SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC  20549

                                   FORM 10-KSB

                                   (Mark One)

                   [x]ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 1999

                                      OR

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

                        Commission file number 0-27908

                SEMICONDUCTOR LASER INTERNATIONAL CORPORATION
                (Name of small business issuer in its charter)

           Delaware                                     16-1494566
 (State or other jurisdiction of          (I.R.S. Employer Identification No.)
  incorporation or organization)

     15 Link Drive, Binghamton, NY                          13904
(Address of principal executive offices)                  (Zip Code)

                 Issuer's telephone number:  (607) 722-3800

     Securities registered pursuant to Section 12(b) of the Exchange Act:

       (Title of class)                        (Name of each exchange on
                                                    which registered)

            None                                          None

     Securities registered pursuant to Section 12(g) of the Exchange Act:

                      Common Stock, par value $.01 per share
                                Redeemable Warrants
                                 (Title of class)

Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days.  Yes [X]   No [ ]

Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this  Form 10-KSB. [ x ]

The issuer's revenues for its most recent fiscal year (year ended
December 31, 1999) were $1,524,514.

The aggregate market value on February 18, 2000, of the voting stock held by
non-affiliates computed by reference to the last sales price on that date
was approximately $ 12,708,365. As of February 18, 2000, 15,641,064 shares
of Common Stock, par value $.01 per share (the "Common Stock"), were
outstanding.


                      Transitional Small Business Disclosure Format
                            (check one): YES   [ ]       NO  [X]




                  DOCUMENTS INCORPORATED BY REFERENCE.
                                   None

                                    1
<PAGE>

                                 PART I

In addition to historical information, this Annual Report contains forward
looking statements relating to such matters as anticipated financial and
operating performance, business prospects, technological developments, new
products research and development activities and similar matters.  The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for forward
looking statements.  Semiconductor Laser International Corporation
(the "Company" or "SLI") notes that a variety of factors could cause the
Company's actual results to differ materially from the anticipated results or
other expectations expressed in the Company's forward looking statements.  The
risks and uncertainties that may affect the operation, performance, development
and results of the Company's business include, but are not limited to, those
matters discussed herein.  Readers are cautioned not to place undue reliance on
these forward looking statements, which reflect managements analysis only as of
the date hereof.  The Company undertakes no obligation to publicly revise these
forward looking statements to reflect events or circumstances that arise after
the date hereof.  Readers should carefully review the risk factors described in
documents the Company files from time to time with the Securities and Exchange
Commission.

 Item 1. Description of Business

General

      Semiconductor Laser International Corporation is a manufacturer of high
power semiconductor diode lasers ("HPDLs").  SLI currently manufactures HPDLs
for a variety of applications across numerous industries, including
telecommunications, printing, laser marking, medical, optical displays,
precision machining, illuminating and military. SLI is a component supplier of
HPDLs.  Most of SLI's customers are Original Equipment Manufacturers ("OEMs").

      The Company manufactures its products at a high technology facility in
Broome County, New York built to the Company's specifications.  The Company
currently utilizes 15,000 square feet at such location, including a 4,500 square
feet class 1,000 clean room.

     The Company has raised an aggregate of $5,730,000  from a series of private
placements  since  January 1, 2000.  The  Company is  currently  in  discussions
regarding raising additional  financing of up to $4 million. The Company intends
to seek to grow its business through expansion into telecommunications products.
The Company has the capability without  substantial  capital  expenditures or an
expansion of staff to manufacture products with telecommunications applications.
If the Company is successful  in raising  additional  capital it is  anticipated
that it will expend between $500,000 to $4,000,000 on capital expenditures to
expand significantly the products with telecommunications applications that the
Company could manufacture.  Therefore, with additional capital the Company
believes that the potential for revenues in telecommunications is significantly
increased. There can be no assurances that additional financing or the ability
to increase sales in telecommunications can be obtained by the Company.
The Company is currently seeking to issue additional equity capital thru private
placements.  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 was incorporated in New York in September of 1993 and
reincorporated in Delaware in September 1997.

Recent Developments

The Company entered into a Securities  Purchase  Agreement (the "Securities
Purchase Agreement"), dated as of February 5, 1999, with bmp Mobility AG Venture
Capital ("bmp"),  as amended by Amendment No. 1 to Securities Purchase Agreement
(the  "Amendment"),  dated  as  of  April  28,  1999  (the  Securities  Purchase
Agreement,  as  amended  by the  Amendment  is  hereinafter  referred  to as the
"Amended  Purchase  Agreement").  Pursuant to the terms of the Amended  Purchase
Agreement, bmp purchased, 2,000,000 shares of the Company's Common  Stock and
1,000,000  shares of the Company's Series B Convertible  Preferred Stock (the
"Series B Stock"), $.01 par value per share,  each  convertible  into 5 shares
of the  Company's  Common  Stock or an aggregate of 5,000,000 shares of the
Company's Common Stock.  bmp had  previously  purchased  367,650  shares  of the
Company's  Common Stock in  unrelated  open market  transactions.  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 Common Stock, at an exercise
price of $0.50 per share(the "bmp Warrrant").  Based on public filings, the
Company is aware that bmp has transferred ownership of its shares of Common
Stock, Series B Stock and the bmp Warrant to ANB Alster Neue Beiteiligungs GmbH
KG ("ANB").  The shares of Common Stock issued to bmp contain certain demand and
piggyback  registration rights and the Series B Stock contains certain
anti-dilution 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.  Pursuant to a verbal agreement with bmp
Consultants SLI will be billed on a work performed basis for the $200,000
aggregate consulting fee.  As of March 21, 2000, bmp Consultants had been paid
$80,887.  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 until June 26, 2001.

In conjunction with the Securities Purchase Agreement, on February 16, 1999,
the Company issued to BSB Bank & Trust Company("BSB"), a five year warrant to
purchase an aggregate of 500,000 shares of the Company's common stock at an
exercise price of $0.575 per share (the "BSB Warrant").  The shares issuable
upon exercise of the BSB Warrant contain certain registration rights. The value
of the BSB warrant 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.

On March 14, 2000, the Company entered into a Waiver and Lock-up Agreement with
BSB, pursuant to which BSB waived any rights to adjustment that it may have
under the BSB Warrant. In addition, BSB agreed not to transfer the shares of
Common Stock issuable to BSB upon conversion of the BSB Warrant until March 20,
2001 without the prior written consent of the Company.  The Company is in the
process of negotiating a Consent, Waiver and Lock-Up Agreement with ANB,
pursuant to which ANB would waive any rights to adjustment that it may have
under the Securities Purchase Agreement and the bmp Warrant and agree to lock-up
a percentage of its shares of Common Stock that it beneficially owns for a
period of one year.  In addition, the Company would agree to include a certain
percentage of the shares of Common Stock beneficially owned by ANB on the
registration statement described below.

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 were 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.

     The Company has issued an  aggregate of  12,833,333  shares of Common Stock
and 9,743,333  warrants in a series of private  placements  consummated  between
December  31, 1999 and the end of March 2000.  The Company is expected to file a
registration  statement with the Securities and Exchange Commission by early May
2000, registering  approximatley 9,400,000 shares of Common Stock issued in such
private  placements.  The Company  raised an aggregate of  $5,730,000  from such
private  placements at purchase prices ranging between $0.30 and $0.50 per share
and warrant  exercise  prices ranging  between $0.75 and $1.0625 per share.  The
warrants range between 4 to 5 year warrants.  The Company is in discussions with
certain other  investors  concerning  up to an additional  $4,300,000 of private
placement  financing.  There can be no assurance that such additional  financing
can be consummated.

Orthogenesis Agreement

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.

Nasdaq Delisting

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).

Industry Background

      Lasers produce a beam of radiation in the electromagnetic spectrum which
can be varied in intensity and wavelength depending upon the desired
application. This variable intensity enables high-powered lasers to be used as
power sources in a broad range of applications, including the materials
processing, fiber optic telecommunications, printing, medical, dental,
automotive, machining, optical data storage, laser marking and illuminating
markets. HPDLs are increasingly replacing traditional technologies, including
other types of high power lasers, in these and other applications, as HPDLs are
generally less complex, smaller, more reliable, more durable and/or more
powerful than their predecessor technologies.

                                       2
<PAGE>

      The kind and number of applications that can benefit from utilizing HPDLs
include all applications requiring intense and efficient power, particularly
where reliability, long useful life (without adjustment or replacement of parts)
and, in some applications, smaller size and/or adaptability to fiber optic
coupling are significant. The variety and magnitude of these applications and
potential applications is creating an expanding demand for HPDLs and, if
lower prices for HPDLs can be achieved, it is anticipated that new
applications requiring lower priced HPDLs will create significant additional
demand.

Strategy

      The Company's manufacturing strategy is to take advantage of the advances
in HPDL manufacturing technology made possible through its proprietary Molecular
Beam Epitaxy ("MBE") process and through its acquisition of rights relating to
aluminum free HPDLs. The Company currently controls all stages of HPDL
manufacturing, including all aspects of wafer growth, processing and packaging
of its HPDL products, at its own manufacturing facility where it utilizes the
full benefit of its research and development efforts to date.

      The Company believes that it has established, within the HPDL marketplace,
the credibility of its products, i.e. their comparable quality to those of
current HPDL manufacturers.  The Company's marketing strategy is
focused on finding potential customers to consider the applicability of its
products to existing and new uses. The Company believes that once the quality
of its product line and the lower prices charged for its products is fully
recognized, it will be able to achieve market penetration. The Company
participates in trade shows and publicizes its improvements in product
literature.

       The Company has an exclusive ten year license on the Desorption Mass
Spectrometric ("DMS" ) technology as it applies to laser technology, pursuant to
its License Agreement with the Air Force. The Air Force has received a patent
with respect to the DMS technology. The License Agreement is not assignable,
other than to the Company's subsidiaries, without the prior written approval of
the Air Force. Under the License Agreement, the Company is obligated to pay
royalties of .5% on all gross sales (other than sales to or for the U.S.
Government) of each laser or laser related product that was produced utilizing
any method defined in the Air Force's patent. In addition to the royalty
payments, the Company was obligated to pay a minimum royalty of $20,000
beginning with the fifth year of the License Agreement (March 30, 1999).
The Company was required under the License Agreement to satisfy the Air Force
that it had taken effective steps to exploit the licensed technology
commercially. The Company has made improvements to the technology and according
to the License Agreement,

                                     3
<PAGE>

these improvements are the sole property of the Company. After 2004, unless
extended, the License Agreement will become nonexclusive. The Air Force has a
royalty free right to employ the DMS technology in non-commercial production of
HPDLs for its own use. Initially, the Company used the Air Force patent to
develop products.  More recently, Company scientists have developed an optical
system to replace DMS, which is an electrical system. The Company's system works
similarly to DMS to control the temperature of the substrate but the Company
believes that its system is simpler to use and easier to control.  As a result,
the Company does not rely on DMS for any current products.  The Company is
current on administrative payments to the Air Force to keep this license in
good standing,  but there are no royalty payments due because the Company is
not using the technology for products sold.  The Company believes that the
License Agreement could become valuable to the Company in the future, but that
it is not critical at this time.

       In September 1996, the Company entered into a license agreement (the
"Northwestern License") with Northwestern University granting the
Company exclusive worldwide rights relating to aluminum free HPDLs under patent
rights of Northwestern University. Under the Northwestern License, an initial
licensing fee was paid along with a number of shares of Common Stock. An
additional issuance of Common Stock occurred in November 1997. The
Northwestern License also provides for royalties on net sales as well as a share
of any payments received by the Company with respect to sub-license fees.
Certain obligations must be met by the Company in order to maintain the
Northwestern License, all of which the Company believes that it has fully
satisfied.

     The Company believes that the patent rights and the Northwestern License
cover all production methods, including, but not limited to MBE and Metal
Organic Chemical Vapor Deposition ("MOCVD"). The Company believes that
attempts by others to develop equivalent aluminum free technology could
infringe on its exclusive rights. Enforcement of these rights will require
coordination by the Company with Northwestern University.  The Company
believes that the exclusive right granted under the Northwestern
License constitutes an as of yet undetermined competitive advantage.
Coherent, Inc., a competitor of the Company, has advised the Company and
Northwestern University that it believes that the patent rights under the
Northwestern License do not cover the manufacture of aluminum free products
other than by MOCVD. Alternatively, Coherent, Inc. claims that its products
do not infringe on the Northwestern patents. The Company is reviewing its
options with respect to such infringements. At this time, no litigation has been
instituted by the Company, Northwestern or any third party with respect to the
scope of the patent rights under the Northwestern License and no assurance can
be given either as to what enforcement action, if any, will be taken by
Northwestern and the Company or as to the outcome of any such action, if taken.
Northwestern has indicated to the Company that it will not institute any
litigation at this time.

     In March 1999, the Company converted its MBE machine so that it may begin
to produce aluminum free HPDLs in order to maximize its flexibility, with more
than one form of technology.  The Company has produced limited quantities of
aluminum free HPDLs.  The Company believes that the potential advantage over
existing HPDLs is the ability of aluminum free HPDLs to generate greater power
while evidencing longer life and greater reliability.

     The Company has submitted a plan for the further development and
commercialization of certain licensed products, including the transfer of
technology and "know-how" from Northwestern University.  The Company has paid
royalties due to Northwestern University under the License and provided further
information concerning the Company's satisfaction of the Northwestern License
milestones.  As of March, 2000, the Company has met all of the requirements of
the Northwestern license.  The Company continues to develop this technology and
expects to introduce new aluminum free products as time goes on.

Current and Future Markets

      The Company has been selling its products to customers for use in a wide
range of applications.  A purchaser of the Company's products will typically
incorporate the products into a particular device or application developed by
such purchaser. Depending upon a customer's needs, the products purchased
from the Company can either be sold in an unpackaged processed form or in a
packaged processed form. In situations where packaged products are sold, they
generally provide the Company with a substantially higher profit margin.

      There are many industries which are currently engaged in product and
design programs for which specialized HPDLs will be essential. The development
of one or more of these areas could greatly increase the demand for the
Company's products.  The Company may be required to expand its operations in
order to meet such potential demand and that there can, however, be no assurance
that such increased demand for the Company's products will occur or that the
Company will be able to sufficiently expand its operations to meet such
increased demand.  To date, the Company is dependent on a few major customers.
See Item 6.  "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Overview."

     The Company is currently engaged in a lawsuit with one of its customers,
Rocky Mountain Instruments ("RMI"). RMI disputes the amounts owed
to the Company regarding certain orders, has made claims regarding defects in
certain of the units delivered and is currently late in making payments on
such orders. The Company believes that RMI owes approximately $468,571
(including a late charge) to the Company. On November 2, 1999 SLI filed a
Complaint and Jury Demand against RMI claiming, among other things, that RMI had
breached its contract and failed to fulfill its promises relating to RMI's
purchase of laser diodes from SLI.  A trial date has not yet been established.

Manufacturing Facility

      The Company is currently operating a single-wafer V-80H DMS controlled MBE
machine at its manufacturing facility. The Company's manufacturing facility
(15,000 square feet) includes all related facilities and equipment necessary for
production, such as a 4,500 sq. ft. class 1,000 clean room and tooling and
testing equipment for its production processing line.


                                        4
<PAGE>

      On December 18, 1996 the Company entered into an agreement (the "Sale and
Leaseback Agreement") with the Broome County IDA, in which the Company sold and
leased back its manufacturing facilities and equipment. See "Item 2.
"Description of Properties."

Manufacturing and Products

General

      The manufacturing process for the growth of HPDL wafers and the further
manufacturing steps necessary to process and package these wafers into bars,
chips and multi-bar stacked arrays in original equipment manufacturer or
end user ready format is a highly technical process. The general description of
these processes which follows necessarily simplifies the essentials and by its
nature does not include many of the more intricate elements involved in
successfully carrying out the complex growth and manufacture of HPDLs.

Growth

      The two principal growth methods which have been developed to manufacture
HPDLs are MOCVD, the process that the Company believes is used by most of its
competitors, and MBE, the process which the Company is using. MOCVD has been
the prevailing manufacturing process to date, even though the yields of
acceptable or usable wafers associated with this process (when compared with
the total number of wafers grown) are believed to be as low as 10%. The MBE
process has historically had even lower useable wafer yields. However, by
monitoring and controlling the MBE production process with its improved control
technology, the Company has developed what it believes to be a process
capable of producing commercially acceptable or usable wafers (which meet the
quality standards of existing MOCVD produced HPDLs).

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<PAGE>

Processing

      After the growth process is completed and the wafers have been tested (a
complicated process requiring dedicated testing equipment) acceptable wafers are
processed and cut (a process referred to as cleaving) into one centimeter
individual laser bars. Each laser bar contains multiple laser chips or laser
emitters. The actual number varies depending upon the desired power
characteristics of the laser chip or emitter. The surface of the bars is then
given optical facet coatings in order to create the laser beam path that is
formed by the laser mirrors.

Packaging

      The Company currently offers numerous packages, fitting the chips and bars
for unique applications, higher power output and fiber optic coupling. Although
bars and chips are sold unpackaged, the Company offers an array of packaging
options for various customer applications including the award winning 7 watt
HHL, LD, LS, TO-3, 9mm, 5.6mm and several fiber coupled styles.

      The final steps in the production process are the actual assembly and
packaging of the fully processed chips and bars into an OEM or end user ready
format. The Company's packages include a range of products, from single chip
devices, such as the C-Mount, the 9 mm package and the 5.6 mm package, to
multiple chip devices up to 40 watts CW, such as the single-LD bar, LT-bar, LS
bar and SLD-bar packages and the stacked array packages and various fiber
coupled lasers up to 35 watts CW and 100 watts QCW. Customers' applications and
preferences dictate which package is best for their needs, and adaptations of
packages for specific product requirements can be designed. Wherever
appropriate, portions of the packaging process may be subcontracted by the
Company. Each packaging configuration can be utilized for different applications
with the principal differences being the power of the laser diode device or its
wavelength. The sizes of the typical HPDL products are merely a function of
industry convention. Thus, the one centimeter single-laser bar size could be
easily modified by the Company or its competitors to a different size.

Suppliers

The Company's products require, during each step of the manufacturing
process, high quality raw materials and components which the Company
purchases from others. The Company believes that numerous suppliers exist
for all of the raw materials and components that it will need and that
such items are readily available on commercially reasonable terms;
however, the Company's ability to continue to manufacture its products
will depend upon its ability to maintain commercial relationships with most of
its suppliers.  In other cases the Company intends to purchase raw
materials, sub-assemblies and components pursuant to purchase orders in
the ordinary course of business. The Company's production is also
dependent upon its suppliers satisfying the Company's performance and
quality specifications and dedicating sufficient production capacity to
meet the Company's scheduled delivery times. Recently, because of cash flow
problems, the Company has experienced a shortage of supply for certain critical
components.  The Company has worked out acceptable terms with most of its
suppliers, but has been placed on a cash only basis with many of them.

Markets and Marketing

Through their use with fiber-optics, diode lasers have materially improved
transmission speeds for the telecommunications industry.  In the automotive
industry, these lasers are used in manufacturing for precision machining and
welding.  In the medical and dental fields, diode lasers have provided the means
for advanced laser surgery.  In the printing and engraving industry, they have
made possible products such as laser printers and copiers.  Diode lasers have
also enhanced military products in laser sight and missile guidance
applications. As laser performance is becoming more reliable and uniform across
these industries, manufacturers have turned to laser products as alternatives
to traditional technologies.  In the optical storage industry, diode lasers are
used with CD, CD-ROM, Laserdisc, magneto-optic drives, and, most recently,
Digital Video Disc (DVD).


                                        6
<PAGE>

Lasers are continually being refined and advanced. One of the most significant
HPDL developments has been with respect to the power output of lasers.  The
maximum power outputs are now about 60 Watts and 120 Watts for CW and QCW bars,
respectively. Although prices vary according to the power output, wavelength
and packaging, the average cost per watt has been reduced to less than half
that of just a few years ago.

The growth in the use of diode lasers in fiber optic  telecommunications is
the  optoelectronics  success  story of the 1990s.  In 1998 the market for diode
lasers in  telecommunications  was $ 1.38  billion,  or 64% of the total  diode
laser  market.  Revenue  growth was 20% while unit growth was a robust 34%.  The
difference  is accounted for by ongoing  average  selling price erosion of 15% -
20% per year,  which shows some signs of slowing to about 10% in 1999 due to
production capacity limitations.  This price erosion,  however, is partly offset
by increasing share higher data rate  transmission  lasers and higher power pump
lasers, which command higher prices.

The Company has a purchase order with a customer in China for approximately $4
million for a single chip high power diode.  The realization of the full
amount of the order is subject to the Company's ability to satisfy quality and
quantity requirements and the order can be increased if the Company satisfies
such requirements.  There can be no assurance that the Company can satisfy such
requirements or realize such revenues.

Telecommunications Applications

     The Company has raised an aggregate of $5,730,000  from a series of private
placements  since  January 1, 2000.  The  Company is  currently  in  discussions
regarding raising additional  financing of up to $4 million.

     The Company  intends to seek to grow its business  through  expansion  into
telecommunications  products. The Company has the capability without substantial
capital  expenditures  or an expansion  of staff to  manufacture  products  with
telecommunications  applications.  If  the  Company  is  successful  in  raising
additional  capital it is anticipated  that it will expend  between  $500,000 to
$4,000,000 on capital  expenditures  to expand  significantly  the products with
telecommunications  applications that the Company could manufacture.  Therefore,
with additional  capital the Company believes that the potential for revenues in
telecommunications is significantly  increased.  There can be no assurances that
additional financing or the ability to increase sales in telecommunications  can
be obtained by the Company. The Company is currently seeking to issue additional
equity  capital thru  private  placements.  The need to raise equity  capital
through current stock prices is likely to result in substantial dilution to
shareholders and could result in a change of control.

The Company  intends to dedicate a  significant  portion of the proceeds of
its recent private placements to the development of telecommunications  products
and to enhancing its current products for  telecommunications  applications.  If
the Company is successful in raising the additional  financing  discussed above,
it expects to spend  approximately  $3,235,000 on new  equipment.  A substantial
portion of such equipment would be financed.  There can be no assurance that the
additional  private  placement  financing  can be  completed  or that  equipment
financing can be obtained.

The   Company   is   currently   in   discussions    with   several   other
telecommunication  companies  concerning  orders for new products.  Although the
Company  is  hopeful  that it will  receive  orders  from  one or more of  these
customers,  there can be no  assurance  that the Company will receive any orders
from these  companies  or if the Company  does  receive  orders from one or more
customers that it will be able to consistently meet stringent  telecommunication
specifications.  The Company  expects to emphasize the development of high power
single mode 980nm pump lasers for use in double  clad fiber laser  designs.  The
Company is also exploring  other areas of  telecommunications  that its products
can be used for.

The  telecommunication  laser  market  consists of two major  applications,
signal  transmission   (lasers  in  the  1300  to  1550  nm  range)  and  signal
amplification (lasers operating at 980 and 1480 nm). The latter used for pumping
erbium doped fiber amplifiers (EDFAs).  According to industry data, pump lasers
accounted for approximately 18% of the telecom laser market in 1998.

Driven by the growth in Internet traffic,  there is an ongoing expansion of
capacity in  fiberoptic  networks,  including  upgrades of existing  systems and
construction of new systems. The principal technique for achieving this expanded
capacity is dense wavelength division  multiplexing("DWDM"). The rapid growth in
deployment of DWDM systems has caused an ever  increasing  demand for wavelength
selected laser diodes in the 1530 to 1600 nm wavelength  band. DWDM systems work
by packing as many individual  wavelengths  (signal carriers) as possible into a
very narrow band of  wavelengths  and  transmitting  them down a single  optical
fiber. Consequently each signal carrier must occupy as little frequency space as
possible.  This is achieved by employing what are known as distributed  feedback
laser diodes (DFBs).  Systems incorporating DFBs on the market today can pack as
many as 80 signal carriers into a band between 1530 and 1565 nm.

The increase in the number of wavelengths  being  transmitted per fiber has
resulted  in  requirements  for  ever  increasing  pump  power  in  the  optical
amplifiers  used to  regenerate  the  signals as they  propagate  over very long
distances.  New EDFA designs are  requiring  as many as eight pumps  sources per
amplifier  and the trend is to  increase  this  number  as the  number of signal
carriers  increase as well.  Some new  amplifier  designs are using both 980 and
1480 nm in the same system thus benefiting  from the technical  virtues of both.
Yet another  technique for producing higher power at 980 nm that is
gaining  significant  acceptance  in the  industry  is  the  double  clad  fiber
amplifier.  The Company  expects to emphasize the development of high power
single mode 980nm pump lasers for use in double clad fiber laser designs.This
design  utilizes a relatively low  brightness  laser diode pump
source at 980 nm to inject  energy  into a multi mode  waveguide  surrounding  a
doped  core.  The core of this fiber is single mode so the  transmission  signal
propagates  normally  through it but gets amplified on its way in much the same
fashion as a conventional  EDFA. The advantages to a double clad fiber amplifier
system are, more easily  produced pump sources,  less  stringent  laser to fiber
alignment tolerances both of which contribute  significantly to reduced cost and
potentially higher pump power.

Overall telecommunications laser revenue worldwide is expected to grow to $ 1.8
billion in 1999,  an  increase of more than 30% with no signs of slowing for the
foreseeable future.  The highest growth rate is expected to be in pump lasers
according to industry data with revenues projected to increase by a whopping
70%. Pump lasers are expected to account for nearly a quarter of the telecom
laser market in 1999.

The market potential is one of the strengths of the laser industry.  A drawback
is that it is highly competitive and may attract may attract more competition to
an industry that has historically had very low profit margins.  In addition,
there is an industry requirement for research and development which in turn
requires capital resources.

The overall laser market is quite competitive.  The marketing approach of the
Company is to promote its line of high power semiconductor lasers to new and
existing market segments as well as creating new applications that were once
impenetrable due to the high cost of laser diodes. The Company believes that
the credibility of its products is being established as its customers'
expectations are being met. To date, a substantial number of orders have been
for prototype or test units, resulting in relatively low sales volumes and
higher unit costs.  However, the Company is now starting to see an increase
in production unit orders based upon the acceptance of its products by
customers. Other marketing activities of the Company include participating in
appropriate trade shows, publicizing advancements in scientific and trade
journals, developing international trade companies for representation and other
creative marketing techniques.


                                      7
<PAGE>

The Company's marketing program is designed to address some of the activities
described above with a strong focus on identifying potential customers in the
telecommunications area and increasing the visibility of the Company within this
market segment. The goal of the marketing program is to create demand, and
obtain orders, for the Company's proposed products, which will then be produced
by the Company.

Research and Development

Subject to the availability of capital, the Company has been engaged in
research and development activities since its inception. Due to the nature of
its business, research and development will continue.  The Company incurred
research and development expenses of approximately $651,000, $7,000 and $77,000
for the years ended December 31, 1997, 1998 and 1999, respectively. The decline
in R & D expense since 1997 is attributable to the Company's emphasis on
manufacturing and the absence of financing.

Precision Laser Machining Consortium

Precision Laser Machining Consortium (the "Consortium") consists of 20
major U.S. laser companies, brought together by the Defense Advanced
Research Project Agency's ("DARPA") dual-use technology program. Major
objectives of the Consortium are to develop a new generation of laser
machine tools, advanced laser systems, and laser-assisted manufacturing
processes, provide high performance, affordable systems for the U.S.
military, and produce commercial products for a fiercely competitive global
marketplace. The Company became an associate member of the Consortium in
April, 1996.  The major function of the Company in the Consortium is to
develop and manufacture high power, low-cost and reliable semiconductor
laser diodes for pumping solid state lasers.  This program ends in April 2000.

Joint Research and Development Projects

The Company has in the past engaged in research and development ventures with
Government Laboratories and academic research laboratories to provide the
Company with access to new technologies, product applications, quality
control measures, testing techniques and packaging techniques.
Typically each research laboratory has specific interests and capabilities in
areas of HPDL technology that are relevant to one or more functions of the
Company. For example, one such research laboratory specializes in testing
techniques while another specializes in packaging techniques. It is
anticipated that the number of these relationships will continue to slow as the
Company moves more and more into production.


                                       8
<PAGE>

Internal Research and Development Programs

Subject to the availability of capital, the Company is conducting several
internal research and development programs associated with high power
semiconductor laser technology, infrared and visible in different departments
of the Company. However, the number of these programs has been decreased.
The Company at the present time is focusing its efforts in R & D in the
areas of telecommunications, printing and theraputic medical and expects to
spend approximately $600,000 in the year 2000 for this effort.

Insurance

The products that the Company markets are intended for use by commercial
end users and OEMs in their end products. Some of the Company's products
may become critical components in telecommunications or medical and surgical
devices or in printing, or precision machining, illumination or the military.
The use of these products is regulated by the Center for
Disease and Radiological Health because the misuse or mishandling of a
product could result in injury from exposure to the laser light emissions.
A malfunction of the Company's products in any application could result in
tort lawsuits based on injuries resulting from such malfunctions, or in
contract damages lawsuits resulting from the high costs of repairing or
replacing the Company's HPDLs in applications such as satellites or
fiber cables or due to lost profits for data transmission down time. The
Company plans to reduce the risk of such losses through warranty
disclaimers and liability limitation clauses in its sales agreements and
by maintaining product liability insurance. Currently the Company
maintains product liability insurance in the amount of $1,000,000 per
occurrence with a $2,000,000 aggregate limit, which it believes is
adequate coverage for its operations and products. There can be no
assurance, however, that this insurance will be sufficient to cover
potential claims or that adequate levels of coverage will be available
in the future at reasonable cost. A partially uninsured or completely
uninsured claim against the Company could have a material adverse effect
on the Company.

Intellectual Property

The Company has five pending U.S. patent applications, two patent
applications for HPDL's, a patent application for an optical image rotating
device, a diode laser array package patent application and a beam splitter
patent application. It is the Company's intention to file patent applications
for all inventions which are not held as trade secrets, such as those routinely
employed in the Company's manufacturing processes and products.  The Company
requires each of its employees to sign a Employee Invention and Non-Disclosure
Agreement to protect the Company's trade secrets, as well as providing for
assignment of the inventions.

                                  9
<PAGE>

The Company has an active portfolio of license patents from the
Air Force and Northwestern University.  The Company has licensed
U.S. Patent No. 5,543,170 entitled "Desorption Mass Spectrometric Control
of Alloy Composition During Molecular Beam  Epitaxy" from the U.S. Air
Force. The Company has licensed three patents from Northwestern University,
U.S. Patent No. 5,384,151 entitled "InGaAsP/GaAs Diode Laser", U.S.
Patent No. 5,389.396 entitled "InGaAsP/GaAs Diode Laser" and U.S. Patent
No. 5,663,976 entitled "Diode Laser" and a divisional patent application. The
Company has also licensed a pending patent application from Northwestern
University.  The Company has a consulting relationship with Professor Manijeh
Razeghi of Northwestern University, who is the inventor of the licensed patents
from Northwestern University.

Competition

The Company's market is highly competitive. The Company faces current or
potential competition from direct competitors, potential entrants,
suppliers of potential new technologies and suppliers of existing
alternative technologies. Various niche markets have been developed by
application-specific OEMs who seek to create competitive advantages in
individual markets through function and price. These OEMs are attempting
to increase their competitive advantage by purchasing higher quality,
lower cost components for assembly into their laser systems, thereby
allowing their end products to have a price advantage.

Most of the Company's competitors have substantially greater financial,
personnel, technological, marketing, administrative and other resources
than the Company. Among the largest of the Company's competitors are SDL,
Inc., Siemens AG, Opto Power Corporation and Coherent, Inc.

The Company believes that most current competitors of the Company utilize MOCVD
production methods, with the lone exception of Coherent, Inc. (which
entered this market through strategic acquisitions), and can be
expected to vigorously assert the claim that this technology is superior to
that of the Company's MBE technology and Northwestern's aluminum free
technology. By entering the HPDL market, which is dominated by several
large companies, and by using MBE technology, the Company faces
intense competitive pressure and may be unsuccessful even if its products
and manufacturing process are superior to those of its competitors. The
Company expects that both direct and indirect competition will increase
in the future. Additional competition could adversely affect the
Company's results of operations through price reductions and loss of
customers.

Potential  new  technologies  may  emerge  to  compete  with the  Company's
products.  Both the  Company  and its  competitors  are  working to develop  new
products and improvements and  modifications  to existing  products,  which will
render present  products  obsolete.  There can be no assurances that the Company
will continue its development efforts, or that such efforts, if continued,  will
be successful.  In addition, there can be no assurance that markets will develop
for any such products, or that any such products would be competitive with other
technologies  or  products  that may be  developed  by  others.  There can be no
assurance that the Company's current or potential  competitors or customers will
not develop or acquire products comparable or superior to those developed by the
Company, combine or merge to form significant competitors, or adapt more quickly
than the Company to new  technologies,  evolving  industry  trends and  changing
customer  requirements.  Increased  competition  has resulted and could,  in the
future, result in price reductions, reduced margins or loss of market share, any
of which could  materially  and  adversely  affect the  Company's  business  and
results of  operations.  There can be no assurance that the Company will be able
to  compete   successfully  against  current  and  future  competitors  or  that
competitive  pressures  faced by the Company  would not have a material  adverse
effect on its business and results of operations.  The Company expects that both
direct  and  indirect  competition  will  increase  in  the  future.  Additional
competition could adversely affect the Company's  results of operations  through
price reductions and loss of market share.

                                   10
<PAGE>

Employees

The Company currently has 33 full-time employees, none of whom are
represented by a union. There are 21 employees in production and production
support, 2 in finance and 10 in corporate management, sales and administration.
The Company has never experienced a work stoppage.  At December 31, 1999, the
Company had 39 full-time employees.

Governmental Regulations

The Company is subject to a variety of federal, state and local laws
and regulations concerning the storage, use, discharge and disposal of
toxic, volatile, or otherwise hazardous or regulated chemicals or
materials used in its manufacturing processes. Further, the Company is
subject to other safety, labeling and training regulations as required by
local, state and federal law.  There can be no assurance that
changes in regulations and laws will not have an adverse economic effect
on the Company. Further, such regulations could restrict the Company's
ability to expand its operations. Any failure by the Company to obtain
required permits or operate within regulations for, control the use of,
or adequately restrict the discharge of, hazardous or regulated
substances or materials under present or future regulations could subject
the Company to substantial liability, require costly changes in the
Company's manufacturing processes or facilities or cause its operations
to be suspended.

Item 2. Description of Properties

The Company's principal executive offices and sole manufacturing facility are
located in approximately 15,000 square feet of space in Broome County, New York.
The Company is currently operating a single-wafer V-80H DMS controlled MBE
machine at its manufacturing facility. The Company's manufacturing facility
(15,000 square feet) includes all related facilities and equipment necessary for
production, such as a 4,500 sq. ft. class 1,000 clean room and tooling and
testing equipment for its production processing line.

On December 18, 1996, the Company entered into an agreement (the "Sale and
Leaseback agreement") with the Broome County IDA, in which the Company sold and
leased back its manufacturing facilities and equipment.  The Company entered
into the Sale and Leaseback Agreement in order to take advantage of certain
benefits offered by the Broome County IDA to induce economic expansion through
tax abatement and expansion of employment levels.  The sale price was $1.00 and
the lease payment is $1.00 per year for twenty years.  In accordance with the
terms of the Sale and Leaseback Agreement, the Company has the unilateral right
at any time to purchase from the Broome County IDA all assets sold to them for
the price of $1.00.  The Sale and Leaseback Agreement also provides that the
Company would make payments in lieu of taxes at a rate dependent upon
employment levels.  All rights of ownership of the facilities and equipment
remain with the Company.  This agreement was not reflected on the books of the
Company as a sale and leaseback transaction as the monetary value of the
transactions and the property rights did not represent in substance a true sale
and leaseback transaction.  Under the agreement, the Company is expected to
create 5 - 10 new jobs per year to achieve up to a 40% reduction in property
taxes and up to 101 new jobs per year to achieve property tax reductions of up
to 70%.  The Company has not yet received any property tax reductions and
does not expect to in the near future.

                                     11
<PAGE>

Item 3. Legal Proceedings

The Company is currently engaged in litigation with a former employee, Dr. Keith
Evans, against whom the Company brought an action for breach of confidentiality
obligations and defamation of character.  Dr. Evans 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 and
further, believes that the ultimate outcome of such action will not have a
material impact on the financial condition, results of operations or cash flows
of the Company.

     Investigations. Since April 1998, the Company had 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 does not know whether or not this investigation
remains active and is not able to speculate as to the specific subject matter of
the investigation.  There are no current requests for information.  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 responded to all requests
for information in connection with the investigation.  No such requests for
information have been forthcoming since late 1998.

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 but has been informed that the Company is not presently a target of
the investigation.  The Company has cooperated fully with the investigation and
has responded to a grand jury subpoena issued in connection with the
investigation.  The Company does not know whether or not this investigation
remains active and is unable to speculate as to the outcome or possible effect
of the investigation on the Company or its management.  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.

     In November,  1999,  an action was filed against the Company and several of
its present and former officers and directors in the United States Federal Court
for  the  District  of  Massachusetts  entitled  Geran  v.  Semiconductor  Laser
International Corporation,  Whale Securities Co., LP, Geoffrey T. Burnham, Allen
W. Johnson, Jr., Theodore W. Konopelski, Susan M. Burnham, George Barrett, David
L. Koffman, Brian Thompson, and Nicholas L. Prioletti, Jr., No. CA99-30-251-MAP.
The Complaint  alleges  violations  by the  defendants  of  Section 12(2) of the
Securities Act of 1933 arising out of alleged  misrepresentations  by defendants
as to the Company  that  allegedly  induced  plaintiff  to purchase  warrants to
purchase the Company's stock.  The Complaint seeks damages of $27,782.00. The
Company  believes it has  meritorious  defenses to this action and intends to
defend the action  vigorously  and 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.  As of December 31, 1999 the Company
had not been served with the summons and complaint in this matter, although the
company understands that several defendants who are current and former officers
and directors of the Company may have received service.

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 Company believes that the vendor was incapable of providing a
working product acceptable to the Company and the equipment was returned to the
vendor as a result.  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 a lawsuit with one of its customers,
Rocky Mountain Instruments ("RMI"). RMI disputes the amounts owed
to the Company regarding certain orders, has made claims regarding defects in
certain of the units delivered and is currently late in making payments on
such orders. The Company believes that RMI owes approximately $468,571
(including a late charge) to the Company. On November 2, 1999 SLI filed a
Complaint and Jury Demand against RMI claiming, among other things, that RMI had
breached its contract and failed to fulfill its promises relating to RMI's
purchase of laser diodes from SLI.  A trial date has not yet been established.

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

The  Company  held a special  meeting  of its  stockholders  (the  "Special
Meeting") on December 14, 1999, for the purpose of approving an amendment to the
Company's  Certificate  of  Incorporation  to increase the number of  authorized
shares of its Common Stock from 20,000,000 to 75,000,000 (the "Amendment").  As
of the  record  date of  November  12,  1999,  there  were 15,153,955  shares of
the Company's  Common Stock  eligible to vote. Of these shares,  8,518,977
(56.22%) were  represented  either in person or by proxy at the Special Meeting.
At the Special Meeting, the Company's stockholders voted to approve the
Amendment.  The number of shares of Common Stock voted in favor of the Amendment
was  8,083,606; the number of shares of Common Stock voted against the Amendment
was 407,538; and the number of shares of Common Stock that abstained was 26,833.
The Amendment was filed with the Delaware secretary of State on March 6, 2000.


                                   12
<PAGE>
                                PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Market Information

The Company's Common Stock is traded on the NASDAQ OTC Bulletin Board
("NASDAQ")under the symbol "SLIC". The following table sets forth, for the
periods indicated and as reported by NASDAQ, the high and low sales prices for
shares of the Common Stock.


        Quarter Ended                        High        Low
    ---------------------                  ---------   ---------

    March 31, 1998                          1 17/32     1 7/16
    June 30, 1998                            1 1/2      1 1/4
    September 30, 1998                        31/32      15/16
    December 31, 1998                          7/16       3/8

    March 31, 1999                            13/32      11/32
    June 30, 1999                             15/32      13/32
    September 30, 1999                        13/32      11/32
    December 31, 1999                         11/32      19/64


Holders of Common Stock

Based upon information supplied to the Company by its transfer agent, the
number of stockholders of record of the Common Stock on March 27, 2000 was
approximately 254. The Company believes that there are in excess of 2,430
beneficial owners of the Common Stock whose shares are held in "Street
Name".

Dividends

The Company has never paid cash dividends with respect to the Common
Stock. The Company intends to retain future earnings, if any, that may
be generated from the Company's operations to help finance the operations
and expansion of the Company and accordingly does not plan, for the
foreseeable future, to pay dividends to holders of the Common Stock. Any
decision as to the future payment of dividends on the Common Stock will
depend on the results of operations and financial position of the Company
and such other factors as the Company's Board of Directors (the "Board"),
in its discretion, deems relevant.  In addition, arrangements with
present or future lenders may restrict the payment of dividends.


                                   13
<PAGE>

The Company has sold the following unregistered securities during the
past three years and to date (all share numbers set forth below have been
updated to reflect stock splits):

<TABLE>
<CAPTION>
                                            Total
   Date                                      Cash
    of                      Total       Consideration    Other
   Sale  Securities Sold Offering Price     Paid      Consideration Purchasers
   ----  --------------- -------------- ------------- ------------- ----------

<S>     <C>              <C>            <C>           <C>          <C>

Jan 1997 58,384 warrants     $  167,710                 $167,710 in Lessor of
         to purchase                                    lease re-   equipment
         Common Stock                                   lated fees  to the
         at $5.00 per                                               Company
         Share
Jan 1997 1,231 shares of     $   10,000                 $10,000 for Licensor of
         Common Stock                                   rights to a the Company
                                                        technology
Oct 1997 2,000,000 shares    $2,975,000     $2,975,000              Accredited
         of Series A 8%                                             Investors
         Convertible
         Preferred Stock
  Oct    770,000 warrants    $1,201,347                 $1,201,347  Consultants
1997(2)  to purchase                                    in services to the
         Common Stock at                                performed   Company
         prices ranging                                 for the
         from $3.4688 to                                Company
         $5.3438 per share
Nov 1997 1,500 shares of     $    2,856                 $2,856 for  Licensor of
         Common Stock                                   rights to a the Company
                                                        technology
Nov 1997 50,000 shares of    $  188,770                 $188,770 in Consultant
         Common Stock                                   services    to the
                                                        performed   Company
                                                        for the
                                                        Company
  Dec    55,000 shares of    $   96,250                 $96,250 in  Consultant
1997(1)  Common Stock                                   services    to the
                                                        performed   Company
                                                        for the
                                                        Company
  Jun    1,650,000 shares    $1,237,500   $1,237,500                Accredited
1998(3)  of Common Stock                                            Investors

Dec 1998 111,280 shares of   $   41,073                 $41,073 in  Legal
         Common Stock at                                Services    Counsel to
         $0.375 per share                               Performed   the Company
                                                        for the
                                                        Company

Feb 1999 2,000,000 shares    $  750,000   $ 750,000                 Accredited
         of Common Stock                                            Investor

Feb 1999 500,000 warrants    $  287,500                 Waiver of   Financial
         to purchase                                    Financial   Institution
         Common Stock at                                Covenants   (lender to
         $0.575 per share                               of and ex-  the Company)
                                                        tension of
                                                        the Line of
                                                        Credit with
                                                        BSB

May 1999 23,867 shares of    $    8,950                 $8,950 in   Company
         Common Stock at                                Services    Vendor
         $0.375 per share                               Performed
                                                        for the
                                                        Company


Jun 1999 500,000 warrants    $  250,000                 Amendment   Accredited
         to purchase                                    to          Investors
         Common Stock at                                Securities
         $0.50 per share                                Purchase
                                                        Agreement

Sep 1999 2,979,256 shares    $1,116,734  $1,116,734     Private     Accredited
         of Common Stock                                Placement   Investors

Dec 1999 40,000 shares of    $   15,000                 $15,000 in  Company
         Common Stock at                                Services    Vendor
         $0.375 per share                               Performed
                                                        for the
                                                        Company

Dec 1999 447,109 shares of   $  100,000  $  100,000     Private     Accredited
         Common Stock at                                Placement   Investor
         $0.2237 per share
         and warrants to
         purchase up to
         447,109 shares of
         Common Stock

Feb 2000 100,000 shares of   $   30,000  $   30,000     Private     Accredited
         Common Stock and                               Placement   Investor
         Warrants to
         purchase up to
         10,000 shares of
         Common Stock

Feb 2000 3,333,333 shares of $1,000,000  $1,000,000     Private     Accredited
         Common Stock and                               Placement   Investor
         Warrants to
         purchase up to
         333,333 shares of
         Common Stock

Mar 2000 9,400,000 shares of $4,700,000  $4,700,000     Private     Accredited
         Common Stock and                               Placement   Investors
         Warrants to
         purchase up to
         9,400,000 shares of
         Common Stock

</TABLE>

(1) Subsequently included in the Company's Registration Statement on Form S-3
    declared effective on January 14, 1998.

(2) Underlying shares of common stock included in Company's Registration
    Statement on Form S-3 declared effective on January 14, 1998.

(3) Subsequently included in Company's Registration Statement on Form S-3
    declared effective on December 30, 1998.

                                   14
<PAGE>

Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations.

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.

The Company has raised an aggregate of $5,730,000  from a series of private
placements  since January 1, 2000. The Company is currently in discussions  with
investors  regarding an  additional  financing of up to $4 million.  The Company
intends to grow its business through expansion into telecommunications products.
The Company has the capability without  substantial  capital  expenditures or an
expansion of staff to manufacture products with telecommunications applications.
If the Company is successful in raising  additional  financing it is anticipated
that it will expend between $500,000 to $4,000,000 on capital expenditures  to
expand significantly the products with telecommunications applications that the
Company could  manufacture.  Therefore,  with  additional  financing the Company
believes that the potential  for revenues in the area of  telecommunications  is
significantly  increased.  However,  there can be no assurances  that additional
financing  or  the  ability  to  increase  sales  in  telecommunications  can be
obtained.

                                  15
<PAGE>

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.  At this time the Company is not experiencing any technical
difficulty of its production processing.  Historically, cash flow problems have
placed considerable strain on Company management, financial, manufacturing and
other resources and limited the Company's ability to grow its revenues.
Although the Company has raised $5,730,000 in private placement financing since
January 1, 2000, lack of financial resources in the future could have a material
adverse impact on the Company's business and results of operations.

The Company has not generated material revenues or profits to date.

Results of Operations

Sales in 1999 were $1,524,514 compared to $2,197,736 for 1998. The decrease
was a result of reduced commercial and government contract revenue.

Sales in 1998 were $2,197,736 as compared to $478,924 for 1997. This increase
was attributable to the continued penetration of the commercial markets.  This
increase was offset by the Company's inability to ship certain units to a key
customer, RMI, because of a legal dispute.See "Item 1. Business - Current and
Future Markets."

Cost of sales, which includes materials, production labor and certain overhead
was $1,871,216 in 1999 as compared to $3,093,343 in 1998. The decrease was
partially attributable to the decreased levels of production labor and overheads
(approximately $622,000) associated with the decrease in sales.

Cost of sales was $3,093,343 in 1998 as compared to $1,482,579 in 1997. The
increase was attributable to the increases in levels of production labor and
overheads associated with the onset of commercial production.  Cost of sales
levels are expected to exceed sales levels until sales levels commensurate with
production capacity are achieved.  The Company believes that if it is successful
with its current efforts to raise additional capital, that its sales levels will
increase in the future which would more effectively utilize the Company's
production capacity.  There can be no assurance of any such increase in
revenues.


                                   16
<PAGE>

Research and Development expenditures were $76,703 in 1999 compared to $7,273 in
1998.  The majority of the research and development efforts in 1998 were charged
to the cost of sales as efforts were focused on the production process.

Research and Development expenditures were $7,273 in 1998 as compared to
$651,242 in 1997.  The decrease in such expenditures was primarily associated
with a change in focus from research and development to production.

Sales and Marketing expenses were $329,927 in 1999 compared to $395,339 in 1998
or a decrease of $65,412.  The decrease was reflected in advertising expenses
offset by minor increases in trade show, travel and meeting expenses.

Sales and Marketing expenses were $395,339 in 1998 as compared to
$368,513 in 1997. The increase of $26,826 was attributable to increased levels
of marketing activities incurred in the achievement of the sales increase
from 1997 to 1998.  The increases were related to increased print media
advertising and brochures offset by a decrease in trade show expense.

General and Administrative expenses were $2,651,139 in 1999 compared to 1998
expenses of $2,882,320 or a decrease of $231,181.  The major impact was an
absence in 1999 of the need for a significant bad debt expense as was recorded
in 1998.  This decrease equated to approximately $488,000.  Additionally,
professional fees (primarily legal expenses) decreased approximately $52,000.
Offsetting these decreases were increases in 1999 compared to 1998 of
approximately $309,000.  These increases were incurred in salaries
(approximately $213,000), interest expense (approximately $66,000), repairs
and maintenance ( approximately $21,000 ) and all other ( approximately
$9,000 ).  Salaries increased due to the addition of positions in the
organization and the impact of required book accounting entries.  Interest
expense increased due to the line of credit expansion by $450,000 to the
$1,000,000 maximum.  Repairs and maintenance increased due to the equipment's
additional aging.

General and Administrative expenses were $2,882,320 in 1998 as
compared to $4,082,360 in 1997. The decrease of approximately
$1,200,000 was attributable primarily to the absence of a one time
charge recorded in 1997 of approximately $1,150,000 associated
with the value of common stock warrants issued in connection with
a broad based financial public relations/investor relations program.
An increase of bad debt expense was recorded in 1998 of approximately
$485,000.  The primary amounts offsetting this increase were Depreciation
expenses decreasing in 1998 by approximately $33,000 due to a
reclassification of certain depreciation to Cost of Goods Sold in 1998 and a
decrease in recruiting expenses of approximately $20,000 in 1998
due to a reduced rate of hiring compared to 1997.  Additionally, certain
expenses in 1998 classified as Cost of Goods Sold were previously classified
as General and Administrative aggregating a total of $485,000.  This change in
classification had no impact on net income or loss per share.

Interest income decreased approximately $7,000 from 1999 compared to 1998
as a result of lower levels of invested cash occasioned by operating demands.

Interest income decreased approximately $63,000 from 1998 compared to 1997
as a result of lower levels of invested cash occasioned by operating demands.

                                  17
<PAGE>

Liquidity and Capital Resources

The Company's cash and cash equivalents at December 31, 1999 were $347,747 as
compared to $111,820 at December 31, 1998, a net increase of $235,927 for
the twelve months ended December 31, 1999.  The net increase was the result of
$4,303,802 provided by financing activities offset by the use of $3,954,701 in
operating activities and $113,174 in investing activities.

The $4,303,802 provided by financing activities was derived primarily from the
private placement of 1,000,000 shares of Series B Convertible Preferred Stock,
the private placement of 2,000,000 shares of Common Stock and the private
placement of 2,979,256 shares of Common Stock and the proceeds from the
expanded use of the line of credit offset by payments on the long-term debt.

The $113,174 used in investing activities was for the purchase of plant,
property and equipment.

The Company's cash and cash equivalents at December 31, 1998 were $111,820 as
compared to $1,934,574 at December 31, 1997, a net decrease of $1,822,754 for
the twelve months ended December 31, 1998.  The net decrease was the result of
$1,560,140 provided by financing activities offset by the use of $176,502 in in-
vesting activities and $3,206,392 in operating activities.

The $1,383,638 provided by financing and investing activities was derived from
the private placement of 1,650,000 shares of Common Stock and the proceeds from
the use of the line of credit offset by the purchase of plant, property and
equipment net of depreciation and payments on the long-term debt.

The Company has a $1,000,000 secured 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 December 31, 1999, the
Company had $1,000,000 outstanding under this Line of Credit and no additional
availability under the eligibility formula.

Pursuant  to its  rights  as  lender  under  loan  documents  executed  and
delivered in connection with its December 1996 loan to the Company, in
January 2000, BSB Bank and Trust Company required  SLI to provide it with
additional  security  for the 1996 loan in the form of a  $750,000.00  second
mortgage on the company's  facility and a first security interest in all of its
assets.  The second mortgage and the security agreement  granting the requested
security interest were executed and delivered to the bank on January 31, 2000.
The bank has agreed to release the lien of the second mortgage upon satisfaction
of the bank's first mortgage, and a pay down or permanent reduction of the
company's  line of credit with the bank of $300,000.00 or a pledge of cash
collateral in such amount.

The  bank  agreed  to waive  the  Default  of the  Company  under  its Loan
Agreement with respect to "Mandatory Loan Repayments" and waived the Affirmative
Covenants - "Financial Covenants and Ratios" at December 31, 1999. Subsequently,
the bank  agreed to waive the Default of the  Company  under its Loan  Agreement
with respect to "Mandatory  Loan  Repayments" for the period ending February 29,
2000 provided the Company met the  borrowing  base  requirements  as of March 3,
2000. These requirements were met by the Company.

The Company entered into a Securities  Purchase  Agreement (the "Securities
Purchase Agreement"), dated as of February 5, 1999, with bmp Mobility AG Venture
Capital ("bmp"),  as amended by Amendment No. 1 to Securities Purchase Agreement
(the  "Amendment"),  dated  as  of  April  28,  1999  (the  Securities  Purchase
Agreement,  as  amended  by the  Amendment  is  hereinafter  referred  to as the
"Amended  Purchase  Agreement").  Pursuant to the terms of the Amended  Purchase
Agreement, bmp purchased, 2,000,000 shares of the Company's Common Stock and
1,000,000  shares of the Company's Series B Convertible  Preferred Stock (the
"Series B Stock"), $.01 par value per share,  each  convertible  into 5 shares
of the  Company's  Common  Stock or an aggregate of 5,000,000 shares of the
Company's Common Stock.  bmp had  previously  purchased  367,650  shares  of the
Company's  Common Stock in  unrelated  open market  transactions.  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 Common Stock, at an exercise
price of $0.50 per share(the "bmp Warrrant").  Based on public filings, the
Company is aware that bmp has transferred ownership of its shares of Common
Stock, Series B Stock and the bmp Warrant to ANB Alster Neue Beiteiligungs GmbH
KG ("ANB").  The shares of Common Stock issued to bmp contain certain demand and
piggyback  registration rights and the Series B Stock contains certain
anti-dilution rights.

     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. There can be mo assurance that any additional
extension  of this  waiver can be  negotiated.  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.

     On March 14, 2000, the Company entered into a Waiver and Lock-up  Agreement
with BSB, pursuant to which BSB waived any rights to adjustment that it may have
under the BSB  Warrant.  In  addition,  BSB agreed not to transfer the shares of
Common Stock issuable to BSB upon  conversion of the BSB Warrant until March 20,
2001 without the prior  written  consent of the  Company.  The Company is in the
process  of  negotiating  a  Consent,  Waiver and  Lock-Up  Agreement  with ANB,
pursuant  to which ANB would  waive any  rights to  adjustment  that it may have
under the Securities Purchase Agreement and the bmp Warrant and agree to lock-up
a  certain  percentage  of its  shares of Common  Stock  that it beneficially
owns for a period of one year. In addition, the Company would agree to include a
certain percentage of the shares of Common Stock beneficially owned by ANB on
the registration statement described below.  There can be no assurances that the
Company will obtain such consent Waiver and Lock-up Agreement with ANB and the
failure to obtain it could result in anti-dilution adjustments under the
instruments governing the securities held by ANB.

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
were 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.

     The Company has issued an  aggregate of  12,833,333  shares of Common Stock
and 9,743,333  warrants in a series of private  placements  consummated  between
December  31, 1999 and the end of March 2000.  The Company is expected to file a
registration  statement with the Securities and Exchange Commission by early May
2000 registering  approximately 9,400,000 shares of Common Stock in such private
placements.  The Company  raised an  aggregate of  $5,730,000  from such private
placements  at purchase  prices  ranging  between  $0.30 and $0.50 per share and
warrant  exercise  prices  ranging  between  $0.75 and  $1.0625  per share.  The
warrants range between 4 to 5 year warrants.  The Company is in discussions with
certain other  investors  concerning  up to an additional  $4,300,000 of private
placement  financing.  There can be no assurance that such additional  financing
can be consummated.

     The Company has incurred net losses from inception (September 21, 1993)
and has an accumulated deficit at December 31, 1999 of $20,329,027. 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 financings. 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 Company is currently seeking to issue additional equity capital
through private placements. 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 anticipates that capital
expenditures during fiscal 2000 will range between approximately $500,000 and
$4,000,000 depending on the level of additional financing raised.

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

     In addition, the Company is currently engaged in a dispute with one of
its key customers, Rocky Mountain Instruments. See Item 3. "Legal Proceedings."


                                     18
<PAGE>

Item 7. Financial Statements

                  Semiconductor Laser International Corporation


                           Index to Financial Statements
                                                                     Page
Report of Independent Public Accountants                              F-1

Financial Statements:

     Balance Sheets as of December 31, 1998 and 1999                  F-2

     Statement of Operations for the Years Ended December 31,
     1997, 1998 and 1999                                              F-3

     Statement of Changes in Shareholders Equity for the Years
     Ended December 31, 1996, 1997, 1998 and 1999                     F-4

     Statement of Cash Flows for the Years Ended December 31,
     1997, 1998 and 1999                                              F-5

Notes to Financial Statements                                        F6-F17


<PAGE>
                                      F-1

Report of Independent Accountants

To The Board of Directors and Shareholders of
Semiconductor Laser International Corporation

In our opinion, the accompanying balance sheets and the related
statements of operations, of changes in shareholders equity and of cash
flows present fairly, in all material respects, the financial position
of Semiconductor Laser International Corporation at December 31, 1998
and 1999, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1999, in conformity
with accounting principles generally accepted in the United States.   These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements
based on our audits.  We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States which
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for the opinion expressed
above.

The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern.  As discussed in Note 2 to
the financial statements, the Company has incurred net losses since
inception (September 21, 1993) and at December 31, 1999 and has a significant
accumulated deficit that raise substantial doubt about its ability to continue
as a going concern.  Management's plans in regard to these matters are also
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



PRICEWATERHOUSECOOPERS LLP
Syracuse, NY
February 18, 2000, except as to Note 9 which is dated March 27, 2000

<PAGE>
                                      F-2

                  Semiconductor Laser International Corporation


                                                Balance Sheets
<TABLE>
<CAPTION>
                                            December 31,      December 31,
                                               1998              1999
                                            -----------       ------------
           <S>                                  <C>               <C>
         Assets
Current Assets
 Cash and cash equivalents.............     $   111,820        $   347,747
 Accounts receivable, net of allowance.
   for doubtful accounts of $560,645 ..
   and $583,293, respectively..........         296,193            295,561
 Inventory.............................         333,806            861,911
 Prepaid expenses and other assets.....         209,717             24,957
                                            -----------        -----------
    Total current assets...............         951,536          1,530,176

Plant, property and equipment, net.....       2,691,926          2,584,974
Deposits and other assets..............          95,093            149,396
                                            -----------        -----------
     Total assets......................     $ 3,738,555        $ 4,264,546
                                            ===========        ===========

Liabilities and Shareholders' Equity
Current Liabilities
 Accounts payable......................     $ 1,127,589        $   708,193
 Notes payable ( Line of Credit )......         550,000          1,000,000
 Accrued expenses and other liabilities         164,235            174,809
 Current portion of long-term debt.....          37,170             44,368
                                            -----------        -----------
     Total current liabilities...........     1,878,994          1,927,320

Long-term debt...........................       765,686            713,668
Accrued royalty payments.................       100,000            100,000
                                            -----------        -----------
     Total liabilities...................     2,744,680          2,741,038
                                            -----------        -----------
Commitments and contingencies ( Note 10)

Shareholders' Equity
 Common stock, $.01 par value, 20,000,000
  and 75,000,000 shares authorized;
  10,039,552 and 15,641,064 shares are
  issued and outstanding or subscribed at
  December 31, 1998 and 1999.............       100,396           156,411
 Common stock issuable...................        41,073              -
 Subscriptions receivable................          -             (100,000)
 Treasury Stock, 35,463 Shares...........      (248,241)         (248,241)
 Convertible Preferred Stock ............         -                10,000
 Additional paid-in capital..............    18,060,685        22,034,365
 Accumulated deficit.....................   (16,960,038)      (20,329,027)
                                            ------------      ------------
    Total shareholders' equity...........       993,875         1,523,508
                                            ------------      ------------
    Total liabilities and shareholders'..
    equity...............................   $ 3,738,555        $4,264,546

                                            ===========       ============
</TABLE>
   The accompanying notes are an integral part of these financial statements

<PAGE>
                                      F-3

                   Semiconductor Laser International Corporation


                                     Statements of Operations
<TABLE>
<CAPTION>



                            Year Ended        Year Ended        Year Ended
                            December 31,      December 31,      December 31,
                               1997              1998              1999
                            ------------      ------------      ------------

        <S>                     <C>               <C>               <C>
Net sales                   $    478,924      $  2,197,736      $ 1,524,514
Cost of sales                 (1,482,579)       (3,093,343)      (1,871,216)
                            ------------      ------------      ------------
  Gross margin                (1,003,655)       (  895,607)      (  346,702)

Operating expenses:

  Research and development  $    651,242             7,273           76,703
  Sales and marketing            368,513           395,339          329,927
  General and administrative   4,082,360         2,882,320        2,651,139
                            ------------      ------------     ------------

     Loss from operations     (6,105,770)       (4,180,539)      (3,404,471)

Interest income                  105,959            42,677           35,482
                            ------------      ------------     ------------

     Net loss                 (5,999,811)       (4,137,862)      (3,368,989)

Less: Beneficial conversion
      feature                 (1,688,000)           --               --
                            -------------     -------------    ------------
     Net loss applicable to
     common stock            $(7,687,811)      $(4,137,862)     $(3,368,989)
                            =============     =============    ============

Net loss per share-basic     $     (2.15)      $     (0.44)     $     (0.26)
and diluted                 =============     =============    =============

Weighted average shares
outstanding                    3,572,458         9,320,785       13,078,597

                            =============     =============    =============

</TABLE>

  The accompanying notes are an integral part of these financial statements

<PAGE>
                                        F-4
<TABLE>
<CAPTION>

                                              Semiconductor Laser International Corporation


                                              Statements of Changes in Shareholders' Equity


                                                Common                 Additional                                   Total
                        Preferred    Common     Stock      Treasury     Paid-In    Subscriptions    Accumulated   Shareholders'
                          Stock      Stock     Issuable      Stock       Capital     Receivable       Deficit        Equity
                        ---------  ---------  -----------  ---------  -----------  -------------   ------------  -------------
<S>                     <C>        <C>        <C>          <C>        <C>          <C>           <C>           <C>

Bal. at Dec.31, 1996
 (3,409,607 shares
 issued and outstanding)               34,096    1,123,438  (248,241)  10,081,464                    (5,134,366)   5,856,391

Issuance of common
 stock issuable, January
 1997, (121,231 shares)                 1,212   (1,072,188)             1,070,976                                      0
Issuance of common
 stock, option exercise
 May 1997, (9,851 shares)                  99                                 394                                       493
Issuance of common
 stock, option exercise
 July 1997, (29,553 shares)               296                               1,182                                     1,478
Issuance of Series A 8%
 Convertible Preferred
 Stock, October 1997,
 (2,000,000 shares)       20,000                                        2,817,480                                 2,837,480
Beneficial conversion
 feature associated
 with Series A 8%
 Convertible Preferred
 Stock, October 1997                                                    1,688,000                   (1,688,000)        0
Warrants issued for
 services rendered,
 October 1997
 (770,000 warrants)                                                     1,198,789                                 1,198,789
Issuance of common
 stock issuable,
 Nov.1997, (10,000 shares)                100    (51,250)                  51,150                                      0
Issuance of common
 stock for services
 rendered, November
 1997, (1,500 shares)                      15                               2,571                                     2,586
Issuance of common stock
 associated with the sale of
 Series A 8% Convertible
 Preferred Stock, Nov.1997,
  (40,000 shares)                         400                             137,120                                   137,520
Issuance of common
 stock for services
 rendered, December 1997
 (55,000 shares)                          550                              78,540                                    79,090
Issuance of common stock
 associated with the
 conversion of Series A 8%
 Convertible Preferred Stock
 December 1997,
 (4,712,810 shares)       (20,000)     47,128                             (92,441)                                  (65,313)
Net loss for the year
ended Dec.31, 1997                                                                                 (5,999,810)   (5,999,810)
                         ---------  ---------  -----------  ---------  -----------   ------------  ------------  -----------

Bal. at Dec.31, 1997
(8,389,552 shares
issued and outstanding)      0         83,896       0       (248,241)   17,035,225        0       (12,822,176)    4,048,704
                         ---------  ---------  -----------  ---------  -----------   ------------ ------------   -----------

Issuance of common
 stock, private placement
 (1,650,000 shares)                    16,500                            1,025,460                                1,041,960
Common stock issuable
for services rendered,
Dec.1998 (111,280 shares)                           41,073                                                           41,073
Net loss for the year
ended Dec. 31, 1998                                                                                (4,137,862)   (4,137,862)

                         ---------  ---------  -----------  ---------  -----------  -------------  ------------  -----------
Bal. At Dec. 31, 1998
(10,039,552 shares
issued and outstanding)     $0       $100,396      $41,073 $(248,241)  $18,060,685       $0      $(16,960,038)  $   993,875

                         ---------  ---------  -----------  ---------  -----------  -------------  ------------  -----------
Issuance of common
 stock, private placement
 Feb.1999(2,000,000 shares)            20,000                              687,964                                  707,964
Issuance of common
 stock issuable,
 Feb.1999(111,280 shares)               1,113      (41,073)                 39,960                                     0
Issuance of warrants for
 extension of line of credit,                                               31,500                                   31,500
 Feb.1999(500,000 warrants)
Issuance of common stock,
 for services rendered,
 May 1999(23,867 shares)                  238                                8,712                                    8,950
Issuance of Series B
 Convertible Preferred
 Stock, May 1999
 (1,000,000 shares)        10,000                                        1,989,988                                1,999,988
Issuance of common
 stock, private placement
 Aug.1999(2,979,256
 shares)                               29,793                            1,048,987                                1,078,780
Issuance of common stock,
 for services rendered,
 Dec.1999(40,000 shares)                  400                               14,600                                   15,000
Common Stock Subscribed,
(447,109 Shares)Dec.1999                4,471                              140,392     (100,000)                     44,863
Record Re-Issuance of
 Stock Options, Nov.1999                                                    11,577                                   11,577
Net loss for the year
ended Dec.31, 1999                                                                                (3,368,989)    (3,368,989)
                         ---------   ---------   ---------  ---------  -----------  ------------- ------------  ------------
Bal. at Dec. 31, 1999
(15,641,064 shares
issued and outstanding    $10,000    $156,411        -     $(248,241)  $22,034,365  $  (100,000) $(20,329,027) $  1,523,508
and subscribed           =========   =========   =========  =========  ===========  ============= ============  ============

  The accompanying notes are an integral part of these financial statements
</TABLE>

<PAGE>
                                  F-5

                Semiconductor Laser International Corporation

                                       Statements of Cash Flows
<TABLE>
<CAPTION>

                                Year Ended      Year Ended      Year Ended
                               December 31,    December 31,    December 31,
                                  1997            1998            1999
                               ------------    ------------    ------------
<S>                            <C>             <C>             <C>


Cash flows from operating
activities:
Net loss                       $(5,999,811)    $(4,137,862)    $(3,368,989)
Adjustments to reconcile
net loss to cash used in
operating activities:
 Depreciation and amort.           126,344         205,066         220,126
 Expenses settled through
 the issuance of Common
 shares, options and
 warrants                        1,282,379          41,073          48,673
Change in assets and
liabilities:
 (Increase) decrease in
 accounts receivable              (140,023)       ( 95,123)            632
 (Increase) in inventory          (132,885)       (194,605)       (528,105)
 (Increase) decrease in
 prepaid exp. and other           ( 70,717)       (110,136)        184,760
 assets
 (Increase) decrease
 in deposits and other
 assets                             64,608         467,363         (54,303)
 Increase (decrease) in
 accounts payable                 (629,825)        615,142        (419,396)
 Increase (decrease) in
 accrued expenses and
 other liabilities                  69,346           2,690          10,574
                               ------------    ------------    ------------
Net cash used in operating
activities                      (5,430,584)     (3,206,392)     (3,906,028)
                               ------------    ------------    ------------
Cash flows from investing
activities:
 Purchase of plant, property
 and equip., net:               (2,463,450)       (176,502)       (113,174)
 Sale of equipment, pursuant
 to sale and leaseback
 agreement                       2,676,856            -               -
                               ------------    ------------    ------------
Net cash provided by (used
in) investing activities           213,406        (176,502)       (113,174)
                               ------------    ------------    ------------
Cash flows from financing
activities:
 Proceeds from long-term
 debt                               31,306            -               -
 Payments on long-term debt        (32,503)        (31,820)        (44,820)
 Proceeds from issuance of
 stock, net of expenses          2,886,781       1,041,960       3,849,949
 Proceeds from short-term
 debt                                -             550,000         450,000

                               ------------    ------------    ------------
Net cash provided by
financing activities             2,885,584       1,560,140       4,255,129
                               ------------    ------------    ------------
Net (decrease) increase
in cash, cash equivalents,
and restricted cash             (2,331,594)     (1,822,754)        235,927

Cash, cash equivalents,
and restricted cash at
beginning of period              4,266,168       1,934,574         111,820
                               ------------    ------------    ------------
Cash, cash equivalents,
and restricted cash at
end of period                  $ 1,934,574     $   111,820     $   347,747
                               ============    ============    ============





  The accompanying notes are an integral part of these financial statements

</TABLE>

<PAGE>
                                       F-6

                    Semiconductor Laser International Corporation

                   Notes to Financial Statements December 31, 1999



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.

2.  Financial Resources and Liquidity

The Company has incurred net losses from inception (September 21, 1993) and
has at December 31, 1999 an accumulated deficit of $20,329,027 and a working
capital deficit of $397,194.  Such losses have resulted primarily from the
Company's activities as a development stage enterprise, until April 1997,  and
have been financed primarily from proceeds from the Company's initial public
offering and private equity financings (see Notes 8 and 9).  While the Company
is in receipt of approximately $5.7 million, subsequent to December 31, 1999(See
Note 9), certain of the monies will be utilized to pay payables in arrears,
prospectively however, the Company needs to demonstrate an ability to increase
its sales, generate positive gross margins and net income.  Based upon the
fiscal 2000 budget, the Company expects that its cash and working capital
requirements will continue to be significant as its operations expand.  The
Company expects that such cash and working capital requirements will be
satisfied through a combination of revenue growth and additional private equity
financings.  There can be no assurance that such additional financing can be
consummated.

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

<PAGE>
                                   F-7
Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of
three months or less, at the date of purchase, to be cash equivalents.

Inventory

Inventory is valued at the lower of cost or market on a first in, first out
(FIFO) method.

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.  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.

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 measurement of impairment is based on the
ability to recover such carrying value from the future undiscounted cash flows
of related operations.  In the event such cash flows are not to be sufficient to
recover the recorded value of the assets, the assets are written down to their
estimated fair values.

Revenue Recognition

Revenue recognition is based on the terms of the underlying sales agreements
(purchase orders or contracts), typically when products are shipped to
customers.

Research and development

Research and development costs are expensed as incurred.  Included in
research and development expenses are costs related to development of
prototypes of approximately $651,000, $7,000 and $76,000 for the years ended
December 31, 1997, 1998 and 1999, respectively.

Income taxes

The Company provides for income taxes in accordance with the liability method
as set forth in Financial Accounting Standards No. 109, "Accounting for 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.

<PAGE>
                                    F-8

Net loss per share

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

As of December 31, 1999, the Company had outstanding warrants and options to
purchase 4,203,493 and 552,304 shares of common stock, respectively, which are
not included in the calculation of diluted earnings per share for the twelve
months ended December 31, 1999, due to the anti-dilutive nature of these
instruments.

4.  Inventories

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
increase in raw material and work-in-process at December 31, 1999.  Inventory is
comprised of the following as of December 31:

                                                1998              1999
                                                ----              ----
Raw Material and Supplies                     $333,806          $778,751
Work in Process                                   -               83,160
                                              --------          --------
Total                                         $333,806          $861,911
                                              ========          ========

5.  Plant, Property and Equipment

Plant, property and equipment consists of the following:

                                      December 31,          December 31,
                                         1998                  1999
                                      -----------           -----------

Land                                  $   175,459           $   175,459
Building                                2,099,861             2,099,861
Machinery and equipment                   587,097               699,798
Furniture and fixtures                    159,358               159,358
Automobiles                                76,124                76,124
                                      -----------           -----------
                                        3,097,899             3,210,600
Less: accumulated depreciation           (405,973)             (625,626)
                                      -----------           -----------
                                      $ 2,691,926           $ 2,584,974
                                      ===========           ===========

Depreciation expense for the years ended December 31, 1997, 1998 and 1999, was
approximately $125,000, $204,000 and $218,000, respectively.


During 1997, the Company sold and leased back approximately $2,677,000 of
machinery, equipment, furniture and fixtures.  No gain or loss was realized on
the sale and leaseback transactions.

<PAGE>
                                        F-9

<PAGE>

                                        F-10
6. Debt

Long-term debt consists of the following:

                                                       December 31,
                                                --------------------------
                                                    1998          1999
                                                ------------   -----------

Bank term loan, principal and interest
at 10% payable monthly through
January 2002                                    $    31,974     $  20,600

Bank term loan, principal and interest
at 10% (adjustable after December 2001)
payable monthly through December 2006               770,882       737,436
                                                ------------   -----------
                                                    802,856       758,036
Less current portion                                (37,170)     ( 44,368)
                                                ------------   -----------
                                                $   765,686     $ 713,668
                                                ============   ===========


Both loans are collateralized by assets purchased with the proceeds of the
loans. The bank term loan due December 2006 prohibits the Company
from payment of dividends, except from net income accrued after the
date of the loan agreement, and requires that the Company maintain
certain financial ratios and indicators. At December 31, 1999, the Company
was not in compliance with the covenants of the  bank term loan due
December 2006.  However, a waiver of the right to demand payment
for this non-compliance has been provided by the lender for the period ending
December 31, 1999.


Aggregate annual scheduled principal payments, assuming the bank does not call
its debts, applicable to long-term debt are as follows:

                                   2000 - $  44,368
                                   2001 -    42,918
                                   2002 -    39,085
                                   2003 -    43,237
                         2004 therafter -   588,428
                                           ---------
                                          $ 758,036
                                           =========

The Company has available a collateralized line of credit, subject to a
borrowing base calculation, with an aggregate availability in the amount of
$1,000,000 for purposes of providing working capital. The line, which matures on
May 31, 2000, bears interest at prime plus 2.5% (prime being 8.75% at December
31, 1999).  The Company has utilized $1,000,000 of this line of credit at
December 31, 1999.  The Company was not in compliance with the financial
covenants at December 31, 1999, however, has obtained a waiver from default
under the Loan Agreement with respect to Affirmative Covenants-"Financial
Covenants and Ratios" and Events of Default-"Change of Control" for the period
ending December 31, 1999.  There can be no assurance that any additional
extension of this waiver can be negotiated.

7. Income taxes

There was no provision for income taxes for the years ended December 31,
1997, 1998 and 1999.

Deferred income tax assets (liabilities) consisted of the following:

                                                       December 31,
                                               ----------------------------
                                                  1998             1999
                                               -----------     ------------
Depreciation and amortization                $   (143,546)     $  (154,007)
Accruals                                           39,000           39,000
Compensatory Stock Options                         56,668           22,012
Bad Debt Expense                                  199,226          208,058
Net operating loss carryforward                 5,295,520        7,929,948
                                               -----------     ------------
                                                5,446,868        8,045,011
Valuation allowance                          $ (5,446,868)     $(8,045,011)
                                               -----------     ------------
                                             $      -          $     -
                                               ===========     ============

<PAGE>
                                      F-11

Net operating loss carry forwards of approximately $20,500,000 expire in
the years 2008 to 2013. Internal Revenue Code Section 382 places a
limitation on the utilization of Federal net operating loss carry forwards
when an ownership change, as defined by tax law, occurs.  The annual utilization
of net operating loss carryforward generated prior to such changes
in ownership will be limited, in any one year, to a percentage of
fair market value of the Company at the time of the ownership change.

A valuation allowance is recorded when it is more likely than not that
deferred taxes will not be realized. Because the Company has only recently
transitioned from the development stage and future income is uncertain,
management has determined that a full valuation allowance against all deferred
tax assets is necessary at December 31, 1998 and 1999.

8. Common Stock

Options

The following summarizes stock option activity:

<TABLE>
<CAPTION>


                                               Exercise
                                  Number of    Price per
                                   Shares        Share       Expiration Date
                                  ---------   -------------   ---------------
<S>                               <C>         <C>            <C>
Outstanding at December 31, 1996  189,159     $ 0.05-$9.25

Granted                           113,550     $8.19-$0.6875  March 2000-Dec.2001
Options exercised                 (39,404)    $   0.05
Options forfeited                 (50,500)    $ 5.00-$9.00
Options canceled                  (76,500)    $ 0.72-$9.25
                                  ---------
Outstanding at December 31, 1997  136,305     $0.05-$0.6875

Granted-Employees                  24,000     $ 0.656-0.938  Apr.2002-Nov.2005
Granted-Directors                   5,000     $ 1.50         March 2008
Options forfeited                 (16,850)    $ 0.6875
                                  ---------
Outstanding at December 31, 1998  148,455     $0.656-$1.50

Granted-Employees                 301,400     $ 0.05-0.5156    Mar 2003-Sep 2005
Granted-Directors                 134,000     $ 0.3438-0.5156  Sep 2009-2011
Options forfeited                 (31,551)    $ 0.05-1.50
                                  ---------
Outstanding at December 31, 1999  552,304
                                  =========

</TABLE>

<PAGE>
                                         F-12

102,755, 122,455 and 99,904 options were exercisable at December 31, 1997, 1998
and 1999, respectively, at a weighted average exercise price of $.38, $0.90 and
$0.44, respectively.

On October 23, 1995, the Board of Directors adopted the Company's 1995
Emplo`yee Stock Option Plan  (the "Plan") which provides for the granting
of options and stock awards for up to 250,000 shares of the Company's
Common Stock. On August 17, 1998 at the Annual Meeting, the Company's
stockholders voted to approve the amendments to the Company's Stock Option Plan
increasing the total number of shares of the Company's common stock available
for options to be granted from 250,000 shares to 1,000,000 shares and permit
the Board to grant additional options to non-employee directors.  Awards
under the plan are discretionary and are administered by a committee of the
Board of Directors.  The exercise price of the options shall not be less than
the fair market value at the date of the grant. Options granted under the
plan vest over varying periods after the date of the grant and expire over
varying periods up to ten years after the date of the grant.

As permitted by Statement of Financial Accounting Standards ("SFAS")
No. 123 "Accounting for Stock-Based Compensation",  the Company continues
to account for options in accordance with Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees",  and its related
interpretations.  Had the compensation cost for the options issued to officers
and employees been determined based upon the fair value at the grant date in
accordance with methodology prescribed under SFAS No. 123, the Company's net
loss would have increased by approximately $27,000 (or $0.01 per share) in
1997,  $14,000 (or $0.02 per share) in 1998 and $26,581(or $0.001 per share)
in 1999.   The weighted average fair value of the options granted in 1997, 1998
and 1999 was estimated at $0.31, $0.70 and $0.505 per option, respectively, on
the dates of grant, using the Black-Sholes option pricing model which included
the following assumptions stated on a weighted average basis:

                                           1997          1998          1999
                                        ----------    ----------    ----------

Dividend Yield                              0%            0%            0%

Volatility                                  63.13%        65.78%       152.11%

Risk Free Interest Rate                      5.68%         4.84%         5.81%

Expected Life                            2.9 years       4.9 years     4.0 years

<PAGE>
                                   F-13

Warrants

On January 3, 1997, the Company issued 58,384 warrants in connection with
an operating lease agreement (see Note 10). The warrants could not be
exercised prior to February 1998 and entitle the warrant holder to
purchase an equal amount of common stock at $5.00 per share.  The value
of such warrants, as determined by the market price at time of issue,
has been reflected in the financial statements as a prepaid lease in the
amount of $167,710 and is being amortized over the term of the lease.

On June 13, 1996, the Company notified holders of warrants issued in a
December 1994 private  placement of the Company's common stock and
warrants (the private placement), of its intent to exercise its right
to redeem warrants issued in that private placement if such warrants
were not exercised prior to July 15, 1996.  As a result, the holders of
101,983 Warrants exercised their right to purchase a like amount of
shares of the Company's common stock at an exercise price of $2.94 per
share on July 15, 1996. The Company redeemed the remaining 13,844
warrants at a redemption price of $0.26 per warrant.

In October 1997, in connection with a private placement of the Company's
Series A 8% Convertible Preferred Stock (the "October Private Placement"), the
Company issued to Marketing Direct Concepts, Inc., a financial public relations
firm, the following warrants, all having a term of three years:

                    Number of Warrants          Exercise Price
                    ------------------          --------------

                         600,000                    $3.4688
                          75,000                    $3.4688
                          25,000                    $4.3438
                          25,000                    $4.8438
                          25,000                    $5.3438

<TABLE>
<CAPTION>
               Warrants Issued and Outstanding at December 31, 1999

          <S>                    <C>                    <C>
             Issued                 Number                Price
           ----------            -----------            ---------
           March, 1996            1,693,000               $5.00
           July, 1996               255,000               $5.00
          January, 1997              58,384               $5.00
          October, 1997             750,000              Various
          February, 1999            500,000               $0.575
          February, 1999            500,000               $0.500
          December, 1999            447,109               $0.450
                                 -----------
Balance at December 31, 1999      4,203,493
                                 ===========
</TABLE>

<PAGE>
                                      F-14

Initial Public Offering

On March 19, 1996 the Company sold 1,700,000 shares of common stock at
$5.00 per share and 1,700,000 warrants to purchase 1,700,000 shares of
common stock at $.10 per warrant through an initial public offering
(the "offering") and realized net proceeds from the offering of
$7,078,995, a portion of which was used to repay the notes from the
Bridge Financing.

On April 3, 1996, the underwriter of the Company's offering notified the
Company of its intent to exercise, in part, its over-allotment option to
purchase shares of the Company's common stock.  As a result, the Company
issued and sold an additional 55,000 shares of its common stock at the
initial public offering price of $5.00 per share.  The net proceeds to
the Company, after expenses and underwriting discounts and commissions,
were approximately $234,800.  The option has since lapsed as to its
unexercised portion.

Treasury Stock

The Company holds 35,463 shares of its common stock in treasury.  The
treasury shares are the result of a return of shares to the Company
by a stockholder who had received the shares as compensation for services
provided in 1995. The shares have been valued at their fair market
value of $248,241 on the date of contribution and have been included in
the accompanying financial statements as Treasury Stock and as a
reduction in general and administrative expenses for the year ended
December 31, 1998.

October 1997 Private Placement

In October 1997, the Company completed a private placement (the "Private
Placement") of 10 Units (the "Units"), each Unit consisting of 200,000 shares
of Series A 8% Convertible Preferred Stock (the "Convertible Preferred
Stock"), for an aggregate purchase price of $3,500,000.  After deducting the
Placement Agent's commissions and expenses of $525,000 and other expenses of
the offering aggregating $138,000, the net proceeds of the Private Placement
to the Company were approximately $2,837,000.

<PAGE>
                                     F-15

The shares of Convertible Preferred Stock underlying the Units were convertible
in whole or in part, at the option of the holder thereof and upon notice to the
Company, into fully paid and nonassessable shares of Common Stock at the
Conversion Rate, as defined.

On December 30, 1997, the holders of all 2,000,000 outstanding shares of the
Convertible Preferred Stock converted their shares of Convertible Preferred
Stock into 4,712,810 shares of Common Stock in the aggregate, in accordance
with the terms of the conversion formula.  A Registration of the securities
issued upon conversion became effective January 14, 1998.

In accordance with the Emerging Issues Task Force Topic D-60 "Accounting for
the Issuance of Convertible Preferred Stock and Debt Securities with a
Nondetachable Conversion Feature", the Company has accounted for the conversion
right associated with conversion on or before December 5, 1997 as a
"Beneficial Conversion Feature". The Beneficial Conversion Feature has been
calculated as the product of the difference between the quoted market price of
the Common Stock on December 5, 1997 and the price paid for the Convertible
Preferred Stock applied to the number of shares of Convertible Preferred Stock
fully paid as of October 27, 1997, and amounted to $1,688,000 and has been
recorded by the Company as a charge to income available to Common Stockholders
and as an increase to additional paid-in capital.

The Convertible Preferred Stock issued on December 11, 1997, was immediately
convertible into 1,098,732 shares of Common Stock, based on the conversion
formula in effect and the market price of the Company's Common Stock.
Had such shares of Convertible Preferred Stock been converted on December 11,
1997, the value of the Common Stock issued upon conversion would have been
less than the price paid for the Convertible Preferred Stock.  Therefore, no
Beneficial Conversion Feature was recognized.

Also, in connection with the October Private Placement, the Company entered
into a one-year agreement with Marketing Direct Concepts, Inc. ("MDC") for
ongoing financial public relations services.  Under the agreement, the Company
will receive a range of financial 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 these services, the Company is
obligated to pay a fee of $195,000, 40,000 shares of non-registered common
stock, 150,000 three-year warrants at exercise prices at or above the closing
bid price of the Company's Common Stock as of October 27, 1997 and 600,000
three-year warrants exercisable at $3.4688.  The value of the warrants
(approximately $1,200,000) and a portion of the cash fee have been charged to
the results of operations for the year ended December 31, 1997.

June 1998 Private Placement

     On June 8, 1998, the Company completed a private placement (the "Private
Placement") of 1,650,000 shares of its Common Stock, at an aggregate purchase
price of $1,237,500. The shares of Common Stock were issued and sold by the
Company without registration under the Securities Act in reliance upon the
exemption from registration afforded by Section 4(2) of the Securities Act and
Section 506 of Regulation D promulgated under the Securities Act in that they
were sold solely to "accredited investors" as defined in Rule 501 (a) of the
Securities Act. The placement agent for the shares, Empire Consulting Company,
LTD,(the "Placement Agent") was paid $194,665 for commissions and expenses.
After deducting the Placement Agent's commissions and expenses of $194,665 in
the aggregate, the net proceeds of the Private Placement to the Company were
approximately $1,042,000. In connection with the Private Placement the Company
has agreed with the Placement Agent that it would enter into an agreement with a
financial public relations firm to be selected by the Placement Agent pursuant
to which the Company would receive a range of services including the
establishment of contact with a number of brokers, the preparation of certain
reports and the arrangement of broker teleconferences.  In consideration of the
services to be provided, the Company has paid to the Placement Agent the sum of
$49,125.

     The Company has registered the shares of Common Stock issued in the
Private Placement on a Registration Statement on Form S-3/A which was declared
effective by the Securities and Exchange Commission on December 30, 1998.

bmp Transaction

The Company entered into a Securities  Purchase  Agreement (the "Securities
Purchase Agreement"), dated as of February 5, 1999, with bmp Mobility AG Venture
Capital ("bmp"),  as amended by Amendment No. 1 to Securities Purchase Agreement
(the  "Amendment"),  dated  as  of  April  28,  1999  (the  Securities  Purchase
Agreement,  as  amended  by the  Amendment  is  hereinafter  referred  to as the
"Amended  Purchase  Agreement").  Pursuant to the terms of the Amended  Purchase
Agreement, bmp purchased, in multiple tranches, 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,  and  1,000,000  shares of the Company's
Series B Convertible  Preferred Stock (the "Series B Stock"), $.01 par value per
share,  each  convertible  into 5 shares  of the  Company's  Common  Stock or an
aggregate of 5,000,000 shares of the Company's Common 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.  bmp had  previously  purchased  367,650  shares  of the
Company's  Common Stock in  unrelated  open market  transactions.  The shares of
Common Stock issued to bmp contain  certain  demand and  piggyback  registration
rights and the Series B Stock contains certain anti-dilution 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 the
$200,000 aggregate consulting fee.  As of March 21, 2000, bmp Consultants had
been paid $80,887.

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 until June
26, 2001.

Based  solely  on  public  filings,  the  Company  is  aware  that  bmp has
transferred  ownership of its shares of Common Stock, Series B Stock and the bmp
Warrant to ANB Alster Neue Beiteiligungs  GmbH & Co. KG ("ANB").
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.

On March 14, 2000, the Company entered into a Waiver and Lock-up Agreement with
BSB, pursuant to which BSB waived any rights to adjustment that it may have
under the BSB Warrant. In addition, BSB agreed not to transfer the shares of
Common Stock issuable to BSB upon conversion of the BSB Warrant until March 20,
2001 without the prior written consent of the Company.
The Company is in the process of negotiating a Consent,  Waiver and Lock-Up
Agreement  with ANB,  pursuant to which ANB would waive any rights to adjustment
that it may have under the Securities Purchase Agreement and the bmp Warrant and
agree to  lock-up a certain  percentage  of its shares of Common
Stock  that it  beneficially  owns for a period of one year.  In  addition,  the
Company  would  agree to include a  percentage  of the  shares of the  Company's
Common Stock beneficially  owned by ANB on a registration  statement to be filed
with the Securities and Exchange Commission by early May 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>
                                      F-16

 9. Subsequent Events

Private Placements

     The Company has issued an  aggregate of  12,833,333  shares of Common Stock
and 9,743,333  warrants in a series of private  placements  consummated  between
December  31, 1999 and the end of March 2000.  The Company is expected to file a
registration  statement with the Securities and Exchange Commission by early May
2000 registering  approximately 9,400,000 shares of Common Stock in such private
placements.  The Company  raised an  aggregate of  $5,730,000  from such private
placements  at purchase  prices  ranging  between  $0.30 and $0.50 per share and
warrant  exercise  prices  ranging  between  $0.75 and  $1.0625  per share.  The
warrants range between 4 to 5 year warrants.  The Company is in discussions with
certain other  investors  concerning  up to an additional  $4,300,000 of private
placement  financing.  There can be no assurance that such additional  financing
can be consummated.


10. Commitments, Contingencies and Other Matters

Operating Leases

Rent expense under noncancellable operating leases was approximately $1,024,000,
$963,000 and $674,000 for the years ended December 31, 1997, 1998 and 1999,
respectively.

Future minimum payments under noncancellable operating leases, including
the Finova lease agreement, at December 31, 1999, are as follows:

                 Year Ending
                 December 31,
               ----------------

                    2000                 1,006,748
                    2001                   605,207
                                        ----------
                                        $1,611,955
                                        ==========


Litigation

The Company is currently engaged in litigation with a former employee, Dr. Keith
Evans, against whom the Company brought an action for breach of confidentiality
obligations and defamation of character.  Dr. Evans 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 and
further, believes that the ultimate outcome of such action will not have a
material impact on the financial condition, results of operations or cash flows
of the Company.

     Investigations. 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 does not know whether or not this investigation
remains active and is not able to speculate as to the specific subject matter of
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.  The Company has cooperated with the
investigation and has responded to all requests for information in connection
with the investigation.  No such requests for information has been forthcoming
since late 1998.

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 but has been informed that the Company is not presently a target of
the investigation.  The Company has cooperated fully with the investigation and
has responded to a grand jury subpoena issued in connection with the
investigation.  The Company does not know whether or not this investigation
remains active and is unable to speculate as to the outcome or possible effect
of the investigation on the Company or its management.  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.

     In November,  1999,  an action was filed against the Company and several of
its present and former officers and directors in the United States Federal Court
for  the  District  of  Massachusetts  entitled  Geran  v.  Semiconductor  Laser
International Corporation,  Whale Securities Co., LP, Geoffrey T. Burnham, Allen
W. Johnson, Jr., Theodore W. Konopelski, Susan M. Burnham, George Barrett, David
L. Koffman, Brian Thompson, and Nicholas L. Prioletti, Jr., No. CA99-30-251-MAP.
The Complaint  alleges  violations  by the  defendants  of  Section 12(2) of the
Securities Act of 1933 arising out of alleged  misrepresentations  by defendants
as to the Company  that  allegedly  induced  plaintiff  to purchase  warrants to
purchase the Company's stock.  The Complaint seeks damages of $27,782.00. The
Company  believes it has  meritorious  defenses to this action and intends to
defend the action  vigorously  and 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.  As of December 31, 1999 the Company
had not been served with the summons and complaint in this matter, although the
company understands that several defendants who are current and former officers
and directors of the Company may have received service.

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 Company believes that the vendor was incapable of providing a
working product acceptable to the Company and the equipment was returned to the
vendor as a result.  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 a lawsuit with one of its customers,
Rocky Mountain Instruments ("RMI"). RMI disputes the amounts owed
to the Company regarding certain orders, has made claims regarding defects in
certain of the units delivered and is currently late in making payments on
such orders. The Company believes that RMI owes approximately $468,571
(including a late charge) to the Company. On November 2, 1999 SLI filed a
Complaint and Jury Demand against RMI claiming, among other things, that RMI had
breached its contract and failed to fulfill its promises relating to RMI's
purchase of laser diodes from SLI.  A trial date has not yet been established.

The Company's allowance for doubtful accounts includes an allowance for a
receivable due from Rocky Mountain Instruments ("RMI") which is in dispute.
On November 2, 1999 the Company filed a Complaint and Jury Demand against RMI
for breach of contract.  The court is in the process of establishing a date
for a settlement conference.

<PAGE>
                                      F-17

Agreements

Technology License Agreement

The Company entered into a license agreement for certain technology.  The
agreement provides for a payment of $100,000 and 5,000 shares of the Company's
restricted common stock, upon delivery of the technology.  In addition, the
Company will pay a royalty for sales utilizing this technology.  As of December
31, 1999 the Company has made $10,000 of the required cash payments.

Orthogenesis Agreement

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.

Northwestern License Agreement

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 know how,
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.

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 required for sales derived from this technology and are based on net
sales volume on a sliding scale from 4% to 1%.

In November 1996, the Company entered into an agreement with a Professor
at Northwestern University for services as an advisor to transfer the
aluminum free technology to the Company for commercial production.  In
consideration for the agreement, the Company committed to issue
120,000 shares of the Company's unregistered common stock to the
Professor.  The fair market value of the Company's unregistered common
stock granted, as of the date of the agreement, was $1,050,000.

The Company has submitted a plan for the further development and
commercialization of certain Licensed Products, including the transfer of
technology and "know-how" from Northwestern University.  The Company has paid
royalties due to Northwestern University under the License Agreement
and provided further information concerning the Company's satisfaction of the
License Agreement milestones.  As of March 20, 2000 the Company has met all of
the requirements of the Northwestern License.  The Company continues to develop
this technology and expects to introduce new aluminum free products as time
goes on.

                                   19
<PAGE>

Item 8. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure

    None.

<PAGE>
                                   20

                                PART III


Item 9. Directors, Executive Officers; Promoters and Control Persons;
        Compliance with Section 16(a) of the Exchange Act.

Directors and Executive Officers

The Company's directors and executive officers are as follows:

<TABLE>
<CAPTION>

         Name                 Age           Position with the Company
--------------------------    ---   --------------------------------------
<S>                           <C>   <C>
Dr. Geoffrey T. Burnham ...... 51   Chairman of the Board of Directors,
                                    President, Chief Executive Officer
Susan M. Burnham ............. 44   Vice President, Treasurer and Director
Leonard E. Lundberg........... 53   Chief Financial Officer
George W. Hippisley........... 59   Director
Dr. Vincent Tomaselli......... 59   Director

</TABLE>

Dr. Geoffrey T. Burnham, a founder of the Company, has also served as its
Chairman, President, and Chief Executive Officer, since its incorporation in
September 1993, and devoted his full-time efforts to the establishment of the
Company commencing in May 1993.  From April 1990 through July 1990, Dr. Burnham
served as a consultant to, and from July 1990 until May 1993, he was employed
by, Northeast Semiconductor, Inc. ("NSI"), and served as its President and as
a director from October 1991 through May 1993.  Dr. Burnham resigned from NSI
upon its acquisition in a hostile take-over. Approximately five months after
his resignation, NSI filed for Chapter 7 bankruptcy protection.  Prior to April
1990, Dr. Burnham had over 16 years of experience in the laser field, including
10 years in the semiconductor laser field, holding management positions with
Hercules Aerospace Corporation (1987 to 1989), General Optronics Corporation,
a company involved in manufacturing laser equipment for telecommunications
applications (1984 to 1986) and General Electric Co. ("General Electric")
(1975 to 1984).  Dr. Burnham founded and directed General Electric's Laser
Business Venture for five years. In addition, he was corporate liaison between
General Electric and the University of Rochester on General Electric's
Consortium on Inertial Confinement Fusion. Dr. Burnham also served as General
Electric's Corporate technical Recruiter at the University of Rochester as well
as Chairman of the United States government's laser section of the Military
Critical Technologies List. Dr. Burnham is married to Susan Burnham.

Susan M. Burnham has been Vice President, Treasurer and a director of the
Company since its incorporation in September 1993.  From May 1993 to September
1993, Ms. Burnham assisted Dr. Burnham in the establishment of the Company and,
from February 1992 through April 1993, Ms. Burnham was not employed.  From
August 1986 through January 1992, she served as a national account executive
in marketing and sales for MLI Industries Inc., a company involved in turn-key
subcontract manufacturing of electronic components, electro-mechanical
assemblies, and copy machine refurbishment and manufacturing, and was
responsible for handling all major company accounts, as well as all new
accounts.  She established a customer base that included several divisions of
General Electric, IBM and Eastman Kodak Company, initiating partnership
agreements for all major customers.  Ms. Burnham was employed by General
Electric from December 1977 through July 1984 during which time she held
administrative positions in various laser and electronic programs with a
particular emphasis on the monitoring of operating budgets.  Ms. Burnham is
married to Dr. Burnham.

<PAGE>
                                     21

Leonard E. Lundberg has been Chief Financial Officer of the Company since
November, 1998.  From March, 1998 through November, 1998 Mr. Lundberg was
employed as CFO by Miller Aviation, Inc., a company engaged in providing general
aviation services.  Miller Aviation, Inc. and Corporate Wings, Inc. merged in
October, 1998 at which time Mr. Lundberg resigned.  From January, 1996 until
February, 1998 Mr. Lundberg was employed by Maines Paper & Food Service, Inc.,
a company engaged in the food and paper warehousing and distribution business,
in the capacity of Vice President of Finance.  Previously, Mr. Lundberg held
the position of Corporate Controller of Taylor Industries, Inc. from 1988
until 1995.  Taylor Industries is involved in the meat packing and rendering
industries.  Mr. Lundberg's employment before 1988 has included various
corporate positions at ITT, Sperry Univac(Unisys)and RCA as well as
independent consulting to various industries.

George W. Hippisley was elected as a director of the Company in June 1999.  Mr.
Hippisley is currently the owner of Cohasset Enterprises, a sole-proprietorship
founded in late 1997 to provide business developement consulting services to
technology-intensive manufacturing firms and not-for-profit organizations. Since
August of 1998, Mr.Hippisley has been a member of the Board of Directors,
Secretary, and Executive Director of the Photonics Industry Association of New
York, Inc. (PIANY),a not-for-profit New York corporation which has filed with
the Internal Revenue Service for 501 (c)(6) trade association status. PIANY's
mission is to promote the photonics, optics, and imaging industry of New York
State. Since 1991 he has served as Executive Director of the New York Photonics
Development Corporation, a 501 (c)(3) not-for-profit New York corporation,
responsible for developeing and executing technology transfer and
commercialization programs to improve the competitiveness of small and mid-size
photonics manufacturing firms throughout New York State. From 1985 to 1990 Mr.
Hippisley was Chief Operating Officer for Eagle Comtronics, Inc., a privately-
held manufacturer of electronic filters and encryption systems for the CATV
industry.

Dr. Vincent P. Tomaselli was elected as a director of the Company in September
1999. Dr. Tomaselli is Deputy Director for Business Development and Operations
for the Center for Advanced Technology (CAT) at the City University Of New York
(CUNY). He has been associated with the CAT since its beginning in 1994.
Concurrently, he also manages the Department of Energy-sponsored Center for
Laser Imaging and Cancer Diagnostics and the NASA-sponsored Institutional
Research Award program, both at City College of CUNY.He has been a member of
the Board of Directors of the Photonics Industry Association of New York since
its inception in 1998. From 1998 to 1990, he was Director of the Center for
Photonics and Imaging Science and Professor of Electrical Engineering and
Physics at Fairleigh Dickinson University. From 1984 to 1988, he was Assistant
Dean for Research and Graduate Studies in the College of Science and Engineering
at FDU. In 1988, he served as University Grants Administrator. From 1975 to 1984
he was Professor of Physics and Manager of the Physics Research Laboratory.
During that time his research interests were in farinfrared spectroscopy,
optical properties of particulate and biological materials, and instrument
development. From 1990 to 1994, Dr. Tomaselli was a senior project scientist at
Woodward-Clyde Consultants, a major consulting firm specializing in enviromental
problems.He headed the program involving health issues related to low frequency
(ELF) electormagnetic fields, supervised and developed analytical and quality
control procedures for a large-scale data management effort, served as computer
services manager, and evaluated computer models. Dr. Tomaselli has a Ph.D. in
physics from New York University and a BS and MS (Magna Cum Laude) in physics
from Fairleigh Dickinson University. He was a member of the New Jersey
Governor's Science Advisory Panel (1981-1983), and was listed in Who's Who in
Optical Science and Engineering (1987), Who's Who in Science and Technology
(1983), and American Men and Women of Science(1981).

All directors hold office until the next annual meeting of shareholders and
until their successors have been elected and duly qualified.  Roger D. O'Brien,
who served as a director during fiscal 1999, advised the Company of his
resignation as a director of the Company, effective as of February 29, 2000.
There has been no disagreement between the Company and Mr. O'Brien.
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 resignation
as a director of the Company effective as of September 7, 1999.  There has been
no  disagreement  between  the  Company  and Mr.Spievack.

The Company has agreed, for a period of five years following the Effective
Date, if so requested by Whale Securities Co., L.P., the Underwriter
(the "Underwriter"), of the Company's initial public offering (the
"Public Offering"), to nominate and use its best efforts to elect a designee
of the Underwriter to the Board or, at the Underwriter's option, as a nonvoting
advisor to the Board.  The Underwriter has not yet exercised its right to
designate such person.

Board Committees

The company has a Compensation Committee and Audit Committee.

Compensation Committee

The function of the Compensation Committee is to make recommendations
to the Board with respect to compensation of executive officers.  In
addition, the Compensation Committee administers the Company's 1995 Stock
Option Plan (the "Option Plan"), as amended, determining the persons to whom
options should be granted and the number of options to be granted to such
persons.  The Compensation Committee also administers plans and programs
relating to the employee benefits, incentives and compensation.  Messrs.
Hippisley and Tomaselli are the current members of the Compensation Committee.

Audit Committee

The function of the Audit Committee is to, among other things, make
recommendations to the Board of Directors regarding the selection of
independent auditors, review and evaluate the result and scope of the audit and
other services provided by the Company's independent auditors, review the
Company's financial statements and review and evaluate the Company's internal
control functions.  Messrs. Hippisley and Tomaselli are the current members of
the Audit Committee.

<PAGE>
                                       22

Indemnification and Exculpation of Directors and Officers

Section  145  of  the  General  Corporation  Law of  Delaware  grants  each
corporation organized thereunder the power to indemnify its officers, directors,
employees and agents on certain  conditions against  liabilities  arising out of
any action or proceeding to which any of them is a party by reason of being such
officer,  director,  employee or agent.  The Company's Bylaws and Certificate of
Incorporation  also  provide for the  indemnification  of such  persons,  to the
fullest  extent  permitted  by  the  General  Corporation  Law  of  Delaware.The
Company's  Certificate of Incorporation  provides that, with certain exceptions,
no director of the Company will be liable to the Company for monetary damages as
a result of certain breaches of fiduciary duties as a director.  Exceptions to
this include a breach of the director's duty of loyalty, acts or omission not in
good faith or which involve intentional misconduct or knowing violation of law,
improper declaration of dividends and transactions from which the director
derived an improper personal benefit.

Section 16(a) Beneficial Ownership Reporting Compliance

To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and information furnished by the
reporting person, during the fiscal year ended December 31, 1999 all
Section 16(a) filing requirements applicable to the Company's officers,
directors and greater than 10% beneficial owners were complied with.

Item 10. Executive Compensation

Summary Compensation Table

The following table sets forth the cash and other compensation paid
by the Company to Dr. Geoffrey T. Burnham, its President and Chief Executive
Officer, during the fiscal years ended December 31, 1999, 1998 and 1997.
No other executive officer of the Company received aggregate compensation and
bonuses which exceeded $100,000 during such years.

                        SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                 Long Term
                                                                                Compensation
                                              Annual Compensation                  Award
                                ----------------------------------------------- ------------
                                                                                 Securities
                                Year Ended                       Other Annual    Underlying
   Name and Principal Position  December 31,  Salary($) Bonus($) Compensation($)   Options
   ---------------------------  ------------  --------- -------- -------------- ------------
<S>                             <C>           <C>       <C>      <C>            <C>
Dr. Geoffrey T. Burnham,            1999      $ 133,000    -         -             60,000(1)
  Chairman, President and           1998      $ 133,000    -         -               -
  Chief Executive Officer           1997      $ 127,395    -         -               -

</TABLE>

     (1)There were 60,000 options to purchase Common Stock granted to Dr.
Burnham during the fiscal year ended December 31, 1999 at an exercise price of
$0.5156 per share.

<TABLE>

                                         STOCK OPTION GRANTS AND EXERCISES

         The following stock options were granted to the following named executives during 1999:
<S>                  <C>            <C>            <C>           <C>             <C>
Name                 Number of      % of Total     Exercise      Expiration         5%             10%
                     Securities       Options       Price          Date          Potential Realized Value at
                     Underlying      Granted to                                    Assumed Annual Rates of
                      Options        Employees                                   Stock Price Appreciation for
                                     in 1999 (1)                                       Option Term (2)




Geoffrey T. Burnham    60,000            20%        $0.5156     9/14/2003-05      $8,576         $19,038


___________

(1)      The Company granted stock options representing 301,400 shares of our common stock to employees during
         the fiscal year ended December 31, 1999.

(2)      The potential realizable value illustrates value that might be realized upon exercise of the options
         immediately prior to the expiration of their terms, assuming the specified compounded rates of
         appreciation of the market price per share from the date of grant to the end of the option term. Actual
         gains, if any, on stock option exercises are dependent upon a number of factors, including the future
         performance of the common stock and the timing of option exercises, as well as the optionee's continued
         employment through the vested period. There can be no assurance that the amounts reflected in this table
         will be achieved.

</TABLE>

Aggregated Option Exercise During Fiscal 1999 and Year End Option Values

     The following table sets forth information  concerning  outstanding options
to  purchase  Common  Stock  held by Dr.  Burnham  as of the  fiscal  year ended
December 31, 1999. Dr. Burnham did not exercise any options during fiscal 1999.

<TABLE>
<CAPTION>
                                                             Number of Securities             Value of Unexercised
                                                        Underlying Unexercised Options     "In-the-Money" Options at
                                                             at Fiscal Year-End(#)                   Fiscal
                                                                                                   Year-End($)
---------------------------- -------------- ----------- --------------- ---------------- --------------- ---------------
           Name                 Shares        Value      Exercisable     Unexercisable    Exercisable    Unexercisable
                              Acquired on    Realized
                               Exercise
---------------------------- -------------- ----------- --------------- ---------------- --------------- ---------------
<S>                          <C>            <C>         <C>             <C>              <C>             <C>
  Dr. Geoffrey T. Burnham         -0-          -0-          39,404          60,000            9,729(1)         -0-
---------------------------- -------------- ----------- --------------- ---------------- --------------- ---------------

         (1) Based upon an estimated fair market value of $0.2969 per share of Common Stock as of December 31,
         1999, less the $0.050 exercise price of such options.


</TABLE>


<PAGE>
                                       23

Employment Agreements

The Company entered into employment agreements with Dr. Geoffrey T. Burnham and
Susan M. Burnham in October 1995. Each of Dr. Burnham's and Ms. Burnham's
employment agreements provides for an initial three-year term, commencing on
October 1, 1995, and each requires full-time service to the Company.
Dr. Burnham's agreement provides for a base salary $110,000 per annum, and
Ms. Burnham's agreement provides for a base salary $75,000 per annum. Each of
the agreements provides for continuing automatic one-year extensions to
maintain its three-year term, until the agreement is terminated by either
party.  Certain fringe benefits are also provided, including split dollar life
insurance and certain expense allowances. Dr. Burnham and Ms. Burnham also may
be granted annual increases of 10% per annum at the discretion of the Board and
bonuses based upon meeting defined goals established by the Board.  No such
bonuses have been awarded to date.   All such bonuses and other increases were
required to be approved by the Underwriter for a period of three years
following the Effective Date.  These agreements also provide that the Company
will continue to pay the base salary to the employee or the employee's legal
representative in the event of the employee's termination due to disability
or death, for a period commencing at the time of such termination and ending
at the end of the employment term.  The agreements contain provisions
prohibiting the employee from competing with the Company during the term of
employment and for a period of two years thereafter.  Dr. Burnham's agreement
provides that he will serve as Chairman of the Board, and Ms. Burnham's
agreement provides that she will serve as a director on the Board.

<PAGE>
                                     24

Item 11.  Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information as of March 28, 2000 based
on information obtained from the persons named below, relating to the
beneficial ownership of shares of Common Stock by (i) each beneficial
owner of more than 5% of the outstanding Common Stock, (ii) each director,
(iii) each named executive officer and (iv) all current executive officers
and directors of the Company as a group.

<TABLE>
<CAPTION>

                                        Amount and Nature   Percentage of
                                          of Beneficial   Outstanding Shares
Name and Address of Beneficial Owner(1)   Ownership (2)       Owned (2)
--------------------------------------- ----------------- ------------------
<S>                                     <C>               <C>

Geoffrey T. Burnham.....................    431,894(3)           1.1%

Susan M. Burnham........................    431,894(4)           1.1%

Leonard E. Lundberg.....................        0                 *

George W. Hippisley.....................      8,666(5)            *
1101 Floyd Avenue
Rome, NY  07840

Vincent Tomaselli.......................        0                 *
30 West Broadway
New York, NY 10007

Rennes Foundation....................... 19,666,666(6)          47.9%
Aeulestrasse 38
FL - 9490 Kaduz
Germany

ANB Alster Neue Beteiligungs GmbH & Co..  7,872,650(7)          17.1%
Neuer Wall 20
20354 Hamburg
Germany

Strategic Management Corporation........  2,800,000(8)           6.8%
282 Katona Avenue
Katona, NY 10536

All Directors and executive officers as
      a group (5 persons)...............    872,454(9)           2.1%

</TABLE>

_________________

* Less than 1%
(1)   Unless otherwise indicated, the address of each beneficial owner
      identified is 15 Link Drive, Binghamton, NY  13904.
(2)   Unless otherwise indicated, the Company believes that all persons
      named in the table have sole voting and investment power with
      respect to all shares of Common Stock beneficially owned by them.
      A person is deemed to be the beneficial owner of securities that
      can be acquired by such person within 60 days from March 31, 2000
      upon the exercise of options, warrants or convertible securities.
      Each beneficial owner's percentage ownership is determined by
      assuming that options, warrants or convertible securities that are
      held by such person (but not those held by any other person) and
      which are exercisable within 60 days of March 31, 2000 have been
      exercised or converted. Assumes a base of 12,150,832 shares of Common
      Stock outstanding, before any consideration is given to outstanding
      options or warrants.
(3)   Includes 23,823 shares held in trust by Dr. Burnham as trustee, as
      to which Dr. Burnham disclaims any beneficial interest; 4,925 shares,
      and 4,925 shares issuable upon exercise of Private Warrants (as defined in
      Footnote 8), held in an IRA trust for the benefit of Dr. Burnham; certain
      non-plan options to purchase 39,404 shares; and 165,405 shares owned by
      Susan Burnham,the wife of Dr. Burnham, and 31,000 shares issuable upon the
      exercise of options granted to Ms. Burnham pursuant to the Company's 1995
      Stock Option Plan, as amended(the "Option Plan"), as to which Dr.
      Burnham disclaims any beneficial interest.
(4)   Includes 162,412 shares owned by Dr. Burnham; 23,823 shares held in
      trust by Dr. Burnham as trustee; 4,925 shares, and 4,925 shares
      issuable upon exercise of Private Warrants, held in an IRA trust for
      the benefit of Dr. Burnham; and 39,404 shares issuable upon exercise
      of certain non-plan options held by Dr. Burnham, as to all of which Susan
      Burnham disclaims any beneficial interest; and 31,000 shares issuable
      upon the exercise of Option Plan options granted to Ms. Burnham.
(5)   Consists of Option Plan options to purchase 8,666 shares.
(6)   Consists of 11,333,333 shares of common stock and 8,333,333 warrants to
      purchase common stock
(7)   Consists of 2,372,650 shares of common stock and 500,000 warrants to
      purchase common stock and 5,000,000 shares of common stock convertible
      from 1,000,000 shares of preferred stock on a 5 to 1 conversion basis
(8)   Consists of 1,400,000 shares of common stock and 1,400,000 warrants to
      purchase common stock
(9)   Includes an aggregate of 84,070 shares of Common Stock issuable
      upon the exercise of Option Plan options, certain non-plan options and
      warrants (the "Private Warrants"), through April 1995 to investors in the
      Company's December 1994 private placement, to purchase 4,925 shares of
      Common Stock purchased by Dr. Burnham and warrants purchased in the
      Company's initial public offering.

<PAGE>
                                     25

Item 12.  Certain Relationships and Related Transactions

Currently, there are no such transactions.  Any future transactions, if any,
between the Company and its officers, directors and/or greater than 5%
shareholders will be on terms no less favorable to the Company than could be
obtained from independent third parties and will be approved by a majority of
the independent, disinterested directors of the Company.


Item 13. Exhibits, List and Reports on Form 8-K.

(a) Exhibits.

3.1   By-Laws of the Company.(1)
3.2   Certificate of Ownership and Merger.(1)
* 3.3   Certificate of Amendment to the Company's Certificate of Incorporation
        filed March 6, 2000
4.1   Form of Underwriter's Warrant Agreement, dated as of March 19, 1996,
      between the Company and Whale Securities Co., L.P.(2)
4.2   Form of Warrant Agreement dated as of March 19, 1996, among the
      Company, Whale Securities Co., L.P. and American Stock Transfer &
      Trust Company.(2)
4.3   Warrant, dated January 3, 1997, between the Company and Finova
      Technology Finance, Inc.(4)
4.4   Corrected Certificates of Designations of Series A 8% Convertible
      Preferred Stock.(3)
4.5   Certificate of Correction of Certificate of Designations of Series A 8%
      Convertible Preferred Stock, filed with the Secretary of the State of
      Delaware on November 4, 1997.(3)
4.6   Certificate of Correction of Certificate of Designations of Series A 8%
      Convertible Preferred Stock, filed with the Secretary of the State of
      Delaware on December 15, 1997.(3)
4.7   Specimen Certificate of Registrant's Series A 8% Convertible Preferred
      Stock.(3)
4.8   Specimen Certificate of Registrant's Common Stock.(2)
4.9   Form of Warrant dated October 23, 1997 between the Registrant and World
      Capital Funding, Inc.(3)
4.10  Form of Warrant between the Registrant and Marketing Direct Concepts,
      Inc.(3)
4.11  Form of Subscription Agreement between the Registrant and each purchaser
      of the Registrant's Series A 8% Convertible Preferred Stock.(3)
4.12  Form of Option Agreement dated October 27, 1997 between the Registrant
      and State Street Securities, Inc.(3)
4.13  Amendment to Option Agreement dated December 30, 1997 between the
      Registrant and State Street Securities, Inc.(3)
4.14  Form of Voting Proxy.(3)
4.15  Warrant between the Registrant and BSB Bank & Trust Company(5)
4.16  Form of Certificate of Designations of Series B Convertible Preferred
      Stock of the Registrant.(6)
* 4.17  Form of Warrant dated March 20, 2000 issued to Strategic Management
        Corporation and to Rennes Foundation.
* 4.18  Waiver and Lock-Up Agreement dated March 14, 2000 by BSB Bank and Trust
        Company
10.1  License Agreement, dated June 3, 1994, by and between the Company and
      the Air Force. (1)

<PAGE>
                                       26

10.2  CRDA, dated January 19, 1994 between the Company and Wright
      Laboratories of the Air Force.(2)
10.3  Amendment, effective January 19, 1994 to CRDA between the Company
      and Wright Laboratories of the Air Force.(2)
10.4  CRDA, dated May 1995, between the Company and Rome Laboratory of the
      Air Force.(2)
10.5  Employment Agreement, dated as of October 1, 1995 between the
      Company and Geoffrey T. Burnham.(2)
10.6  Employment Agreement, dated as of October 1, 1995 between the
      Company and Susan M. Burnham.(2)
10.7  Employment Agreement, dated as of October 1, 1995, by and between
      the Company and Theodore W. Konopelski.(2)
10.8  Consulting Agreement, dated November 10, 1995, by and between the
      Company and George W. Barrett.(2)
10.9  1995 Stock Option Plan of the Company.(2)
10.10 Real Property Lease, dated as of August 23, 1995, by and between
      Manufacturers and Traders Trust Company and the Company.(2)
10.11 Form of Private Warrants (2)
10.12 Form of Consulting Agreement between the Company and Whale
      Securities Co., L.P.(2)
10.13 Master Equipment Lease Agreement with Finova(4)
10.14 Northwestern License(4)
10.15 Line of Credit Commitment Letter between the Registrant and BSB
      Bank & Trust Company(5)
10.16 Amendment to Line of Credit Commitment Letter between the
      Registrant and BSB Bank & Trust Company(5)
10.17 Securities Purchase Agreement, dated February 5, 1999, between the
      Registrant and bmp Mobility AG Venture Capital, together with the Form
      of the Certificate of Designations, Preferences and Rights of Series B
      Convertible Preferred Stock of the Registrant, the Registration Rights
      Agreement, and the Opinion of Counsel to the Registrant(5)
10.18 Registration Rights Agreement, dated February 5, 1999, between the
      Registrant and bmp Mobility AG Venture Capital(5)
10.19 Amendment No. 1 to Securities Purchase Agreement, dated as of April 28,
      1999, between the Company and bmp Mobility AG Venture Capital.(6)
10.20 Consulting Agreement, dated as of April 28, 1999 between the Company and
      bmp Management Consultants GmbH.(6)
10.21 Common Stock Purchase Warrant, dated June 26,1999, issued to bmp.(7)
10.22 Form of Securities Purchase Agreement.(7)
10.23 Form of Registration Rights Agreement (Exhibit A to Form of Securities
      Purchase Agreement).(7)
10.24 Promissory Note from BSB Bank & Trust.(7)
10.25 Joint Venture Agreement, dated as of September 28,1999, by and between
      the Company and Orthogenesis Systems, Inc.(8)
10.26 Forbearance Letter Agreement, dated November 18, 1999, between the Company
      and FINOVA.(8)
* 10.27 Form of Subscription Agreement dated as of February 25, 2000 between
        the Registrant and Rennes Foundation and the Registrant and Nasser
        Sahraian
* 10.28 Form of Securities Purchase Agreement dated as of March 20, 2000 by
        and among the Registrant and Strategic Management Corporation and
        Rennes Foundation
* 10.29 Registration Rights Agreement dated as of March 20,2000 by and among
        the Registrant and Strategic Management Corporation and Rennes
        Foundation
* 10.30 Form of Mortgage and Security Agreement dated January 31,2000, between
        Broome County Industrial Development Agency, the Registrant and BSB.
* 10.31 Form of Subscription Agreement dated as of December 31, 1999 between
        the Registrant and Michael Kachmarik
* 27.1  Financial Data Schedule
----------
  *   Filed herewith

(1) Incorporated by reference to Registrant's Annual Report on Form 10KSB for
the year ended December 31, 1997.

(2) Incorporated by reference to Registrant's Registration Statement on
Form S-1 (Reg. No. 333-754) which was declared effective by the Securities
and Exchange Commission on March 19, 1996.

(3) Incorporated by reference to Registrant's Registration Statement on
Form S-3 (Reg. No. 333-39879) which was declared effective on January 14, 1998.

(4) Incorporated by reference to Registrant's Annual Report on Form 10KSB for
the year ended December 31, 1996.

(5) Incorporated by reference to Registrant's Annual Report on Form 10KSB for
the year ended December 31, 1998.

(6) Incorporated by reference to Registrant's Quarterly Report on Form 10QSB for
 the quarter ended March 31, 1999.

(7) Incorporated by reference to Registrant's Quarterly Report on Form 10QSB for
 the quarter ended June 30, 1999.

(8) Incorporated by reference to Registrant's Quarterly Report on Form 10QSB for
 the quarter ended September 30, 1999.

(b) Reports on Form 8-K

     None

<PAGE>
                                    27

                                SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act,
the Registrant caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                             SEMICONDUCTOR LASER INTERNATIONAL CORPORATION



         March 30, 2000            By: /s/  Geoffrey T. Burnham
                                      ______________________________

                                   Geoffrey T. Burnham, Chairman of
                                     the Board, President and Chief
                                     Executive Officer (principal executive
                                     officer)


In accordance with the requirements of the Exchange Act, this Report
has been signed by the following persons in the capacities and on the
dates stated.


         Signature                      Title                     Date


/s/   Geoffrey T. Burnham
-----------------------------  Chairman of the Board, President
      Geoffrey T. Burnham      and Chief Executive Officer
                               (Principal Executive Officer)  March 30, 2000

/s/   Susan M. Burnham
----------------------------   Vice President, Treasurer
      Susan M. Burnham         and Director                   March 30, 2000

/s/   Leonard E. Lundberg
------------------------------ Chief Financial Officer,
      Leonard E. Lundberg      Principal Financial Officer
                               and Principal Accounting
                               Officer                        March 30, 2000

/s/   George W. Hippisley
-----------------------------
      George W. Hippisley      Director                       March 30, 2000

/s/   Dr. Vincent Tomaselli
-----------------------------
      Dr. Vincent Tomaselli    Director                       March 30, 2000


<PAGE>

[TYPE]    EX-3.3

                            CERTIFICATE OF AMENDMENT
                                      TO THE
                          CERTIFICATE OF INCORPORATION
                                      OF
                     SEMICONDUCTOR LASER INTERNATIONAL CORPORATION

        (Pursuant to Sections 242 of the Delaware General Corporation Law)

     SEMICONDUCTOR LASER INTERNATIONAL  CORPORATION, a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that:

     FIRST:  The name of the corporation is  Semiconductor  Laser  International
Corporation.

     SECOND: The Board of Directors of the Corporation duly adopted a resolution
proposing and declaring it advisable that the first  paragraph of Article FOURTH
of the  Certificate  of  Incorporation  of the  Corporation  be  amended  in its
entirety to read as follows:

     The total  number  of shares of all  classes  of  capital  stock  which the
Corporation  shall have the  authority to issue is eighty  million  (80,000,000)
shares divided into two classes of which five million  (5,000,000) shares of par
value  $.01 per share  shall be  designated  Preferred  Stock and  seventy  five
million  (75,000,000)  shares of par value  $.01 per share  shall be  designated
Common Stock.

     THIRD:   This  amendment  to  the  Certificate  of   Incorporation  of  the
Corporation  was duly adopted in accordance  with the  applicable  provisions of
Section 242 of the Delaware General Corporation Law.

     FOURTH:   This  amendment  to  the  Certificate  of  Incorporation  of  the
Corporation  shall  be  effective  on and as of  the  date  of  filing  of  this
Certificate  of Amendment with the office of the Secretary of State of the State
of Delaware.


                                       SEMICONDUCTOR LASER INTERNATIONAL
                                       CORPORATION


                                       By:___________________________________
                                       Name:  Geoffrey T. Burnham
                                       Title: President, Chief Executive Officer
                                              and Chairman of the Board

[TYPE]    EX-4.17

THE SECURITIES  REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT") OR UNDER ANY STATE SECURITIES LAWS. THESE SECURITIES MAY
NOT BE SOLD,  TRANSFERRED OR ASSIGNED WITHOUT (A) REGISTRATION UNDER THE ACT AND
APPLICABLE  STATE SECURITIES LAWS OR (B) RECEIPT BY THE COMPANY OF AN OPINION OF
COUNSEL  SATISFACTORY  TO THE COMPANY THAT SUCH  REGISTRATION  IS NOT  REQUIRED.
                    _________________________________________

                       WARRANT TO PURCHASE COMMON STOCK

                                    OF

                  SEMICONDUCTOR LASER INTERNATIONAL CORPORATION

                     ______________________________________


No. 1 of ________


     FOR VALUE  RECEIVED,  __________________,  or its  permitted  assigns  (the
"Holder"),  is entitled to purchase,  subject to the provisions of this Warrant,
from Semiconductor Laser International  Corporation, a Delaware corporation (the
"Company"), up to _____________ shares of common stock, par value $.01 per share
("Common  Stock"),  of the  Company  at any  time  or from  time  to time  after
__________,  2000 and before 4:00 P.M., New York City time, on __________,  2004
(the "Termination  Date"),  at a price per share  equal to $.75 (the  "Exercise
Price").  The number of shares of Common Stock to be received  upon the exercise
of this  Warrant and the  Exercise  Price may be  adjusted  from time to time as
hereinafter set forth. The shares of Common Stock  deliverable upon any exercise
of this Warrant are hereinafter  sometimes referred to as "Warrant Shares". This
Warrant is issued by the Company pursuant to the Securities  Purchase  Agreement
dated as of ___________,  2000 (the "Purchase  Agreement") among the Company and
each of the  purchasers  named  on the  signature  pages  thereto  and  shall be
entitled to the rights set forth therein,  including certain registration rights
relating to the Warrant Shares.

     (a) EXERCISE OF WARRANT.  This Warrant may be exercised in whole or in part
at any time or from time to time after  __________,  2000 until the  Termination
Date;  provided,  that, if the date of exercise  shall be a day on which banking
institutions in the State of New York shall be authorized by law to close,  then
the Warrant shall be exercisable  on the next  succeeding day which shall not be
such a day; and provided,  further,  that the Holder shall exercise this Warrant
for a number of Warrant  Shares in a minimum  amount  equal to the lesser of (i)
20,000  Warrant  Shares and (ii) such number of Warrant  Shares  (including  any
fraction of a share) that shall remain  issuable upon exercise of the Warrant in
full. This Warrant may be exercised by presentation  and surrender hereof to the
Company at its principal  office,  or at the office of its stock transfer agent,
if any, with the Purchase Form annexed  hereto duly executed and  accompanied by
payment of the Exercise Price for the number of Warrant Shares specified in such
Form. As soon as practicable  after each such exercise,  but not later than five
(5) business days following the date of such  exercise,  the Company shall issue
and deliver to the Holder a certificate or  certificates  for the Warrant Shares
issuable  upon  such  exercise,  registered  in the  name of the  Holder  or its
designee(s). If this Warrant shall be exercised in part, the Company shall, upon
surrender  of the  Warrant for  cancellation,  execute and deliver a new Warrant
evidencing  the rights of the  Holder  thereof to  purchase  the  balance of the
Warrant Shares purchasable hereunder. Upon receipt by the Company of the Warrant
at its office,  or by the stock transfer agent of the Company at its office,  in
proper form for exercise and accompanied by proper payment,  the Holder shall be
deemed  to be the  holder of record of the  Warrant  Shares  issuable  upon such
exercise,  notwithstanding  that the stock  transfer  books of the Company shall
then be closed or that  certificates  representing  such shares of Common  Stock
shall not then have been physically  delivered to the Holder.

     (b) RESERVATION OF SHARES.  The Company  covenants and agrees that it shall
at all times reserve for issuance and delivery upon exercise of the Warrant such
number of shares of Common  Stock as shall be required for issuance and delivery
upon exercise of the Warrant.  In addition,  the Company  further  covenants and
agrees that all Warrant Shares, upon issuance, shall be duly and validly issued,
fully paid and  non-assessable  and no personal  liability  shall  attach to the
Holder.

     (c) FRACTIONAL SHARES. No fractional shares of Common Stock shall be issued
upon  exercise of this  Warrant.  All  fractional  shares shall be eliminated by
rounding any fraction to the nearest whole number of shares of Common Stock.

     (d) EXCHANGE,  TRANSFER,  ASSIGNMENT OR LOSS OF WARRANT. This Warrant shall
be exchangeable, without expense, at the option of the Holder, upon presentation
and  surrender  hereof to the  Company,  or at the office of its stock  transfer
agent,  for other  Warrants  of  different  denominations  entitling  the Holder
thereof to purchase in the  aggregate  the same number of shares of Common Stock
purchasable  hereunder.  Upon  surrender  of this  Warrant to the Company or the
office of its stock transfer agent, with the Assignment Form annexed hereto duly
executed  and funds  sufficient  to pay any transfer  tax, the Company,  without
charge, shall execute and deliver new Warrants in the name of the assignee named
in such  instrument of assignment and this Warrant shall be cancelled  promptly,
provided  that the Company  shall  receive from the Holder an opinion of counsel
satisfactory to the Company that such assignment, as contemplated by the Holder,
shall not violate  applicable Federal or state securities laws. This Warrant may
be divided or  combined  with other  Warrants  which  carry the same rights upon
presentation  hereof at the principal office of the Company or the office of its
stock  transfer  agent,  together  with a written  notice,  signed by the Holder
hereof,  specifying the names and  denominations in which new Warrants are to be
issued. The term "Warrants" as used herein shall include any warrants into which
this  warrant  may be  divided or  exchanged.  Upon  receipt  by the  Company of
evidence  satisfactory  to it of the loss,  theft,  destruction or mutilation of
this  Warrant,  and (in the case of loss,  theft or  destruction)  of reasonably
satisfactory  indemnification,  and  upon  surrender  and  cancellation  of this
Warrant,  if  mutilated,  the Company shall execute and deliver a new Warrant of
like  tenor and date.

                                     -2-

     (e) RIGHTS OF HOLDER.  The Holder shall not,  until the exercise  hereof of
the Warrant,  be entitled to any rights of a stockholder in the Company,  either
at law or  equity,  and the  rights  of the  Holder  shall be  limited  to those
expressed herein.

     (f) ANTI-DILUTION PROVISIONS.  The Exercise Price in effect at any time and
the number and kind of securities  purchasable upon the exercise of this Warrant
shall be subject to  adjustment  from time to time upon the  happening of any of
the following events:

     (i) In the event that the Company  shall issue or sell any shares of Common
Stock (except as provided in paragraph  (f)(v) hereof) for a  consideration  per
share  less  than  the  greater  of (A)  75% of the  Exercise  Price  in  effect
immediately  prior to such  issue or sale and (B) 75% of the  Market  Price  (as
defined in Paragraph  (f)(ii)(G) hereof) on the date of such issue or sale, then
the Exercise  Price,  as of the date of such issue or sale,  shall be reduced to
such lesser price  (calculated  to the nearest  cent) as shall be  determined by
multiplying  the  Exercise  Price  in  effect  immediately  prior  thereto  by a
fraction, the numerator of which shall be the sum of (x) the number of shares of
Common  Stock  outstanding  immediately  prior to the  issuance  or sale of such
additional  shares  and (y) the  number  of shares  of  Common  Stock  which the
aggregate  consideration  received for the  issuance or sale of such  additional
shares  would  purchase at the  greater of the Market  Price on the date of such
issue or sale or the Exercise Price then in effect, and the denominator of which
shall be the number of shares of Common Stock outstanding  immediately after the
issuance or sale of such additional shares.

  (ii) For the purposes of paragraph (f)(i) above, the following subparagraphs
(A) to (G), inclusive,  shall be  applicable:

     (A) If at any time the Company  shall issue or sell any rights to subscribe
for, or any rights or options to  purchase,  Common  Stock or any stock or other
securities  convertible into or exchangeable for Common Stock (such  convertible
or  exchangeable  stock or  securities  being  hereinafter  called  "Convertible
Securities"),  whether or not such  rights or options or the right to convert or
exchange any such Convertible Securities shall be immediately  exercisable,  and
the price per share for which Common  Stock shall be issuable  upon the exercise
of such rights or options or upon  conversion  or  exchange of such  Convertible
Securities  (determined  by dividing (1) the total amount,  if any,  received or
receivable  by the Company as  consideration  for the granting of such rights or
options,  plus the minimum aggregate amount of additional  consideration payable
to the Company upon the exercise of such rights or options, plus, in the case of
any such rights or options  which shall relate to  Convertible  Securities,  the
minimum aggregate amount of additional  consideration,  if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or exchange
thereof,  by (2) the total  number of shares of Common Stock  issuable  upon the
exercise  of such  rights or options or upon the  conversion  or exchange of all
such  Convertible  Securities  issuable  upon the  exercise  of such  rights  or
options)  shall be less than the  greater  of (x) the  Exercise  Price in effect
immediately prior to the time of the issue or sale of such rights or options and
(y) the Market Price on the date of such issue or sale, then the total number of
shares of Common Stock  issuable  upon the exercise of such rights or options or
upon conversion or exchange of the total amount of such  Convertible  Securities
issuable  upon the  exercise of such rights or options  shall (as of the date of
granting of such rights or options) be deemed to be outstanding and to have been
issued for such price per share, and except as provided in paragraph (f)(iv), no
further adjustments of the Exercise Price shall be made upon the actual issue of
such Common Stock or of such Convertible  Securities,  upon the exercise of such
rights or options or upon the actual issue of such Common Stock upon  conversion
or exchange of such Convertible Securities.

     (B) If at any  time  the  Company  shall  issue  or  sell  any  Convertible
Securities, whether or not the rights to exchange or convert thereunder shall be
immediately exercisable, and the price per share for which Common Stock shall be
issuable upon such conversion or exchange  (determined by dividing (1) the total
amount received or receivable by the Company as  consideration  for the issue or
sale of such  Convertible  Securities,  plus the  minimum  aggregate  amount  of
additional consideration,  if any, payable to the Company upon the conversion or
exchange  thereof,  by (2) the total number of shares of Common  Stock  issuable
upon the  conversion or exchange of all such  Convertible  Securities)  shall be
less than the greater of (x) the Exercise Price in effect  immediately  prior to
the  time of such  issue or sale  and (y) the  Market  Price on the date of such
issue or sale,  then the total  number of shares of Common Stock  issuable  upon
conversion or exchange of all such Convertible  Securities shall (as of the date
of the issue or sale of such Convertible Securities) be deemed to be outstanding
and to have been  issued for such price per share,  and,  except as  provided in
paragraph  (f)(iv),  no further  adjustments of the Exercise Price shall be made
upon the actual issue of such Common Stock,  upon conversion or exchange of such
Convertible  Securities.  In addition,  if any issue or sale of such Convertible
Securities  shall be made upon  exercise  of any rights to  subscribe  for or to
purchase or any option to purchase  any such  Convertible  Securities  for which
adjustments  of the Exercise  Price shall have been or shall be made pursuant to
other  provisions  of this  paragraph  (f)(ii),  no  further  adjustment  of the
Exercise Price shall be made by reason of such issue or sale.

     (C) If at any time the Company shall declare and pay a dividend or make any
other  distribution upon the Common Stock payable in Common Stock or Convertible
Securities, any such Common Stock or Convertible Securities, as the case may be,
issuable  in payment of such  dividend or  distribution  shall be deemed to have
been issued or sold without consideration;  provided,  that this provision shall
not apply to any shares of Common Stock  issuable for  additional  consideration
upon conversion of such Convertible Securities. (D) If at any time any shares of
Common Stock or Convertible  Securities or any rights or options to purchase any
such Common Stock or  Convertible  Securities  shall be issued or sold for cash,
the consideration received therefor shall be deemed to be the amount received by
the Company therefor,  without  deduction  therefrom of any expenses incurred or
any underwriting  commissions or concessions or discounts paid or allowed by the
Company  in  connection  therewith.  In case  any  shares  of  Common  Stock  or
Convertible  Securities  or any rights or options to  purchase  any such  Common
Stock or  Convertible  Securities  shall be issued  or sold for a  consideration
other than cash, the amount of the consideration other than cash received by the
Company shall be deemed to be the fair value of such consideration as determined
by the Board of Directors,  without deduction therefrom of any expenses incurred
or any  underwriting  commissions or concessions or discounts paid or allowed by
the  Company in  connection  therewith.  In case any  shares of Common  Stock or
Convertible  Securities  or any rights or options to  purchase  any such  Common
Stock or Convertible Securities shall be issued in connection with any merger of
another corporation into the Company, the amount of consideration therefor shall
be deemed to be the fair value of such merged  corporation  as determined by the
Board of Directors reduced by all cash and other  consideration (if any) paid by
the Company in connection with such merger.

     (E) If at any  time the  Company  shall  fail to set a  record  date of the
holders  of Common  Stock for the  purpose  of  entitling  them (1) to receive a
dividend  or other  distribution  payable  in  Common  Stock  or in  Convertible
Securities,  or (2) to subscribe  for or purchase  Common  Stock or  Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common  Stock  deemed to have been issued or sold upon the
declaration  of such  dividend or the making of such other  distribution  or the
date of the granting of such right of subscription or purchase,  as the case may
be.

     (F) The  number of shares of Common  Stock  outstanding  at any given  time
shall not include  shares  owned or held by or for the  account of the  Company,
provided that such shares are neither issued,  sold or otherwise  distributed by
the Company.

     (G) For purposes  hereof,  the "Market  Price" shall mean the national best
bid price of the Common Stock as shown on the NASD's OTC Bulletin Board Service
as of 4:00 p.m. Eastern time on any day, or, if the Common Stock shall be quoted
on The  Nasdaq  National  Market or The  Nasdaq  SmallCap  Market or listed on a
national  securities  exchange,  the closing sale price as of 4:00 p.m.  Eastern
time on such  principal  market or  national  securities  exchange  on which the
Common Stock may be listed.  If at any time the Common Stock shall not be traded
on the OTC Bulletin  Board  Service or quoted or listed on the Nasdaq  National
Market or The Nasdaq  SmallCap  Market or a national  securities  exchange,  the
"Market  Price" of a share of Common  Stock  shall be deemed to be the higher of
(x) the book value  thereof (as  determined  by any firm of  independent  public
accountants  of  nationally   recognized  standing  selected  by  the  Board  of
Directors) as of the last day of any month ending  within 60 days  preceding the
date of  determination,  or (y) the fair value  thereof (as  determined  in good
faith by the Board of  Directors)  as of a date which shall be within 15 days of
the date of determination.

     (iii) In case at any time  the  Company  shall  subdivide  its  outstanding
shares of Common Stock into a greater  number of shares,  the Exercise  Price in
effect immediately prior to such subdivision shall be  proportionately  reduced.
In case at any time the outstanding  shares of Common Stock of the Company shall
be  combined  into a smaller  number of  shares,  the  Exercise  Price in effect
immediately prior to such combination shall be proportionately  increased.

     (iv) If the purchase or exercise  price provided for in any right or option
referred  to in  paragraph  (f)(ii)(A),  or the  rate at which  any  Convertible
Securities referred to in paragraph  (f)(ii)(A) or (B) shall be convertible into
or  exchangeable  for Common  Stock,  shall  change or a  different  purchase or
exercise price or rate shall become  effective at any time or from time to time,
then,  upon such change  becoming  effective,  the Exercise Price then in effect
hereunder  shall  forthwith be increased or decreased to such Exercise  Price as
would have been in effect had the adjustments made upon the granting or issuance
of such rights or options or Convertible  Securities been made upon the basis of
(A) the  issuance of the number of shares of Common Stock  theretofore  actually
delivered  upon the exercise of such options or rights or upon the conversion or
exchange of such Convertible  Securities and (B) the granting or issuance at the
time of such change of any such options,  rights or Convertible  Securities then
still  outstanding  for the  consideration,  if  any,  received  by the  Company
therefor and to be received on the basis of such changed price;  provided,  that
no further  adjustment  will be made if the change in such  purchase or exercise
price or rate shall occur pursuant to the anti-dilution provisions of such right
or option or Convertible  Securities and there shall have already been a similar
adjustment  to the  Exercise  Price or rate as a result of the same  transaction
that  precipitated  the change in such purchase or exercise  price or rate.

     (v)  Notwithstanding  the  foregoing,  the Company shall not be required to
make any  adjustment  to the  Exercise  Price in the case of:

     (A) the  granting,  after the date hereof,  by the Company of stock options
with  respect to shares of Common Stock under stock option plans of the Company,
so long as the total number of shares of Common Stock  issuable  pursuant to (i)
stock  options  outstanding  as of any such date,  including  stock options then
granted (but not including any terminated or exercised options),  and (ii) stock
options available to be granted, shall not exceed, in the aggregate, six million
of the total  outstanding  number of shares of Common Stock as of any such date;

     (B) the issuance of shares of Common Stock  pursuant to the exercise of the
options referred to in paragraph  (f)(v)(A) above;

     (C) the issuance of shares of Common Stock  pursuant to the exercise of any
options or warrants  outstanding on the date hereof;

     (D) the  issuance  of shares  of  Common  Stock  pursuant  to the  Purchase
Agreement or the Registration Rights Agreement;

     (E) the  issuance of shares of Common Stock upon the exercise of any of the
Warrants;

     (F) the issuance of shares of Common Stock  pursuant to the  acquisition of
another  corporation  or entity by the  Company  by merger,  purchase  of all or
substantially  all of the assets or other  reorganization  whereby  the  Company
shall become the owner of more than 50% of the voting power of such  corporation
or entity; and

     (G) the issuance of shares of Common  Stock  issued  pursuant to any public
offering and sale of equity  securities of the Company  pursuant to an effective
registration  statement  under the Securities Act.

     (H) the issuance of shares of Common Stock privately placed for sale by the
Company to a group of  investors  within  thirty (30) days from the Closing Date
(as  defined  in the  Purchase  Agreement);  and

     (I) the issuance of warrants  privately placed by the Company to a group of
investors  within  thirty  (30) days from the  Closing  Date (as  defined in the
Purchase  Agreement).

     (vi)  Whenever the  Exercise  Price  payable upon  exercise of this Warrant
shall be adjusted  pursuant to this  paragraph (f), the number of Warrant Shares
purchasable upon exercise hereof simultaneously shall be adjusted by multiplying
the number of Warrant Shares  issuable  immediately  prior to such adjustment by
the Exercise Price in effect  immediately  prior to such adjustment and dividing
the  product so obtained by the  Exercise  Price,  as  adjusted.

     (g)  OFFICER'S  CERTIFICATE.  The Company  shall give notice to each record
holder of the  Warrants  of any event or  transaction  that  shall  result in an
adjustment in the Exercise Price, within five (5) business days thereof, at such
Holder's  address as the same appears on the books of the  Company,  including a
computation  of such  adjustment  and any  adjustment  in the  number of Warrant
Shares for which such Holder may exercise such Holder's  Warrant and any further
information   as  shall  be  necessary  to  confirm  the   computation  of  such
adjustments.

     (h) CERTAIN  NOTICES TO HOLDERS.  If (i) the Company shall pay any dividend
or make any distribution  upon the Common Stock, (ii) the Company shall offer to
the holders of the Common Stock for  subscription  or purchase by them any share
of any  class of  capital  stock  or any  other  rights  or  (iii)  any  capital
reorganization  of the  Company,  reclassification  of the capital  stock of the
Company, consolidation, merger or other business combination of the Company with
or into another corporation, sale, lease or transfer of all or substantially all
of the assets of the Company to another corporation, or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be effected, then in
any such case,  the Company  shall cause to be mailed by  certified  mail to the
Holder,  at least  twenty  (20) days prior to the date  specified  in (x) or (y)
below,  as the  case  may be, a notice  containing  a brief  description  of the
proposed  action  and  stating  the date on which  (x) a  record  date  shall be
established for the purpose of such dividend, distribution or rights offering or
(y) such reclassification,  reorganization,  consolidation,  merger, conveyance,
sale, lease, transfer,  dissolution,  liquidation or winding up shall take place
and the date,  if any to be fixed,  as of which the  holders of Common  Stock or
other  securities  shall receive cash or other  property  deliverable  upon such
reclassification,    reorganization,    consolidation,    merger,    conveyance,
dissolution,  liquidation or winding up.

     (i) RECLASSIFICATION, REORGANIZATION, MERGER OR OTHER BUSINESS COMBINATION.
In case of any  reclassification,  capital  reorganization  or other  change  of
outstanding shares of Common Stock, or in case of any  consolidation,  merger or
other business  combination  of the Company with or into another  corporation or
other entity  (other than a merger with a subsidiary in which merger the Company
shall  be  the  continuing  corporation  and  which  shall  not  result  in  any
reclassification,  capital  reorganization or other change of outstanding shares
of Common Stock of the class  issuable upon exercise of this Warrant) or in case
of any sale,  lease or conveyance to another  corporation or other entity of all
or  substantially  all of the assets of the  Company,  the  Company  shall cause
effective  provisions to be made so that the Holder,  by exercising this Warrant
at  any  time  after  the   consummation  of  such   reclassification,   change,
consolidation,  merger, sale, lease or conveyance,  shall be entitled to receive
the stock or other  securities  or property to which such Holder would have been
entitled  upon such  consummation  if such  Holder had  exercised  this  Warrant
immediately  prior  to such  consummation.  Any  such  provision  shall  include
provisions  for  adjustments  which  shall  be as  nearly  equivalent  as may be
practicable  to the  adjustments  provided for in this  Warrant.  The  foregoing
provisions  of  this   paragraph  (i)  shall   similarly   apply  to  successive
reclassifications, capital reorganizations and changes of shares of Common Stock
and to successive consolidations,  mergers, sales, leases or conveyances. In the
event  that,   in   connection   with  any  such   capital   reorganization   or
reclassification,  consolidation,  merger, sale, lease or conveyance, additional
shares of Common Stock shall be issued in exchange, conversion,  substitution or
payment,  in whole or in part,  for a security of the Company  other than Common
Stock,  any such issue shall be treated as an issue of Common  Stock  subject to
the provisions of paragraph (f) hereof.

     (j) REDEMPTION. The Company, upon thirty (30) days' prior written notice to
the Holder,  may elect to redeem all or part of this Warrant at a price equal to
$0.01 per Warrant Share issuable upon the exercise hereof,  if, but only if: (i)
the Market Price shall have  exceeded  $.90 per share  (adjusted as set forth in
paragraph  (f)(iii)  hereof,  if  applicable) on each of the twenty (20) trading
days for which  quotes  appear on the Common  Stock  ending on the  business day
prior to the date on which  the  notice  of  redemption  shall be  mailed to the
Holder, (ii) the registration  statement required to be filed under Section 2 of
the Registration Rights Agreement, dated as of the date hereof, by and among the
Company and the other parties signatory  thereto,  shall be effective and permit
the sale of all Warrant  Shares,  and (iii) the Common Stock shall be trading on
the OTC Bulletin Board Service,  the NASDAQ National  Market,  the NASDAQ Small
Cap Market or a  national  securities  exchange.  Any such  redemption  shall be
effective on the  thirtieth  day  following  the date of such notice;  provided,
however,  that the Holder may elect at any time prior to the  effective  date of
redemption to exercise all or any portion of this Warrant in accordance with the
terms hereof;  and,  provided  further,  that the Company's right to redeem this
Warrant shall be suspended if the Warrant  Shares may not be sold pursuant to an
effective  registration  statement for any reason whatsoever or the Common Stock
shall not be trading on the OTC Bulletin  Board  Service,  the NASDAQ  National
Market,  the  NASDAQ  Small Cap Market or a national  securities  exchange.  The
notice period shall then be extended for a period of time equal to the number of
days during the notice period during which the registration  statement shall not
have  permitted  the sale of such  Warrant  Shares or the Common Stock shall not
have been so listed and trading,  as the case may be. The redemption price shall
be payable in full, in cash, on the effective date of any redemption pursuant to
this paragraph  (j). A redemption  notice  delivered by the Company  pursuant to
this paragraph (j) shall be  irrevocable.  Notwithstanding  the  foregoing,  the
Company's right to redeem all or part of this Warrant may not be exercised if on
the date on which the Company  gives  notice of such  exercise  the Market Price
shall be less than $.90 per share  (adjusted as set forth in paragraph  (f)(iii)
hereof, if applicable).

     (k)  GOVERNING  LAW.  This  Warrant  shall be governed by and  construed in
accordance  with the law of the  State of New  York.

     (l)  NOTICES.  Any notice  required to be given or delivered to the Company
under the terms of this Warrant  shall be in writing and  addressed to the Chief
Financial Officer of the Company at its principal corporate offices.  Any notice
required  to be  given or  delivered  to the  Holder  shall  be in  writing  and
addressed to the Holder at the address indicated in the Purchase Agreement or to
such other  address as such party may  designate in writing from time to time to
the Company.  All notices  shall be deemed to have been given or delivered  upon
any of the following: (i) personal delivery; (ii) five (5) days after deposit in
the  United  States  mail  by  certified  or  registered  mail  (return  receipt
requested);  (iii)  one (1)  business  day  after  deposit  with any  nationally
recognized  overnight  courier  (prepaid);  or (iv) one (1)  business  day after
transmission  by  facsimile  and  receipt  by the  sender of  written  facsimile
confirmation.


IN WITNESS WHEREOF, the Company has caused this  Warrant to be signed and
attested by the  undersigned, each being duly authorized,  as of the date below.

 Dated:  __________,  2000

                                            SEMINCONDUCTOR LASER
                                            INTERNATIONAL CORPORATION

                                            By:_______________________________
                                            Name:
                                            Title:


Attest:  ________________________
Name:
Title:


                               PURCHASE FORM

     The undersigned  hereby  irrevocably  elects to exercise the Warrant to the
extent of purchasing  ____________ shares of Common Stock and hereby makes total
payment of  $______________  in payment of the Exercise Price multiplied by such
number  of  shares.
___________________

                             ASSIGNMENT  FORM

     FOR VALUE  RECEIVED,  _____________________________________  hereby  sells,
assigns and transfers unto
Name:  __________________________________
       (print in block  letters)

Social  Security No. or
Federal  Taxpayer  Identification  No.:_________________________________

Address:________________________________________________________
the right to purchase Common Stock  represented  by this Warrant to the extent
of _________  shares of Common Stock as to which such right is exercisable  and
does hereby  irrevocably constitute and appoint  _________________________  as
Attorney,  to transfer the same  on the  books  of the  Company  with  full
power  of  substitution.

Date____________________,    ____   Signature:   _______________________

                                    Name:

[TYPE]    EX-4.18

                          WAIVER AND LOCK-UP AGREEMENT

     Reference is made to the Common Stock Purchase Warrant,  dated February 16,
1999 (the "Warrant"), issued to BSB Bank & Trust Company. The undersigned hereby
waives  any  rights to  adjustment  in the  Purchase  Price (as  defined  in the
Warrant) per share of the Company's  Common Stock acquired  through the exercise
of the Warrant (the  "Securities")  in  connection  with a private  placement of
securities by the Company for an aggregate  purchase price per share of at least
$4 million  closed  during the next 30 days for a  consideration  per share less
than the then current  Market Price or the Lower  Exercise  Price (as such terms
are defined in the Warrant).  In addition,  the undersigned  agrees not to sell,
make any  short  sale of,  pledge,  grant  any  option  for the  purchase  of or
otherwise  dispose of the  Securities,  without the prior written consent of the
Company until March 20, 2001.  Before any transfer of the  Securities may occur,
the transferee  thereof shall agree in writing to the terms hereof.  This Waiver
shall not operate as a waiver of any subsequent or future issuances and sales of
equity securities by the Company.

Dated:March 14, 2000



                                         BSB BANK & TRUST COMPANY



                                         By:______________________
                                            Name:
                                            Title:

[TYPE]     EX-10.27


                  SEMICONDUCTOR LASER INTERNATIONAL CORPORATION



                            SUBSCRIPTION AGREEMENT



                          Dated as of December 31, 1999




                            SUBSCRIPTION AGREEMENT

     SUBSCRIPTION  AGREEMENT,  dated as of December 31, 1999 (this "Agreement"),
by  and  among  Semiconductor  Laser  International   Corporation,   a  Delaware
corporation (the "Corporation"), and _______________ (the "Subscriber").

                             W I T N E S S E T H:

     WHEREAS,  the Corporation desires to sell and issue to the Subscriber,  and
the  Subscriber  desires to purchase  and  subscribe  from the  Corporation  (i)
447,109  shares (the  "Shares") of common  stock,  $.01 par value per share (the
"Common  Stock"),  of the  Corporation,  and  (ii)  a  warrant  (the  "Warrant")
exercisable  for an  aggregate of 447,109  shares of Common Stock (the  "Warrant
Shares")  which may be exercised in whole or in part at any time or from time to
time  commencing  on the date  hereof  and  prior to  December  31,  2004 for an
exercise price of $.45 per share; and

     WHEREAS,  certain  terms used in this  Agreement are defined in Section 7.1
hereof.

     NOW,  THEREFORE,  in consideration of these premises,  the mutual covenants
and  agreements  hereinafter   contained,   and  for  other  good  and  valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
intending to be legally bound, the parties hereto hereby agree as follows:

     1. Sale and  Purchase of the Shares and the  Warrant.  Subject to the terms
and conditions of this Agreement, at the Closing, the Corporation shall sell and
deliver to the Subscriber,  and the Subscriber shall purchase and subscribe from
the Corporation, the Shares of Common Stock and the Warrant.

     2. Purchase Price.

     2.1.  Amount of the  Purchase  Price.  The  aggregate  purchase  price (the
"Purchase  Price")  for the  Shares  of  Common  Stock  and the  Warrants  being
purchased by the Subscriber  pursuant to Section 1 shall be One Hundred Thousand
Dollars  ($100,000)  (calculated  with reference to the ten day average  closing
price from  December  16,  1999 to  December  30,  1999 of the shares less a 10%
discount).  The  Purchase  Price  shall be payable as  provided  in Section  2.2
hereof.

     2.2.  Payment of the Purchase  Price.  At the Closing Date,  the Subscriber
shall deliver the Purchase Price to the Corporation,  which Purchase Price shall
be payable by a certified or official bank check(s)  payable to the order of the
Corporation  or  wire  transfer  of  immediately  available  funds.  As  soon as
practicable after such payment, the Corporation shall

                                    2

deliver to the  Subscriber  (i) a  certificate  representing  the  Shares of
Common Stock and (ii) the Warrant  which shall  contain  customary  antidilution
protection and other customary terms.

     3. Closing.  The closing of this Agreement (the  "Closing") is scheduled to
take place on December  31, 1999 at the offices of the  Corporation,  or at such
other time, date or place as the parties hereto may mutually agree.  The date on
which the  Closing is held is  referred  to in this  Agreement  as the  "Closing
Date."

     4. Representations and Warranties of the Corporation.

     The Corporation hereby represents and warrants to the Subscriber, that:

     4.1.  Organization of the Corporation;  Authority.  The Corporation is duly
formed, validly existing and in good standing under the laws of the jurisdiction
of its formation. The Corporation has all requisite power and authority to enter
into this Agreement, and to consummate the transactions contemplated hereby. The
execution, delivery and performance by the Corporation of this Agreement and the
consummation of the transactions  contemplated  hereby have been duly authorized
by all necessary action on the part of the Corporation.  This Agreement has been
duly executed and delivered by the Corporation and, assuming that this Agreement
constitutes  a valid and binding  obligation  of the  Subscriber,  constitutes a
valid  and  binding  obligation  of the  Corporation,  enforceable  against  the
Corporation  in accordance  with its terms,  subject to  applicable  bankruptcy,
insolvency,  reorganization,  moratorium and similar laws  affecting  creditors'
rights and  remedies  generally  and  subject as to  enforceability,  to general
principles  of  equity  (regardless  of  whether  enforcement  is  sought  in  a
proceeding at law or in equity).

     4.2.  Consents of Third Parties.  None of the execution and delivery by the
Corporation of this Agreement, the consummation of the transactions contemplated
hereby,  or compliance by the Corporation with any of the provisions hereof will
(a)  conflict   with,  or  result  in  the  breach  of,  any  provision  of  the
organizational documents of the Corporation,  (b) conflict with, violate, result
in the breach or  termination  of, or  constitute  a default (or an event which,
with notice or lapse of time or both,  would  constitute a default) or give rise
to any right of termination or acceleration or right to increase the obligations
or otherwise  modify the terms thereof  under any  Contract,  Permit or Order to
which  the  Corporation  is a party or by which  the  Corporation  or any of its
properties or assets is bound,  (c) constitute a violation of any Law applicable
to the  Corporation,  or (d)  result  in the  creation  of  any  Lien  upon  the
properties or assets of the Corporation.

     5. Representations and Warranties of the Subscriber.

     The Subscriber hereby represents and warrants to the Corporation, that:

                                       3

     5.1.  Capacity;  Authorization.  The  Subscriber  has the legal capacity to
enter into this Agreement and to carry out their obligations hereunder. Assuming
due execution and delivery by the Corporation of this Agreement,  this Agreement
will  constitute  a legal,  valid  and  binding  obligation  of the  Subscriber,
enforceable  against the  Subscriber  in accordance  with its terms,  subject to
applicable bankruptcy, insolvency,  reorganization,  moratorium and similar laws
affecting   creditors'  rights  and  remedies  generally  and  subject,   as  to
enforceability,   to  general   principles  of  equity  (regardless  of  whether
enforcement is sought in a proceeding at law or in equity).

     5.2. Due Diligence. The Subscriber is an employee of the Corporation and is
familiar with the business,  operations and management of the  Corporation.  The
Subscriber has had an  opportunity to ask questions of and receive  answers from
the Corporation  and its officers and other  directors  concerning the terms and
conditions  of the sale of the Shares of Common Stock and the  Warrant,  and has
had an opportunity to obtain additional  information from the Corporation to the
extent  deemed  necessary or advisable by the  Subscriber in order to verify the
accuracy of the information  obtained.  The Subscriber has, to the extent deemed
necessary by the  Subscriber,  consulted  with his own advisors  (including  the
Subscriber's   attorney,   accountant  or  investment   advisor)  regarding  the
Subscriber's  investment  in the  Shares of Common  Stock  and the  Warrant  and
understands  the  significance  and effect of its  representations,  warranties,
acknowledgments and agreements set forth in this Agreement.  The Subscriber has,
to the extent deemed necessary by the Subscriber, completed due diligence and an
independent   investigation   concerning  the  Corporation  and  the  terms  and
conditions of the sale of the Shares of Common Stock and the Warrant.

     5.3.  Investment  Purposes.  (a) The  Subscriber is acquiring the Shares of
Common Stock for investment  purposes only, for their own account,  and not as a
nominee or agent for any other Person,  and not with a view to, or for resale in
connection with, any  distribution  thereof within the meaning of the Securities
Act, (b) the  Subscriber  has knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of their investment,
(c) the Subscriber is an "accredited investor" within the meaning of Rule 501 of
Regulation D under the  Securities Act (i.e.,  the  Subscriber's  net worth,  or
joint net worth  with that of his  spouse,  at the time of his  purchase  of the
Shares of Common Stock  exceeds  $1,000,000)  and (d) the  Corporation  has made
available to the  Subscriber  the  opportunity  to ask  questions and to receive
answers,  and to obtain the  information  the Subscriber has deemed material and
necessary to evaluate the merits and risks of this investment.

     5.4.  Consents of Third Parties.  None of the execution and delivery by the
Subscriber of this Agreement, the consummation of the transactions  contemplated
hereby,  or compliance by the Subscriber with any of the provisions  hereof will
(a)  conflict  with,  violate,  result  in the  breach  or  termination  of,  or
constitute a default (or an event  which,  with notice or lapse of time or both,
would  constitute  a  default)  or give  rise to any  right  of  termination  or
acceleration or right to increase the obligations or otherwise  modify the terms
thereof under any Contract,  Permit or Order to which the  Subscriber is a party
or by which the Subscriber or any of

                                       4

their  properties or assets is bound;  (b) constitute a violation of any Law
applicable to the Subscriber; or (c) result in the creation of any Lien upon the
properties  or  assets of the  Subscriber.  Other  than  those  which  have been
obtained or made, no consent, waiver,  approval,  Order, Permit or authorization
of,  or  declaration  or  filing  with,  or  notification   to,  any  Person  or
Governmental Body is required on the part of the Subscriber,  in connection with
the  execution  and  delivery  of  this  Agreement,  or  the  compliance  by the
Subscriber with any of the provisions hereof.

     6. Transfer Restrictions; Private Placement.

     6.1.  The  Subscriber  understands  and  agrees  that none of the Shares of
Common Stock,  the Warrant or the Warrant Shares have been registered  under the
Securities Act, and that  accordingly  they will not be  transferable  except as
permitted  under various  exemptions  contained in the  Securities  Act, or upon
satisfaction of the  registration  and prospectus  delivery  requirements of the
Securities Act. The Subscriber  acknowledges that it must bear the economic risk
of the Shares of Common Stock for an  indefinite  period of time since they have
not been registered under the Securities Act and therefore cannot be sold unless
they are subsequently registered or an exemption from registration is available.

     6.2.  The  Subscriber  agrees with the  Corporation  that the  certificates
evidencing the Shares of Common Stock sold pursuant to this  Agreement  shall be
stamped or otherwise  imprinted  with a legend in  substantially  the  following
form:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
         PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE.
         SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
         HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A
         REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH
         IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH
         ACT, OR (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH
         ACT, PROVIDED THAT, IF REQUESTED BY THE CORPORATION, AN OPINION
         OF COUNSEL REASONABLY SATISFACTORY IN FORM AND SUBSTANCE IS
         FURNISHED TO THE CORPORATION THAT AN EXEMPTION FROM THE
         REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.

     6.3. The legend endorsed on the certificates pursuant to Section 6.2 hereof
shall be removed and the  Corporation  shall issue a  certificate  without  such
legend to the holder  thereof at such time as the securities  evidenced  thereby
cease  to  be  restricted  securities  upon  the  earliest  to  occur  of  (i) a
registration  statement with respect to the sale of such  securities  shall have
become  effective under the Securities Act and such  securities  shall have been
disposed of in accordance with such registration statement,  (ii) the securities
shall  have  been  sold to the  public  pursuant  to Rule 144 (or any  successor
provision) under the Securities Act, or (iii) such securities

                                       5

may be sold by the holder  without  restriction or  registration  under Rule
144(k) under the Securities Act (or any successor provision).

     7. Miscellaneous.

     7.1. Certain Definitions.

     "Contract"  means any contract,  agreement,  indenture,  note,  bond, loan,
instrument,  lease,  conditional sale contract,  mortgage,  license,  franchise,
insurance policy, commitment or other arrangement or agreement,  whether written
or oral.

     "Governmental Body" means any government or governmental or regulatory body
thereof,  or political  subdivision  thereof,  whether federal,  state, local or
foreign,  or any agency,  instrumentality or authority thereof,  or any court or
arbitrator (public or private).

     "Law" means any applicable federal,  state, local or foreign law (including
common law), statute, code, ordinance,  rule, regulation or other requirement or
guideline.

     "Lien" means any mortgage, pledge, security interest,  encumbrance, lien or
charge of any kind, including, without limitation, any conditional sale or other
title retention agreement,  any lease in the nature thereof and the filing of or
agreement to give any financing  statement under the Uniform  Commercial Code of
any  jurisdiction  and including any lien or charge  arising by statute or other
law.

     "Order"  means any  order,  injunction,  judgment,  decree,  ruling,  writ,
assessment or arbitration award.

     "Person"  means  any  individual,  corporation,  partnership,  firm,  joint
venture,  association,  joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.

     "Securities Act" means the Securities Act of 1933, as amended.

     7.2. Counterparts.  This Agreement may be executed simultaneously in two or
more  counterparts,  each of which shall be deemed an original  but all of which
together shall constitute one and the same instrument.

     7.3. Further  Assurances.  The Corporation and the Subscriber each agree to
execute and deliver such other  documents or  agreements  as may be necessary or
desirable for the  implementation  of this Agreement and the consummation of the
transactions contemplated hereby.


                                        6

     7.4.  Severability.  If any  provision  of this  Agreement  is  invalid  or
unenforceable, the balance of this Agreement shall remain in effect.

     7.5. Entire Agreement; Amendments and Waiver. This Agreement represents the
entire  understanding and agreement among the parties hereto with respect to the
subject  matter  hereof and can be amended,  supplemented  or  changed,  and any
provision  hereof can be  waived,  only by written  instrument  making  specific
reference  to this  Agreement  signed by the  parties  hereto.  No action  taken
pursuant to this Agreement,  including without limitation,  any investigation by
or on behalf of any party,  shall be deemed to  constitute a waiver by the party
taking such action of compliance with any representation,  warranty, covenant or
agreement  contained  herein.  The waiver by any party hereto of a breach of any
provision  of this  Agreement  shall not operate or be construed as a further or
continuing  waiver of such  breach  or as a waiver  of any  other or  subsequent
breach.  No  failure  on the  part of any  party  to  exercise,  and no delay in
exercising,  any  right,  power or remedy  hereunder  shall  operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further  exercise thereof or the exercise of
any other right,  power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.

     7.6.  Governing Law. This  Agreement  shall be governed by and construed in
accordance  with the laws of the State of New York without  giving effect to the
principles of conflict of laws thereunder which would specify the application of
the law of another jurisdiction.

     7.7. Headings; Interpretive Matters. The section headings of this Agreement
are  for  reference  purposes  only  and  are  to be  given  no  effect  in  the
construction or interpretation of this Agreement. No provision of this Agreement
will be interpreted in favor of, or against, any of the parties hereto by reason
of the  extent  to which  any  such  party or its  counsel  participated  in the
drafting  thereof  or by reason of the  extent  to which any such  provision  is
inconsistent with any prior draft hereof or thereof.

     7.8. Binding Effect;  Assignment.  This Agreement shall be binding upon and
inure  to the  benefit  of the  parties  and  their  respective  successors  and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third-party  beneficiary  rights in any Person or entity not a party to this
Agreement  except as provided  below.  No assignment of this Agreement or of any
rights or obligations hereunder may be made by the Corporation or the Subscriber
(by  operation of law or  otherwise)  without the prior  written  consent of the
other party hereto and any attempted  assignment  without the required  consents
shall be void. Upon any permitted  assignment,  the references in this Agreement
to the Corporation shall apply to any such assignee unless the context otherwise
requires.

                                     7

     IN WITNESS  WHEREOF,  the parties  hereto  have  caused  this  Subscription
Agreement to be duly executed as of the date and year first written above.

                                   SEMICONDUCTOR LASER
                                   INTERNATIONAL CORPORATION


                                   By:________________________
                                   Name: Geoffrey T. Burnham
                                   Title: President and Chief Executive Officer



                                   ___________________________
                                   [Subscriber]

                                     8



[TYPE]    EX-10.28


                              SECURITIES PURCHASE AGREEMENT

     Securities  Purchase  Agreement (this  "Agreement"),  dated as of March __,
2000, by and among  Semiconductor Laser  International  Corporation,  a Delaware
corporation  (the  "Company"),  and  each of the  purchasers  set  forth  on the
signature  pages hereto  (individually,  a "Purchaser"  and,  collectively,  the
"Purchasers").
                                 W I T N E S S E T H :

     WHEREAS,  the Company proposes to issue and sell to the Purchasers for cash
an  aggregate  of  nine  million  four  hundred  thousand   (9,400,000)   shares
(individually,  a "Share" and,  collectively,  the "Shares") of common stock, no
par value,  of the Company  (the  "Common  Stock") and nine million four hundred
thousand  (9,400,000)  warrants to purchase  shares of Common  Stock (as further
described below); and

     WHEREAS,  the Company,  among other things,  has agreed to provide  certain
registration rights under the Securities Act of 1933 (the "Securities Act") with
respect to the Shares,  the shares of Common  Stock  issuable  upon  exercise of
warrants that are being issued to the Purchasers  pursuant to this Agreement and
certain  shares of Common  Stock  issuable  pursuant  to this  Agreement  or the
Registration Rights Agreement (as hereinafter defined).

     NOW  THEREFORE,  in  consideration  of the above  recitals  and the  mutual
covenants set forth herein, the parties hereto agree as follows:

       1.       Sale of Stock and Delivery of Warrants; Closing.

     (a)  Purchase and Sale.  Subject to the terms and  conditions  hereof,  the
Company  shall  issue and sell to each of the  Purchasers,  and each  Purchaser,
severally,  shall  purchase  from the  Company,  the  number of Shares set forth
opposite such  Purchaser's name on Schedule 1 hereto at a purchase price of $.50
per Share. The Company shall deliver to each Purchaser warrants to purchase,  at
an exercise  price of $.75 per share,  such number of shares of Common Stock set
forth opposite such Purchaser's name on Schedule 1 hereto (the "Warrants").  The
shares of Common  Stock  issued or issuable  upon  exercise of the  Warrants are
hereinafter  referred to as the "Warrant  Shares." The Warrants  shall be in the
form of Exhibit A hereto.

     (b)  Closing.  The  closing  of the  purchase  and sale of the  Shares  and
Warrants  (the  "Closing")  shall  take place at the  offices of Swidler  Berlin
Shereff Friedman,  LLP, 405 Lexington Avenue,  New York, New York 10022 on March
__, 2000, or such later date on which the conditions set forth in Sections 8 and
9 hereof  shall have been  satisfied  or  waived;  provided,  however,  that the
Closing,  in no event,  shall occur later than March 28,  2000.  The date of the
Closing shall be hereinafter referred to as the "Closing Date."

     (c) Delivery. At the Closing, the Company shall deliver to each Purchaser a
stock  certificate  representing  the Shares purchased by such Purchaser and the
Warrants to be  delivered  to such  Purchaser,  against  payment of the purchase
price therefor by cashier's  check,  payable to the order of the Company,  or by
wire transfer of immediately  available  funds to the Company in accordance with
the Company's  wiring  instructions.  In addition,  the Company shall deliver to
each Purchaser such other  agreements,  documents,  certificates and opinions as
specified in this Agreement or as may reasonably be requested by such Purchaser.

       2.       Representations  and  Warranties  of  Purchasers.  Each  of  the
Purchasers  represents,   warrants  and covenants, severally, to the Company, as
of the date hereof and as of the Closing Date, as follows:

     (a) Authorization. The Purchaser is duly organized, validly existing and in
good  standing  under  the  laws  of its  jurisdiction.  The  Purchaser  has the
necessary  power and  authority  to execute and deliver  this  Agreement  and to
perform its  obligations  hereunder.  The  execution  and  delivery  of, and the
performance  under,  this  Agreement by the Purchaser will not conflict with any
rule,  regulation,  judgment or material agreement  applicable to the Purchaser.
Each of the Transaction  Documents to which the Purchaser is a party constitutes
the valid and  binding  obligation  of the  Purchaser,  enforceable  against the
Purchaser  in  accordance  with its terms,  except (i) as limited by  applicable
bankruptcy,  insolvency,  reorganization,  moratorium  or other  laws of general
application  affecting  enforcement of creditor's  rights and (ii) as limited by
general  principles  of equity  that  restrict  the  availability  of  equitable
remedies.

     (b)  Investment  Purpose.  The  Purchaser was not formed for the purpose of
acquiring the  Securities  (as defined  below).  The Purchaser is purchasing the
Shares  and  acquiring  the  Warrants,  and will  purchase  the  Warrant  Shares
(together with the Shares and the Warrants,  the  "Securities"),  for investment
purposes  and not with a present  view to,  or for sale in  connection  with,  a
distribution  thereof  within the meaning of the  Securities  Act. The Purchaser
understands  that  it may  not be able  to  sell  or  otherwise  dispose  of the
Securities,  and  accordingly it must bear the economic risk of this  investment
indefinitely.  The Purchaser  understands that the Company has had and continues
to have insufficient  capital and that this investment involves a high degree of
risk.

     (c) Reliance On Exemptions.  The Purchaser  understands that the Securities
have not been registered  under the Securities Act or any state  securities laws
and are being  offered and sold in reliance upon  specific  exemptions  from the
registration  requirements  of Federal  and state  securities  laws and that the
Company  is  relying  upon the truth and  accuracy  of the  representations  and
warranties  of the  Purchaser  set  forth  herein  in  order  to  determine  the
availability  of such exemptions and the eligibility of the Purchaser to acquire
the Securities.

     (d) Information. The Purchaser has been furnished all documents relating to
the  business,  finances  and  operations  of the  Company  which the  Purchaser
requested  from the Company  and has been able to evaluate  the risks and merits
associated  with  an  investment  in the  Securities  to its  satisfaction.  The
Purchaser  has been afforded the  opportunity  to ask questions of the Company's
representatives  concerning  the Company in making the  decision to purchase the
Shares and acquire the Warrants,  and such  questions  have been answered to its
satisfaction.  However,  neither  the  foregoing  nor any  other  due  diligence
investigation conducted by the Purchaser or on its behalf shall limit, modify or
affect the  representations  and  warranties of the Company in Section 3 of this
Agreement or the right of the Purchaser to rely thereon.

     (e) Governmental Review. The Purchaser understands that no Federal or state
agency or any other  government or  governmental  agency has passed upon or made
any recommendation or endorsement of the Securities.

     (f) Purchaser's  Qualifications.  The Purchaser is an "accredited investor"
as defined in Rule 501 under  Regulation D of the  Securities  Act  ("Regulation
D").  The  Purchaser  is  capable  of  evaluating  the  merits  and  risks of an
investment in the Securities.

     (g)  Restrictions on Transfer.  The Purchaser  covenants and agrees that it
shall not transfer any of the Securities  unless such  Securities are registered
under  the  Securities  Act  or  unless  an  exemption  from   registration  and
qualification requirements are available under the Securities Act and applicable
state  securities  laws and the  Company  has  received  an  opinion  of counsel
satisfactory  to it stating  that such  registration  and  qualification  is not
required;  provided,  that such  transaction be effected in accordance  with the
assignment  provisions of Section 11(e) hereof.  The Purchaser  understands that
certificates  representing the Shares, the Warrants,  the Warrant Shares, shares
of Common Stock issued pursuant to Section 5 of this Agreement,  and any Default
Shares (as such term is defined in the Registration  Rights  Agreement  attached
hereto as  Exhibit  B (the  "Registration  Rights  Agreement"))  shall  bear the
following,  or substantially similar,  legends until such time as they have been
registered under the Securities Act or otherwise may be sold without  compliance
with volume limitations under Rule 144 under the Securities Act:

          THE SECURITIES  REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
          THE  SECURITIES  ACT OF 1933  (THE  "ACT")  OR  UNDER  ANY  STATE
          SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
          ASSIGNED  WITHOUT (A)  REGISTRATION  UNDER THE ACT AND APPLICABLE
          STATE SECURITIES LAWS OR (B) RECEIPT BY THE COMPANY OF AN OPINION
          OF COUNSEL  SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
          NOT REQUIRED.

     (h) Residence.  The Purchaser is a resident of the  jurisdiction  set forth
under its name on the signature pages hereto.

     (i)  Antidilution.  Each of the Purchasers  understand that the Company has
antidilution   protection   provisions  in  its  Certificate  of   Designations,
Preferences  and  Rights  and  Series B  Convertible  Preferred  Stock  covering
1,000,000  shares  of the  Company's  Series  B  Preferred  Stock  which  may be
convertible  into  5,000,000  shares of Common  Stock for each share of Series B
Preferred  Stock and warrants  convertible  into 500,000 shares of the Company's
Common Stock.  It is further  understood  that the investment in the Company may
trigger certain  antidilution,  adjustments and co-investment  rights under such
instruments.  Each of the Purchasers has been furnished with such instruments by
the Company and has been able to evaluate the risks and merits  associated  with
an investment in the Securities to its satisfaction.

       3.       Representations  and Warranties of the Company.  The Company
represents  and warrants to each  Purchaser,as of the date hereof and as of the
Closing Date, as follows:

     (a)  Organization  and Good  Standing.  The Company is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware,  and has all necessary  corporate  power and authority to own or lease
its assets and to carry on its  business as now being  conducted  and  presently
proposed  to be  conducted.  The Company is duly  qualified  to do business as a
foreign  corporation  and is in good standing in each  jurisdiction in which its
ownership  or leasing  of assets,  or the  conduct of its  business,  makes such
qualification  necessary,  except where the failure to be so qualified would not
result in a Material Adverse Change (as defined in Section 3(h) hereof).

     (b)  Subsidiaries.  The  Company has no  subsidiaries.  Except as listed on
Schedule  3(b),  the  Company  has  no  equity  interest  in  any   corporation,
partnership, joint venture or other entity.

     (c)  Requisite  Power and  Authorization.  The  Company  has all  necessary
corporate  power and  authority  to execute  and  deliver  this  Agreement,  the
Registration Rights Agreement and the Warrants  (collectively,  the "Transaction
Documents")  and to  perform  its  obligations  under  each  of the  Transaction
Documents, including without limitation the issuance of the Securities hereunder
and thereunder.  All corporate  action of the Company required for the execution
and delivery of the  Transaction  Documents and the issuance and delivery of the
Securities  has  been  duly  and  effectively  taken,  and no  further  actions,
authorizations or consents,  including,  without limitation, any consents of the
stockholders of the Company,  are required.  Each of the  Transaction  Documents
constitutes the valid and binding obligation of the Company, enforceable against
the Company in  accordance  with its terms,  except (i) as limited by applicable
bankruptcy,  insolvency,  reorganization,  moratorium  or other  laws of general
application  affecting  enforcement  of  creditor's  rights,  (ii) as limited by
general  principles  of equity  that  restrict  the  availability  of  equitable
remedies  and  (iii) as the  indemnity  provisions  of the  Registration  Rights
Agreement may be limited by law. The Shares, when issued, delivered and paid for
in compliance  with the provisions of this  Agreement,  will be validly  issued,
fully paid and  non-assessable,  free and clear of any and all  liens,  charges,
claims or encumbrances.  The Warrant Shares,  if and when issued,  delivered and
paid for in compliance  with the  provisions of this Agreement and the Warrants,
will be validly issued, fully paid and non-assessable, free and clear of any and
all  liens,  charges,  claims  or  encumbrances.  The  Company  has  reserved  a
sufficient number of shares of Common Stock necessary for issuance of the Shares
and the Warrant Shares.

     (d) SEC  Documents.  The Company has filed with the Securities and Exchange
Commission  (the "SEC") all reports,  statements,  schedules and other documents
(collectively,  the "SEC Documents")  required to be filed by it pursuant to the
Securities Act and the Securities Exchange Act of 1934 (the "Exchange Act"). The
Company is subject to the  reporting  requirements  of the  Exchange Act and has
been so subject  during the last three  years.  Since  December  31,  1998,  the
Company has filed in a timely manner all SEC Documents  required to be filed (or
obtained  extensions in respect  thereof and filed within the  applicable  grace
period).  As of  their  respective  dates,  the SEC  Documents  complied  in all
material  respects with the  requirements  of the Securities Act or the Exchange
Act, as the case may be, and the rules and  regulations  of the SEC  promulgated
thereunder,  and none of the SEC Documents, at the time they were filed with the
SEC,  contained  any untrue  statement of a material  fact or omitted to state a
material  fact  required to be stated  therein or necessary in order to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.  As of their respective dates, the financial statements included
in the SEC Documents  (the  "Financial  Statements")  complied as to form in all
material  respects with  applicable  accounting  requirements  and the published
rules and  regulations  of the SEC with  respect  thereto.  Except (i) as may be
indicated in the notes to the  Financial  Statements  or (ii) in the case of the
unaudited interim statements,  as permitted by Form 10-Q under the Exchange Act,
the Financial  Statements  have been  prepared in accordance  with United States
generally accepted accounting principles consistently applied and fairly present
in all material  respects the financial  position of the Company as of the dates
thereof and the results of its  operations  and cash flows for the periods  then
ended  (subject,  in the  case of  unaudited  statements,  to  normal  recurring
year-end adjustments and footnotes).

     (e) Capitalization. The capitalization of the Company as of the date hereof
is set forth on Schedule 3(e),  including (i) the authorized capital stock, (ii)
the number of shares issued and outstanding, (iii) the number of shares reserved
for issuance pursuant to stock option, employee benefit or other plans, (iv) the
number of shares  reserved  for  issuance  or issuable  pursuant  to  securities
exercisable for, or convertible  into or exchangeable  for, any shares of Common
Stock,  (v) the number of shares of Common  Stock  reserved  for  issuance  with
respect to the sale of the Shares, and (vi) the number of shares of Common Stock
reserved for issuance upon exercise of the Warrants.  All outstanding  shares of
capital stock have been duly  authorized  and validly  issued and are fully paid
and  non-assessable.  Except as set forth on  Schedule  3(e) and  except for the
Securities  issued  hereunder,  the  Company has (i) no  outstanding  securities
convertible into or exchangeable for any shares of capital stock of the Company,
(ii) no rights, options,  warrants,  calls or other agreements or commitments of
any nature  whatsoever  relating  to the  purchase or other  acquisition  of any
shares of its capital stock or securities  convertible  into or exchangeable for
any shares of its capital stock or (iii) no shares of its capital stock reserved
for issuance.  Except as set forth on Schedule  3(e), the Company is not a party
to, and it has no knowledge of, any agreement restricting the voting or transfer
of any shares of the capital stock of the Company.

     (f) No Conflicts.  Neither the execution,  delivery and  performance by the
Company of this Agreement,  the other Transaction Documents, and all instruments
and  documents to be delivered by the Company in connection  therewith,  nor the
consummation  of the  transactions  contemplated by any of the foregoing (i) has
constituted or resulted in, or will  constitute or result in, a default under or
breach or violation of any term or provision of the Certificate of Incorporation
or Restated By-Laws of the Company or material contracts or instruments to which
the Company is a party or Federal,  state or local laws,  rules or  regulations,
writs,  orders,  judgments or decrees which are applicable to the Company or its
assets,  (ii) will result in the acceleration or termination of any rights under
any  material  contract or  instrument  to which the Company is a party or (iii)
will result in the  creation or  imposition  of any material  liens,  charges or
encumbrances  upon  any  assets  of  the  Company  (except  for  such  defaults,
accelerations,  terminations,  liens  charges  and  encumbrances  as would  not,
individually or in the aggregate, have a Material Adverse Effect).

     (g) Consents.  Other than any necessary approvals of the Board of Directors
of the Company that will be obtained before the Closing,  no approval,  consent,
order,  authorization  or other  action  by, or notice  to or filing  with,  any
governmental  authority or regulatory agency or any other person or entity,  and
no lapse of a waiting  period,  is required in  connection  with the  execution,
delivery or performance by the Company of this Agreement,  any other Transaction
Document,  the  issuance  and  delivery  of any of the  Securities  or any other
transactions contemplated by any of the Transaction Documents except for (i) the
filing of a Form D with the SEC, (ii) filings  required under  applicable  state
"blue sky" laws (which shall be duly filed and effective prior to the Closing if
so required under such laws) and (iii) the filing of a registration statement or
statements pursuant to the Registration Rights Agreement.

     (h) No Material Adverse Change. Except as set forth on Schedule 3(h), since
December 31, 1998, the business of the Company has been operated in the ordinary
course and  substantially  consistent  with past practice and there has not been
any  material  adverse  change in the  business,  assets,  financial  condition,
results of operations,  affairs or prospects of the Company (a "Material Adverse
Change").  Since  December 31, 1998, the Company has not (i) paid any obligation
or liability or discharged or satisfied any liens or encumbrances  other than in
the  ordinary  course  of  business;  (ii)  declared  or  made  any  payment  or
distribution  to its  stockholders or purchased or redeemed any of its shares of
capital stock or other securities;  (ii) mortgaged,  pledged or subjected to any
lien,  charge or other  encumbrance  any of its assets,  tangible or intangible,
except in the ordinary course of business;  (iv) sold, transferred or leased any
of its assets  except for fair value in the  ordinary  course of  business;  (v)
increased  the  annual  compensation  payable  to any of its  officers  or other
employees,   consultants  or  representatives  by  greater  than  $20,000;  (vi)
cancelled or compromised  any debt or claim,  or waived or released any right of
material value;  (vii) entered into any  transaction  other than in the ordinary
course of business;  (viii)  issued or sold any shares of capital stock or other
securities  or granted  any  options,  warrants  or other  purchase  rights with
respect  thereto that are not  disclosed on Schedule  3(e); or (ix) agreed to do
any of the foregoing (other than pursuant hereto).

     (i) Litigation. Except as described in the SEC Documents or as set forth on
Schedule 3(i),  there is no claim,  action,  suit,  proceeding or  investigation
pending or, to the Company's  knowledge,  threatened against the Company, or any
of its respective  directors or officers,  in their capacities as such, (i) that
questions the validity of this  Agreement or any other  Transaction  Document or
the issuance of the  Securities,  or the right of the Company to enter into this
Agreement or any other  Transaction  Document or to consummate the  transactions
contemplated  by any  Transaction  Document  or (ii) that  could  reasonably  be
expected to result,  either  individually  or in the aggregate,  in any Material
Adverse Change or in any material change in the current equity  ownership of the
Company.  The Company is not a party or subject to the  provisions of any order,
writ, injunction,  judgment,  stipulation or decree of any court, administrative
agency,   commission,   regulatory   authority,   other  government   agency  or
instrumentality.

     (j) No Default.  The Company is not in  violation  of or default  under any
provision  of its  Certificate  of  Incorporation  or Restated  By-Laws or other
constituent  documents or is in default  (or,  with notice or the lapse of time,
would be in default)  under any  material  agreement,  contract,  commitment  or
instrument to which it is a party or by which it or its  properties or assets is
bound or affected.  To the  Company's  knowledge,  no third party is in material
default  under or in material  breach or  violation  of any  material  contract,
commitment  or instrument to which the Company is a party or by which any of its
properties or assets are bound or affected.

     (k)  Compliance  with Laws.  The Company is in compliance and has conducted
its business and  operations so as to comply with all laws  (including,  without
limitation,   any  environmental  laws),  ordinances,   rules  and  regulations,
judgments,  decrees or orders of any regulatory  authority or other governmental
or  administrative  body or  instrumentality,  whether domestic or foreign.  The
Company has not,  since December 31, 1998,  received any notice  relating to any
violation or potential  violation of applicable law or  regulations.

     (l) Title.  Except as set forth on Schedule  3(l), the Company has good and
marketable title to all real and personal property owned by it which is material
to its  business,  in each case free and clear of all  liens,  encumbrances  and
defects.  Any property,  real or personal,  held under lease by the Company,  is
held by it under valid and enforceable leases.

     (m)  Intellectual  Property.  The Company  owns or  possesses  adequate and
enforceable  rights  to  use  all  patents,  patent  applications,   trademarks,
trademark  applications,  trade  names,  service  marks,  copyrights,  copyright
applications, licenses, permits, domain names, know-how (including trade secrets
and  other   unpatented   and/or   unpatentable   proprietary  or   confidential
information,  systems or procedures)  and other similar  rights and  proprietary
knowledge  necessary to conduct its business as  heretofore  conducted by it, as
now being conducted by it, and as proposed to be conducted by it  (collectively,
the "Intangibles").  To the Company's knowledge,  the Company has not infringed,
is infringing, or is in conflict with any right of any other person with respect
to, any Intangibles. To the knowledge of the Company, no person is infringing on
or violating the Intangibles owned or used by the Company.

     (n) Registration Rights. The only registration rights,  including piggyback
rights, granted (or agreed to be granted) to any person or entity other than the
Purchasers  are set forth on  Schedule  3(n).  None of the  registration  rights
disclosed  on Schedule  3(n) are senior in priority to the  registration  rights
provided for in the Registration Rights Agreement.

     (o) OTC Bulletin Board. The Common Stock is traded by means of the National
Association of Securities Dealers, Inc. (the "NASD") OTC Bulletin Board Service
(the  "OTCBB").  The sale of the  Securities  as  contemplated  hereby  will not
violate any rule of the NASD applicable to the Company or the Common Stock.  The
Company has not  received  notification,  written or oral,  and has no reason to
believe,  that the  Company has failed to satisfy  any  requirement  of the NASD
relating to the trading of the Common Stock on the OTCBB.

     (p) No  Misrepresentation.  No representation or warranty by the Company in
this Agreement  (including any Exhibit or Schedule  hereto) and no statements of
the  Company  contained  in  any  document,   certificate,   schedule  or  other
information furnished or to be furnished by or on behalf of the Company pursuant
to this Agreement or any other  Transaction  Document or in connection  with the
transactions  contemplated by any Transaction Document contains or shall contain
any untrue statement of material fact or omits or shall omit to state a material
fact  required to be stated herein or therein or necessary in order to make such
statements,  in light of the  circumstances  under  which  they were  made,  not
misleading.  Except  for the  transactions  contemplated  hereby,  no  event  or
circumstance  has occurred or exists with respect to the Company or its business
affairs, assets, properties,  prospects, operations or financial condition which
has not been  publicly  disclosed,  but which,  under  applicable  law,  rule or
regulation,  would be required to be disclosed by the Company in a  registration
statement  filed on the date hereof by the Company under the Securities Act with
respect to the primary  issuance of the  Company's  securities.  The Company has
delivered true and complete copies of all documents  requested by the Purchasers
in writing.

     (q) Other Shares.  Except as set forth on Schedule  3(q), no stockholder of
the Company or other person or entity has any preemptive  right of  subscription
or purchase or contractual  right of first refusal or similar right with respect
to any of the  Securities.  Issuance  of the  Securities  will not result in the
issuance of any additional shares of Common Stock or similar rights contained in
any options,  warrants,  debentures  or other  securities  or  agreements of the
Company.

     (r) No Brokers or Finders.  Except for the fee described on Schedule  3(r),
which fee is the  responsibility of and is being paid by the Company,  no person
or  entity  has or will  have,  as a result  of any  engagement  or  contractual
obligation incurred by the Company or any of its affiliates, any right, interest
or  valid  claim  against  any  Purchaser  for  any  commission,  fee  or  other
compensation as a finder or broker,  or in any similar  capacity,  in connection
with the transactions contemplated by this Agreement.

     (s)  Change of  Control  Payments.  Neither  the  execution,  delivery  and
performance  by  the  Company  of  any  of the  Transaction  Documents  nor  the
consummation of any of the transactions  contemplated  thereby shall require any
payment by the Company,  in cash or kind,  under any  agreement,  plan,  policy,
commitment  or other  arrangement.  There are no  agreements,  plans,  policies,
commitments or other arrangements with respect to any compensation,  benefits or
consideration which will be materially increased,  or the vesting of benefits of
which will be materially accelerated,  as a result of the execution and delivery
of the  Transaction  Documents  or  the  occurrence  of any of the  transactions
completed thereby.  There are no payments or other benefits,  the value of which
will be calculated on the basis of any of the transactions  contemplated by this
Agreement or any other Transaction Document.

     (t) Taxes. Except as set forth on Schedule 3(t), the Company has accurately
prepared and filed all federal,  state and other tax returns  required by law to
be filed by it, has paid or made  provisions  for the payment of all taxes shown
to be due and all additional assessments,  and adequate provisions have been and
are  reflected  in the  Financial  Statements  for all  current  taxes and other
charges  to which the  Company is subject  and which are not  currently  due and
payable.  None of the income  tax  returns of the  Company  is  currently  being
audited by the Internal Revenue Service or any other  governmental  entity.  The
Company  has  not  filed  with  the  Internal   Revenue  Service  or  any  other
governmental authority any agreement or document extending, or having the effect
of extending,  the period for assessment or collection of any taxes. The Company
has no knowledge of any  additional  assessments,  adjustments or contingent tax
liability  (whether Federal or state) pending or threatened  against the Company
for any period, nor of any material basis for any such assessment, adjustment or
contingency.

     (u) Year 2000  Compliance.  Each system,  comprised of software,  hardware,
databases or embedded control systems  (microprocessor  controlled or controlled
by any robotic or other  device) that  constitutes  any material  part of, or is
used in  connection  with the use,  operation  or  enjoyment  of,  any  material
tangible or intangible asset of the Company (collectively,  a "System"),  to the
Company's  knowledge,  was not and will not be materially  adversely affected by
the  advent of the year  2000,  the  advent of the  twenty-first  century or the
transition  from  the  twentieth  century  through  the  year  2000 and into the
twenty-first century. To the Company's knowledge,  the Company has not incurred,
and it has no reason to believe  that it may incur,  material  expenses  arising
from or  relating to the failure of any of its Systems as a result of the advent
of the year 2000, the advent of the twenty-first  century or the transition from
the twentieth  century through the year 2000 and into the twenty-first  century.
To the  Company's  knowledge,  each System of the Company is able to  accurately
process,  provide and/or receive all date/time data, including,  but not limited
to,  calculating,  comparing and sequencing  within,  from, into and between the
twentieth  century  (through  year  1999),  the year  2000 and the  twenty-first
century, including leap year calculations; and has not been, and will not be, as
to performance  and  functionality,  affected by any  dates/times  prior to, on,
after or  spanning  January 1, 2000 ("Year 2000  Compliant").  To the  Company's
knowledge,  all  vendors of  products  or  services  to the  Company,  and their
respective products, services and operations are Year 2000 Compliant.

     (v) Registration  Statement.  The Company is currently eligible to register
the  resale  of  its  Common  Stock  under  the  Securities  Act  pursuant  to a
registration statement on Form SB-2. To the Company's knowledge,  there exist no
facts or circumstances that would inhibit or delay the preparation and filing of
a registration statement on Form SB-2 with respect to the Shares and the Warrant
Shares.

     (w) ERISA. All "employee  benefit plans", as defined in Section 3(3) of the
Employee  Retirement Income Security Act of 1974, as amended ("ERISA"),  and any
other  employee  benefit   arrangements  or  payroll  practices  (the  "Plans"),
maintained by the Company or to which the Company contributed or is obligated to
contribute thereunder,  is and has been maintained in compliance with applicable
law,  including but not limited to ERISA,  the Internal Revenue Code of 1986, as
amended (the "Code"), and any applicable law of any other governmental authority
and with any other  contractual  obligations and their terms.  Each Plan that is
intended to be a tax qualified  plan under  Section  401(a) of the Code has been
determined by the Internal  Revenue  Service to qualify under Section 401 of the
Code, and the trusts created  thereunder  have been determined to be exempt from
tax under the  provisions of Section 501 of the Code,  and nothing has occurred,
including  the adoption of or failure to adopt any Plan  amendment,  which could
reasonably  be expected to  adversely  affect its  qualification  or  tax-exempt
status.

     (x) Labor Matters. There are no strikes or other labor disputes against the
Company  pending  or,  to  the  Company's  knowledge,  threatened.  There  is no
organizing   activity  involving  the  Company  pending  or,  to  the  Company's
knowledge, threatened by any labor union or group of employees.

       4.       Registration Rights.       At the Closing, the Company and the
Purchasers shall enter into the Registration Rights Agreement.

       5.       Co-investment Rights for New Securities.

     (a) The Company  hereby grants to each  Purchaser that owns at least 50% of
the Shares purchased by it pursuant to this Agreement a co-investment right with
respect to any New  Securities  (as defined  below) which the Company may,  from
time to time,  during the period  beginning  on the date of this  Agreement  and
ending on the fourth anniversary of the Closing Date, propose to sell and issue.
Such right of co-investment shall allow each eligible Purchaser,  at its option,
to maintain up to its percentage  ownership of outstanding equity of the Company
(on a fully diluted basis,  with respect to ownership and with respect to voting
rights)  by  participating  in such  issuance  of  securities  on  terms no less
favorable  in any respect  than the terms on which any other  purchaser  of such
securities  participates  in such issuance.  The  maintenance of such percentage
ownership of any eligible Purchaser shall be only to the extent practicable, and
any eligible  Purchaser  shall take into account the  difficulty  of achieving a
precise   percentage  for  such  eligible  Purchaser  while  also  satisfying  a
prospective  purchaser's  objectives;  provided,  however, that any shortfall in
such maintenance of such eligible  Purchaser's  percentage ownership shall be de
minimus.

     (b) The  Company  shall  notify any  eligible  Purchaser,  in writing  (the
"Notice"),  of its  intention to sell such  securities,  setting forth the terms
under  which it  proposes  to make such sale,  the  persons to whom such sale is
proposed to be made,  and the number of  securities  it  proposes  to sell,  and
advising  such  eligible  Purchaser of the amount of such  securities  which the
eligible  Purchaser is entitled to purchase in  accordance  with this Section 5.
Any eligible  Purchaser shall have the right, but not the obligation,  to notify
the  Company  within 10 days  after the  Company  gives  such  notice  that such
eligible Purchaser desires to purchase some or all of the securities which it is
entitled to purchase  hereunder.  Failure to give such notice within such 10 day
period shall constitute a waiver of such eligible  Purchaser's right to purchase
such securities  under this Section 5. If any eligible  Purchaser shall give the
Company  timely  notice that it desires to purchase  such  securities,  it shall
purchase  such  securities  within 2 Business  Days of its notice to the Company
regarding  such  purchase,  on the same  terms,  and at the same  price that the
Company  sells  the  remainder  of such  securities,  all such  sales to be made
pursuant to the terms set forth in the Notice. "Business Day" shall mean any day
that is not a  Saturday,  a  Sunday  or a day on which  banks  are  required  or
permitted to be closed in the State of New York.

     (c) "New Securities" shall mean any authorized but unissued shares, and any
treasury  shares,  of capital stock of the Company,  and all rights,  options or
warrants to purchase  capital stock,  and securities of any type whatsoever that
are,  or may  become,  convertible  into  or  exchangeable  for  capital  stock;
provided,  however,  that  the  term  "New  Securities"  does  not  include  (i)
securities  issued pursuant to the acquisition of another  corporation or entity
by the Company by merger,  purchase of all or substantially all of the assets or
other reorganization whereby the Company shall become the owner of more than 50%
of the voting power of such  corporation or entity;  (ii) shares of Common Stock
issued in  connection  with any stock split or stock  dividend  of the  Company;
(iii) shares of Common Stock issued  pursuant to any public offering and sale of
equity securities of the Company pursuant to an effective registration statement
under the Securities  Act; (iv) Warrant Shares  delivered to the Purchasers upon
exercise of the Warrants; (v) Default Shares issued pursuant to the Registration
Rights Agreement;  (vi) options granted under, and shares of Common Stock issued
pursuant to the exercise of options granted under, the current stock option plan
of the Company plus up to an additional  five million shares of Common Stock and
options to purchase  Common Stock that may be granted under any successor  stock
option plan of the Company;  and (vii) the issuance of Common Stock and warrants
to purchase shares of Common Stock privately placed for sale by the Company to a
group of  investors  within  thirty  (30)  days from the  Closing  Date on terms
substantially  the same as applicable to the sale of the Shares pursuant to this
Agreement.  "Proportionate Share" shall be equal to a fraction, the numerator of
which  shall  equal the total  number of  shares of Common  Stock  (taking  into
account all shares of Common Stock  issuable upon exercise of the Warrants) then
owned by such  Purchaser  and the  denominator  of which  shall  equal the total
number of shares of Common Stock  outstanding  immediately prior to the issuance
of the New Securities (assuming the exercise of all Warrants,  but not including
options, warrants or other rights to acquire Common Stock).

     (d) If the Company  shall  propose to issue New  Securities,  it shall give
each Purchaser written notice thereof, describing the New Securities, the number
thereof to be issued, the purchase price therefor (which shall be payable solely
in cash) and the terms upon which the Company  shall  propose to issue the same.
Each Purchaser shall have 10 Business Days from the date such notice is received
to  determine  whether  to  purchase  all or any  portion  of  such  Purchaser's
Proportionate  Share of such New  Securities for the purchase price and upon the
terms  specified  in the  notice by giving  written  notice to the  Company  and
stating therein the number of New Securities to be purchased.

     (e) If the  Purchasers  shall not have elected  within such 10 Business Day
period to purchase all of the New Securities  proposed to be issued, the Company
shall  provide to each  Purchaser,  within  five  Business  Days  thereafter,  a
schedule  setting  forth  the  following  information:  (i)  the  amount  of New
Securities   elected  to  be  purchased;   (ii)  the  purchasers   thereof  (the
"Participating Purchasers") and the specific amount of New Securities elected to
be purchased by each such Participating  Purchaser;  and (iii) the amount of New
Securities  not elected to be  purchased.  Each  Participating  Purchaser  shall
thereafter  have an  additional  10 Business  Days after such five  Business Day
period has elapsed to  determine  whether to purchase all or any portion of such
Participating  Purchaser's  Residual  Proportionate  Share (as defined below) of
such  remaining  New  Securities  for the  purchase  price  and upon  the  terms
specified  in the notice by giving  written  notice to the  Company  and stating
therein the number of New  Securities to be purchased.  "Residual  Proportionate
Share"  shall be equal to a  fraction,  the  numerator  of which shall equal the
total  number of shares of Common  Stock (as  determined  in the  definition  of
Proportionate  Share)  then  owned  by  such  Participating  Purchaser  and  the
denominator  of which shall equal the total  number of such shares  owned by all
Participating Purchasers.

     (f) If the  Purchasers  shall not have  elected to purchase  all of the New
Securities  proposed  to be issued  (within the time  period for  notifying  the
Company set forth above),  then the Company shall have 60 calendar days in which
to complete  the  proposed  issuance of the  portion of the New  Securities  not
purchased  by the  Purchasers  at a price not less than  that  contained  in the
notice  previously  given to the Purchasers and on terms and conditions not more
favorable to the third party than those contained in such notice. If, at the end
of such  60-calendar  day period,  the  Company  shall not have  completed  such
issuance of New  Securities,  the Company  shall no longer be permitted to issue
such New  Securities  pursuant to this Section 5  without again fully  complying
with all of the provisions of this Section 5.

       6.       Buy-In Rights.

     (a) In the event that (i) the Company  shall fail for any reason to deliver
Warrant  Shares to a Purchaser  upon  exercise of any  Warrants  within the time
period  specified in paragraph (a) of such Warrants or the Company shall fail to
remove,  or shall fail to cause its transfer  agent to remove,  any  restrictive
legend on any certificates  evidencing Shares, Warrant Shares, Default Shares or
shares  of  Common  Stock  issued  pursuant  to  Section  5  of  this  Agreement
(collectively,  the "Buy-In  Shares") as and when required under Section 7(e) of
this Agreement and (ii)  thereafter,  such Purchaser  shall purchase (in an open
market  transaction  or  otherwise)  shares of Common Stock to make  delivery in
satisfaction  of a sale by such  Purchaser of (A) the Warrant  Shares which such
Purchaser anticipated receiving upon such exercise or (B) such unlegended Buy-In
Shares,  as the case may be (in each case, the "Sold Shares"),  then the Company
shall pay to such Purchaser (in addition to any other remedies  available to the
Purchaser)  the  amount  by which  (x) such  Purchaser's  total  purchase  price
(including  brokerage  commissions,  if any) for the  shares of Common  Stock so
purchased shall exceed (y) the net proceeds  received by such Purchaser from the
sale of the Sold Shares.

     (b) The Company shall make any payments required pursuant to this Section 6
within five  Business  Days after  receipt of written  notice from the Purchaser
setting  forth the  correct  calculation  of the amount due  hereunder.  Nothing
contained  herein shall  relieve the Company from its  continuing  obligation to
deliver  Warrant Shares upon any such exercise of the Warrants or the unlegended
Buy-In Shares, as the case may be.

       7.       Covenants of the Company.  The Company hereby covenants that:

     (a)  Exchange Act Filings.  The Company  shall file in a timely  manner all
reports and other  documents  required to be filed by it under the  Exchange Act
(or obtain  extensions in respect  thereof and file within the applicable  grace
period).  The Company shall not  terminate  its status as an issuer  required to
file  reports  under the  Exchange Act even if the Exchange Act or the rules and
regulations promulgated thereunder would permit such termination.

     (b) Authorized  Shares.  The Company shall, from and at all times after the
Closing,  maintain a reserve of authorized  shares of Common Stock sufficient to
cover the issuance of the Warrant Shares underlying the Warrants.

     (c) Use of Proceeds.  The Company  shall use the net proceeds from the sale
of the Securities for general corporate and working capital purposes and capital
expenditures.

     (d) OTCBB Requirements.  The Company shall use its best efforts to continue
to meet all requirements necessary for trading of the Common Stock on the OTCBB.
The Company shall use its best efforts, including, without limitation,  promptly
filing any notification,  application,  form or other information and paying any
fees, to permit and maintain  trading on the OTCBB of all shares of Common Stock
(including Shares,  Default Shares and Warrant Shares) that may be issued to the
Purchasers.

     (e) Removal of Legends.  Any  restrictive  legend  placed on a  certificate
pursuant to Section 2(g) and any related stop transfer instructions with respect
to any Securities  shall be removed,  and the Company  shall,  within 2 Business
Days,  issue,  or cause its transfer agent to issue, a certificate  without such
legend to the holder  thereof,  if (i) such  Securities  are sold pursuant to an
effective  registration  statement  under the Securities Act or (ii) such holder
shall  provide  the  Company  with an opinion of  counsel,  satisfactory  to the
Company,  to the effect that a sale,  transfer or assignment of such  Securities
may be made pursuant to Rule 144(k) under the Securities Act or that such legend
may  otherwise  be  properly  removed  under  the  terms of Rule 144  under  the
Securities Act.

     (f)  Maintenance  of Existence and Conduct of Business.  The Company shall:
(i) do or cause to be done all things  necessary  to  preserve  and keep in full
force and effect its corporate  existence,  and its rights and  franchises;  and
(ii) at all times use its best efforts to maintain,  preserve and protect all of
its material  intellectual  property  including,  but not limited to,  licenses,
patents, trade secrets, confidential and proprietary information,  domain names,
copyrights,  trademarks,  service  marks and trade  names,  and preserve all the
remainder  of its  material  assets,  in use or  useful  in the  conduct  of its
business and keep the same in good repair,  working order and condition  (taking
into consideration  ordinary wear and tear) and from time to time make, or cause
to  be  made,  all  needful  and  proper  repairs,  renewals  and  replacements,
betterments and improvements thereto consistent with industry practices.

       8.       Conditions  to  Obligations  of the  Purchasers  at the  Closing
The obligation  of each  Purchaser  to purchase  the Shares at the Closing shall
be subject to the  fulfillment  on or prior to the  Closing  Date of the
following conditions, any of which may be waived by such Purchaser:

     (a) Certificates. The Company shall have delivered to each Purchaser a duly
executed  certificate  representing the Shares and the Warrants issuable to such
Purchaser.

     (b) Trading. The Common Stock shall be trading on OTCBB.

     (c)  Representations  and  Warranties;   Performance  of  Obligations.  The
representations  and  warranties  of the  Company set forth in Section 3 of this
Agreement  shall be true and correct when made, and shall be true and correct on
the Closing  Date with the same force and effect as if they had been made on and
as of said date, except for representations and warranties made as of a specific
date which  shall be true and correct as of such date.  The  Company  shall have
performed,  satisfied and complied with all obligations and conditions  required
to be performed or observed by it under this Agreement or any other  Transaction
Document on or prior to the Closing Date.

     (d)  Consents  and  Waivers.  The  Company  shall have made all filings and
obtained any and all consents (including,  without limitation,  all governmental
or  regulatory  consents),  approvals  or  authorizations,  permits  and waivers
necessary or appropriate for  consummation of the  transactions  contemplated by
this Agreement and any other Transaction Document.

     (e) No Litigation or Legislation.  To the Company's knowledge,  no Federal,
state or local statute,  rule,  regulation,  decree,  ruling or injunction shall
have been enacted or entered, and no litigation,  proceeding, government inquiry
or investigation shall be pending, which challenges,  prohibits or restricts, or
seeks to prohibit or restrict, the consummation of the transactions contemplated
by this Agreement or any other Transaction Document, or restricts or impairs the
ability of any Purchaser to own an equity interest in the Company.

     (f)  Compliance  Certificate.  The  Company  shall  have  delivered  to the
Purchasers  a  certificate,  executed  by the  Chief  Executive  Officer  of the
Company,  dated as of the Closing  Date,  certifying to the  fulfillment  of the
conditions  set forth in Sections  8(b),  (c), (d), (e), and (g), and such other
matters as the Purchasers shall reasonably request.

     (g) No Material  Adverse  Change.  There shall not have occurred  since the
execution of any of the Transaction Documents any Material Adverse Change.

     (h) Registration Rights Agreement.  At the Closing,  the Company shall have
executed and delivered to the Purchasers the Registration Rights Agreement.

       9.       Conditions to Obligation  of the Company at the Closing.  The
obligation of the Company to sell and issue the Shares and the Warrants to the
Purchasers  at the Closing shall be subject to the  fulfillment  on or prior to
the Closing Date of the following conditions, any of which may be waived by the
Company:

     (a) Purchase Price.  Each Purchaser shall have delivered the purchase price
for the Shares to be purchased by such Purchaser hereunder.


     (b) Representations and Warranties. The representations and warranties made
by the  Purchasers in this  Agreement  shall be true and correct when made,  and
shall be true and correct on the Closing  Date with the same force and effect as
if they had been made on and as of said  date,  except for  representations  and
warranties made as of a specific date which shall be true and correct as of such
date.

     (c) No Litigation or Legislation. No Federal, State or local statute, rule,
regulation, decree, ruling or injunction shall have been enacted or entered, and
no litigation, proceeding, government inquiry or investigation shall be pending,
which challenges,  prohibits or restricts, or seeks to prohibit or restrict, the
consummation  of the  transactions  contemplated  by this Agreement or any other
Transaction  Document,  or restricts or impairs the ability of any  Purchaser to
own an equity interest in the Company.

     (d) No Material  Adverse  Change.  There shall not have occurred  since the
execution of any of the Transaction Documents any Material Adverse Change

       10.           Survival; Indemnification; Expenses, Etc.

     (a) All representations,  warranties, covenants and agreements contained in
this Agreement or in any document  delivered  pursuant hereto shall be deemed to
be  material  and to have been  relied  upon by the  parties  hereto,  and shall
survive the Closing and shall be fully effective and enforceable for a period of
one year following the Closing Date, but thereafter shall be of no further force
or effect,  except as they  relate to claims  for  indemnification  timely  made
pursuant to this Section 10. Any claim for  indemnification  asserted in writing
before the first anniversary of the Closing Date shall survive until resolved or
judicially determined.

     (b) The Company agrees to indemnify and hold harmless the Purchaser and its
respective directors, officers, partners, principals, shareholders and attorneys
(individually,  an  "Indemnified  Party"  and,  collectively,  the  "Indemnified
Parties")  from and against any and all losses,  claims,  damages,  liabilities,
costs  (including   reasonable  attorneys'  fees  and  including  any  costs  of
investigation)  and expenses  (collectively,  "Losses") to which any Indemnified
Party may become subject, insofar as such Losses arise out of or result from any
breach of any representation or warranty made by the Company,  or the failure of
the  Company  to fulfill in any  material  respect  any  agreement  or  covenant
contained in this Agreement or any other Transaction Document. The Company shall
not  have any  obligation  under  this  indemnity  provision  to  indemnify  any
Indemnified  Party with respect to Losses until the aggregate  combined total of
all such Losses incurred by any  Indemnified  Party exceeds 10% of the aggregate
purchase price of the Shares hereunder, whereupon the Indemnified Party shall be
entitled  to  indemnity  with  respect to the amount of Losses in excess of such
amount,  and the Company  shall  reimburse  the  Indemnified  Party for all such
Losses  as  they  are   incurred  or  suffered   by  such   Indemnified   Party.
Notwithstanding the foregoing or any other provision hereof to the contrary, the
aggregate  liability of the Company to the Purchasers under this Agreement shall
in no event exceed the aggregate purchase price of the Shares.

     (c) If any Indemnified Party is entitled to indemnification hereunder, such
Indemnified  Party  shall  give  notice  to the  Company  of any claim or of the
commencement  of any  proceeding  against the Company or any  Indemnified  Party
brought by any third party with  respect to which such  Indemnified  Party seeks
indemnification pursuant hereto; provided,  however, that the delay to so notify
the  Company  shall not relieve the Company  from any  obligation  or  liability
except to the extent the Company is  materially  prejudiced  by such delay.  The
Company  shall  have the  right,  exercisable  by  giving  written  notice to an
Indemnified  Party within  thirty (30) days after the receipt of written  notice
from such  Indemnified  Party of such claim or  proceeding,  to  assume,  at the
expense of the Company, the defense of any such claim or proceeding with counsel
reasonably satisfactory to such Indemnified Party. After notice from the Company
to the Indemnified  Party of its election to assume the defense of such claim or
proceeding,  the Company  shall not be liable to the  Indemnified  Party for any
legal  or other  expenses  subsequently  incurred  by the  Indemnified  Party in
connection   with  the  defense   thereof   other  than   reasonable   costs  of
investigation;  provided  that the  Indemnified  Party  shall  have the right to
employ separate counsel to represent the Indemnified  Party which may be subject
to  liability  arising  out of any claim in  respect of which  indemnity  may be
sought by the Indemnified  Party against the Company,  but the fees and expenses
of such counsel  shall be for the account of such  Indemnified  Party unless (i)
the  Company  and the  Indemnified  Party  shall  have  mutually  agreed  to the
retention of such counsel or (ii) in the  reasonable  opinion of counsel to such
Indemnified  Party,  representation of both parties by the same counsel would be
inappropriate due to actual or potential  conflicts of interest between them, it
being  understood,  however,  that the Company shall not, in connection with any
one such claim or  proceeding or separate but  substantially  similar or related
claims or proceedings in the same  jurisdiction  arising out of the same general
allegations or  circumstances,  be liable for the fees and expenses of more than
one separate firm of attorneys  (together with appropriate local counsel) at any
time for all Indemnified  Parties. The Company shall not consent to entry of any
judgment or enter into any settlement that does not include as an  unconditional
term thereof the giving by claimant or plaintiff  to such  Indemnified  Party or
Parties of a release from all liability in respect of such claim,  litigation or
proceeding.

     (d) If the indemnification  provided for in Section 10(b) is unavailable or
insufficient  to hold  harmless  an  Indemnified  Party in  respect of any loss,
claim, damage,  liability, cost or expense, then the indemnifying party, in lieu
of indemnifying  such  Indemnified  Party  thereunder,  shall  contribute to the
amount  paid or  payable  by such  Indemnified  Party as a result of such  loss,
claim,  damage,  liability,  cost  or  expense  (i)  in  such  proportion  as is
appropriate to reflect the relative  benefits received by the Company on the one
hand and the  Purchaser  on the  other  hand from the sale and  purchase  of the
Securities or (ii) if the allocation  provided by clause (i) is not permitted by
applicable  law, in such  proportion as is  appropriate  to reflect not only the
relative  benefits  referred to in clause (i) above, but also the relative fault
of the Company on the one hand and the Purchaser on the other hand in connection
with the events or facts which gave rise to such loss, claim, damage, liability,
cost or expense,  as well as any other  equitable  considerations.  The relative
fault shall be  determined  by  reference  to, among other  things,  whether the
events or facts that gave rise to such loss, claim, damage,  liability,  cost or
expense relate to a breach of representations  and warranties or other covenants
and obligations under this Agreement and the other Transaction  Documents by the
Company  or the  Purchaser  and the  intent of the  parties  and their  relative
knowledge,  access to  information  and  opportunity  to correct or prevent such
events.  The amount paid or payable by an Indemnified  Party as a result of such
loss, claim, damage,  liability,  cost or expense shall be deemed to include any
reasonable and documented  legal or other expenses  incurred by such Indemnified
Party in connection with investigating or defending such claim.

       11.      Miscellaneous.

     (a) Governing  Law; Jury Waiver.  This  Agreement  shall be governed by and
construed  in  accordance  with the laws of the State of New  York.  Each of the
Company and the Purchasers irrevocably consents to the exclusive jurisdiction of
the United States  Federal  courts and state courts  located in New York County,
New York, in any suit or proceeding based on or arising under this Agreement and
irrevocably  agrees that all claims in respect of such suit or proceeding may be
determined  in such  courts.  The Company  irrevocably  waives the defense of an
inconvenient  forum to the  maintenance of such suit or  proceeding.  Service of
process  on the  Company  mailed by first  class  mail  shall be deemed in every
respect  effective  service  of  process  upon the  Company  in any such suit or
proceeding.  Nothing  herein  shall  affect the right of any  Purchaser to serve
process in any manner  permitted by law.  The parties  hereto waive all right to
trial by jury in any action or  proceeding to enforce or defend any rights under
this Agreement.

     (b) Finder's  Fee. Each party shall  indemnify and hold the other  harmless
from any  liability  for any  commission  or  compensation  in the  nature  of a
finder's or broker's fee (and the costs and  expenses of defending  against such
liability or asserted  liability)  for which such party or any of its  officers,
partners, employees or representatives shall be responsible.

     (c) Further Assurances.  Each party, whether prior to or after the Closing,
shall execute, acknowledge and deliver all such other instruments and documents,
and shall take all such other  actions,  as may be  reasonably  requested by any
other party for the purpose of effecting and evidencing the  consummation of the
transactions contemplated by this Agreement.

     (d) Successors;  Assignment. This Agreement shall be binding upon and inure
to the benefit of the  successors and permitted  assigns of the parties  hereto;
provided,  however,  that the  rights  of any  Purchaser  hereunder  may only be
transferred in compliance with all applicable federal and state securities laws,
and  provided,  further,  that a Purchaser  may not assign its rights under this
Agreement in connection  with the sale of Shares or Warrant Shares pursuant to a
Registration Statement under the Securities Act or under Rule 144.

     (e) Counterparts.  This Agreement may be executed in counterparts,  each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same instrument.

     (f) Entire  Agreement.  This  Agreement,  including and  incorporating  all
Schedules  and all  Exhibits  hereto and  referred to herein,  the  Registration
Rights Agreement and the Warrants  constitute and contain the entire  agreements
and  understandings  of the parties  regarding  the subject  matter of each such
agreement  and  supercede  any  and  all  prior  negotiations,   correspondence,
understandings  and agreements,  written or oral, among the parties with respect
to the subject matter of any of the foregoing agreements.

     (g) Notices.  All notices  required to be given hereunder shall be given by
personal  delivery,  facsimile  transmission,  nationally  recognized  overnight
carrier  (prepaid) or registered or certified mail,  postage prepaid with return
receipt  requested.  Notices  shall  be  delivered,  if to the  Company,  at its
principal  corporate  offices  located at 15 Link  Drive,  Binghamton,  New York
13904,  or facsimile  number (607) 722-5045,  to the Attention:  Chief Executive
Officer and, if to a Purchaser,  to the address set forth below such Purchaser's
name on the signature pages hereto. Notices delivered personally shall be deemed
given as of actual  receipt;  notices sent via facsimile  transmission  shall be
deemed given as of one Business Day  following  receipt by the sender of written
confirmation of transmission  thereof;  notices sent via overnight courier shall
be deemed given as of one Business Day  following  sending;  and notices  mailed
shall be deemed given as of five Business Days after proper mailing. A party may
change his or its  address by written  notice in  accordance  with this  Section
11(g).

     (h)  Amendments  and Waivers.  Except as  otherwise  provided  therein,  no
provision of this Agreement or any other  Transaction  Document may be waived or
amended  other  than by an  instrument  in  writing  signed by the  Company  and
Purchasers  owning or having the right to  acquire a majority  of the Shares and
the Warrant Shares.

     (i) Severability. If one or more provisions of this Agreement shall be held
to be unenforceable under applicable law, such provisions shall be excluded from
this  Agreement to the extent  unenforceable  and the balance of this  Agreement
shall be  unaffected  thereby  and shall  remain in full force and effect to the
fullest extent permitted by law.

     (j) Expenses. Except as otherwise provided herein, the parties hereto shall
pay their own costs and expenses.

     (k)  Publicity.  The parties shall  consult with each other,  to the extent
practicable,  as to the form and content of any press  releases  and other third
party   communications  or  disclosures   relating  to  this  Agreement  or  the
transactions  contemplated  hereby,  except as may be required  to be  disclosed
pursuant  to the  rules and  regulations  of the SEC,  and shall use  reasonable
efforts,  acting  in good  faith,  to  agree  upon  disclosure  which  shall  be
satisfactory to the parties hereto.

     (l)  Headings.  The  headings  of this  Agreement  are for  convenience  of
reference  and shall not form a part of, or affect the  interpretation  of, this
Agreement.

     (m)  Termination  of  Covenants.  The covenants of the Company set forth in
Section 7 of this Agreement shall terminate at such time as the Purchasers shall
not own any  Securities  issued or issuable  pursuant to this  Agreement  or the
Warrants.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the date
first above written.


                                                     SEMICONDUCTOR LASER
                                                     INTERNATIONAL CORPORATION

                                                     By:____________________
                                                     Name:__________________
                                                     Title:_________________


                                                     RENNES FOUNDATION

                                                     By:____________________
                                                     Name:__________________
                                                     Title:_________________

                                              Address:   Aeulestrasse 38
                                                         FL - 9490 Kaduz
                                              Facsimile No.:00 11 41 1 217 97 00
                                              Residence:    Germany


                                                     STRATEGIC MANAGEMENT
                                                     CORPORATION

                                                     By:____________________
                                                     Name:__________________
                                                     Title:_________________

                                              Address: 282 Katona Avenue
                                                       Katona, New York 10536
                                              Facsimile No.:
                                              Residence:    New York



                                  Schedule 1

             Purchasers/Purchased Shares and Warrant Shares

-----------------      ------------ ---------------- ----------------------
                                                      Aggregate Purchase
    Purchaser          Common Stock   Warrant Shares          Price
-----------------      ------------ ---------------- ----------------------

Rennes Foundation       8,000,000      8,000,000           $4,000,000

Strategic Management    1,400,000      1,400,000             $700,000
Corporation
                        ---------      ---------           ----------
Total                   9,400,000      9,400,000           $4,700,000
                        =========      =========           ==========

[TYPE]    EX-10.29

                          REGISTRATION RIGHTS AGREEMENT


     Registration  Rights Agreement,  dated as of _________,  2000, by and among
Semiconductor  Laser  International  Corporation,  a Delaware  corporation  (the
"Company"), and the other parties signatory hereto.

                             W I T N E S S E T H :

     WHEREAS,  the Company and the other parties  signatory  hereto have entered
into that certain Securities Purchase Agreement,  dated as of _______, 2000 (the
"Purchase  Agreement"),  pursuant  to which the  Company has agreed to issue and
sell to such parties, and such parties have agreed to purchase from the Company,
an  aggregate  of  __________  shares  (each a  "Share"  and  collectively,  the
"Shares")  of the  Company's  common  stock,  par value $.01 per share  ("Common
Stock"),  and warrants (the  "Warrants") to purchase an aggregate of ___________
shares of Common Stock (the "Warrant Shares"); and

     WHEREAS,  in order to induce the parties signatory hereto to enter into the
Purchase Agreement and to purchase the Shares and the Warrants,  the Company has
agreed to provide registration rights with respect thereto.

     NOW,  THEREFORE,  in  consideration  of  the  premises  and  the  covenants
hereinafter contained, the parties hereto agree as follows:

     1.  Definitions.  Unless  otherwise  defined  herein,  terms defined in the
Purchase  Agreement are used herein as therein defined,  and the following shall
have (unless otherwise provided elsewhere in this Registration Rights Agreement)
the following respective meanings:

     "Agreement"  shall mean this Registration  Rights Agreement,  including all
amendments,  modifications  and supplements and any exhibits or schedules to any
of the foregoing,  and shall refer to the Agreement as the same may be in effect
at the time such reference shall become operative.

     "Business Day" shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New York.

     "Commission" shall mean the Securities and Exchange Commission or any other
federal  agency  then   administering  the  Securities  Act  and  other  federal
securities laws.

     "Exchange Act" shall mean the Securities  Exchange Act of 1934, as amended,
or any similar federal statute,  and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.

     "Holder" shall mean any holder of Registrable Securities.

     "NASD" shall mean the National Association of Securities Dealers,  Inc., or
any successor corporation thereto.

     "Registrable  Securities"  shall  mean the  Shares and all shares of Common
Stock  issued or  issuable  as Warrant  Shares,  and all shares of Common  Stock
issued or issuable, from time to time (with any adjustments),  as a distribution
on, in exchange for or otherwise with respect to the Shares or Warrant Shares.

     "Requisite Holders" shall mean Holders,  holding at the time, a majority of
the Registrable Securities.

     "Securities Act" shall mean the Securities Act of 1933, as amended,  or any
similar  federal  statute,  and the  rules  and  regulations  of the  Commission
thereunder, all as the same shall be in effect from time to time.

     2. Required Registration.

     (a) Within  forty-five  (45) days  following the Closing Date,  the Company
shall use its best efforts to file a registration statement under the Securities
Act on Form  SB-2  (or on such  other  Form as is then  available  to  effect  a
registration  of all  Registrable  Securities on a delayed or continuous  basis)
covering,  and shall obtain all such  qualifications  and  compliances as may be
required  and as would  permit the sale and  distribution  of,  all  Registrable
Securities.  The Company shall use its best efforts to secure the  effectiveness
of such  registration  statement  no later  than one  hundred  five  (105)  days
following  the Closing  Date (the  "Effective  Date").  If the actual  number of
shares of Common  Stock for which the  Registrable  Securities  are  exercisable
shall exceed the number of shares of Common  Stock  initially  registered  under
this Section 2, the Company shall have forty-five (45) days to file an amendment
to the registration  statement  described herein, or an additional  registration
statement,  covering  such shares,  and shall use its best efforts to cause such
amendment  or  registration  statement  to be  declared  effective  as  soon  as
possible, but, in no event, later than one hundred five (105) days after filing.

     (b) Only one registration shall be effected pursuant to this Section 2.

     (c) The  Company  shall  use its best  efforts  to cause  the  registration
statement or registration  statements filed pursuant to this Section 2 to remain
effective until the earlier of (i) the date on which all Registrable  Securities
shall  have been sold and (ii) the second  anniversary  of the  Effective  Date;
provided,  however, that such two-year period shall be extended by any period of
time  during  which  (i)  effectiveness  of  the  registration  statement(s)  is
suspended  due  to the  issuance  of a stop  order  or  otherwise  or  (ii)  the
registration statement(s) does not cover the sale of all Registrable Securities.

     3. Registration Piggyback.

     (a) If the  Company at any time  proposes  to file on its behalf  and/or on
behalf of any of its  security  holders  (the  "demanding  security  holders") a
registration  statement  under  the  Securities  Act on any form  (other  than a
Registration Statement on Form S-4 or S-8 or any successor form) for the general
registration of securities,  the Company will give written notice to all Holders
at least thirty (30) days before the initial  filing with the Commission of such
registration  statement,  which notice  shall set forth the  intended  method of
disposition  of the  securities  proposed to be registered  by the Company.  The
notice shall offer to include in such filing the  aggregate  number of shares of
Registrable Securities as may be requested by such Holders.

     (b) Each Holder desiring to have  Registrable  Securities  registered under
this Section 3 shall advise the Company in writing within ten (10) Business Days
after the date of  receipt of such offer  from the  Company,  setting  forth the
amount of such Registrable Securities for which registration shall be requested.
The  Company  shall  thereupon  include  in such  filing the number of shares of
Registrable Securities for which registration shall be requested, subject to the
next sentence,  and shall use its best efforts to effect  registration under the
Securities Act of such shares. If the managing  underwriter of a proposed public
offering  shall advise the Company  that,  in such  underwriter's  opinion,  the
distribution  of the  Registrable  Securities  requested  to be  included in the
registration concurrently with the securities being registered by the Company or
such demanding  security  holders would  adversely  affect the  distribution  or
marketability  of such  securities  being  registered  by the Company,  then all
selling  security holders shall reduce the amount of securities each intended to
distribute  through such offering on a pro rata basis.  If a Holder shall decide
not to include all of its Registrable Securities in such Registration Statement,
such  Holder  nevertheless  shall  continue  to have the  right to  include  any
Registrable Securities in any subsequent  registration statement or registration
statements  as may be filed by the Company,  in each instance upon the terms and
conditions set forth herein. The right to registration of Registrable Securities
under this  Section 3  shall not be construed to limit in any way the obligation
of the Company to register the Registrable Securities under Section 2.

     4. Registration Procedures.

     (a) In connection  with the  registration of Registrable  Securities  under
Section 2, and if the Company  shall be required by the  provisions of Section 3
to effect the registration of any Registrable  Securities,  the Company will, as
expeditiously as possible:

     (i) prepare and file with the  Commission  a  registration  statement  with
respect to such  Registrable  Securities  and use its best efforts to cause such
registration  statement  to become and remain  effective  for the period of time
specified in Section 2(b) hereof;

     (ii) before filing a registration statement,  furnish to the Holders of the
Registrable  Securities covered by such registration statement and not more than
one attorney representing each Holder (i) copies of such registration  statement
as proposed to be filed, together with exhibits thereto, which documents will be
subject to the review and comment of each of the foregoing  within ten (10) days
after  delivery  (except that such review and comment of any  prospectus  or any
amendment or supplement  to such  registration  statement or prospectus  must be
within five (5) days after delivery),  and (ii) such other  information as shall
be  reasonably   requested  in  order  to  facilitate  the  disposition  of  the
Registrable Securities;

     (iii) in the case of a registration  statement  filed pursuant to Section 2
hereof,  prepare and file with the Commission such amendments and supplements to
such registration  statement and the prospectus used in connection  therewith as
may be necessary to keep such  Registration  Statement  effective  and to comply
with the  provisions  of the  Securities  Act with  respect to the sale or other
disposition of all Registrable Securities covered by such registration statement
until the time specified in Section 2(c) hereof;

     (iv)  furnish to each  selling  Holder  such  number of copies of a summary
prospectus  or  other  prospectus,   including  a  preliminary  prospectus,   in
conformity with the requirements of the Securities Act, and such other documents
as such selling Holder may reasonably request;

     (v) take all reasonable  actions  required to prevent the entry of any stop
order by the  Commission or any state  regulatory  authority with respect to any
registration statement covering Registrable Securities,  and take all reasonable
actions to remove it if entered;

     (vi) use its best efforts to register or qualify the Registrable Securities
covered by such  registration  statement under such other securities or blue sky
laws of such  jurisdictions  within  the  United  States as shall be  reasonably
requested by each Holder, and do such other reasonable acts and things as may be
required  to  enable  such  Holder  to  consummate   the   disposition  in  such
jurisdiction  of  the  Registrable   Securities  covered  by  such  registration
statement;  provided,  however,  that the Company  shall not be obligated to (a)
qualify  as a  foreign  corporation  to  do  business  under  the  laws  of  any
jurisdiction  in which it shall not then be  qualified,  (b)  subject  itself to
taxation in any such  jurisdiction or (c) file any consent to general service of
process in any such  jurisdiction;  provided,  further,  such Holders  shall not
request the Company to register or qualify the Registrable Securities covered by
such  registration  statement  in more than ten (10)  jurisdictions  within  the
United States in the aggregate;

     (vii)  enter  into  customary  agreements  reasonably  satisfactory  to the
Company  (including  an  underwriting  agreement in customary  form and which is
reasonably  satisfactory  to the  Company)  and take such  other  actions as are
reasonably  required in order to expedite or facilitate the  disposition of such
Registrable Securities;

     (viii) use its best efforts to comply with the provisions of the Securities
Act  applicable  to it  with  respect  to the  disposition  of  the  Registrable
Securities  covered by such registration  statement during the applicable period
in accordance  with the intended  methods of disposition by such selling Holders
set forth in such registration statement or supplement to the prospectus;

     (ix) use its best efforts to make  available to its  security  holders,  as
soon as  reasonably  practicable,  but not later than eighteen (18) months after
the effective date of the registration statement, an earnings statement covering
the period of at least  twelve (12) months  beginning  with the first full month
after  the  effective  date  of  such  registration  statement,  which  earnings
statement  shall satisfy the provisions of Section 11(a) of the Securities  Act;
and

     (x) use its best efforts to cause all  Registrable  Securities to be listed
on  any  securities  exchange,  quotation  system,  market  or  over-the-counter
bulletin board, if any, on which the Common Stock shall then be listed.


     The Company may require each selling Holder to promptly  furnish in writing
to the Company such  information  regarding the  distribution of the Registrable
Securities  as the  Company  may from time to time  reasonably  request and such
other   information  as  may  be  legally   required  in  connection  with  such
registration  including,  without  limitation,  all such  information  as may be
requested by the Commission or the National  Association of Securities  Dealers,
Inc.

     (b) It shall be a condition  precedent to the  obligation of the Company to
take any  action  pursuant  to this  Agreement  in  respect  of the  Registrable
Securities  to be registered at the request of any Holder that such Holder shall
furnish to the Company such  information  regarding the  Registrable  Securities
held by such Holder and the intended  method of disposition  thereof as shall be
reasonably  requested by the Company and as shall be required in connection with
the action  taken by the Company and that such Holder  executes and delivers the
form of underwriting agreement and any other questionnaires,  powers of attorney
or other typical underwriting documents required by the managing underwriter, if
any, with respect to the registration in which such Holder is participating.

     5. Default Shares.

     (a) In the event that the registration statement or registration statements
required  to be filed  pursuant  to  Section  2  hereof  shall  not be  declared
effective  by the  Commission  within  one  hundred  twenty  (120) days from the
Closing  Date (the  "Default  Effective  Date"),  the  Company  shall  issue and
deliver,  free of charge and  without  cost,  to the Holders (i) within ten (10)
days of the Default Effective Date, certificates  representing a number of fully
paid,  non-assessable shares of Common Stock equal to the aggregate of 1% of the
Shares and the Warrant Shares (with  additional  shares issued  pursuant to this
Section 5(a)  referred to as "Default  Shares"),  and (ii) if such  registration
statement shall not have been declared  effective at the end of each thirty (30)
day period  following the Default  Effective Date,  within ten (10) days of each
such thirty (30) day period,  additional  certificates  representing a number of
fully paid,  non-assessable  shares of Common Stock equal to the aggregate of 1%
of such Shares and Warrant Shares.

     (b) Any Default  Shares shall be allocated pro rata among the Holders based
on the number of Shares purchased by each under the Purchase Agreement.  Any and
all shares of Common Stock issued and delivered by the Company  pursuant to this
Section 5 shall  constitute  "Registrable  Securities," and the Company shall be
required  to  register  them under the  Securities  Act in  accordance  with the
provisions of this Agreement.

     (c) The remedies provided for in this Section 5 shall be in addition to any
other  remedies  available  to  Purchasers  under this  Agreement,  at law or in
equity.

     6.  Expenses.  All  expenses  incurred in  complying  with this  Agreement,
including,  without limitation,  all registration and filing fees (including all
expenses  incident to the filing  with the NASD),  printing  expenses,  fees and
disbursements  of  counsel  for the  Company,  expenses  of any  special  audits
incident to or required by any such  registration and expenses of complying with
the securities or blue sky laws of any jurisdiction pursuant to Section 4, shall
be paid by the  Company,  except  that the  Company  shall not be liable for any
fees, discounts or commissions to any underwriter.

     7. Indemnification and Contribution.

     (a) In the event of any  registration of any Registrable  Securities  under
the Securities Act pursuant to this  Agreement,  the Company shall indemnify and
hold  harmless  each  Holder  of  such  Registrable  Securities,  such  Holder's
directors,  officers, partners and agents, and each other person (including each
underwriter) who participated in the offering of such Registrable Securities and
each other person, if any, who controls such Holder or such participating person
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities,  joint or  several,  to which  such  Holder  or any such  director,
officer, partner, agent or participating person or controlling person may become
subject under the Securities Act or any other statute or at common law,  insofar
as such losses,  claims,  damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue or alleged untrue statement of any
material fact  contained,  on the effective  date thereof,  in any  registration
statement under which such securities were registered  under the Securities Act,
any  preliminary  prospectus  or  final  prospectus  contained  therein,  or any
amendment or  supplement  thereto,  or (ii) any omission or alleged  omission to
state therein a material fact required to be stated therein or necessary to make
the statements  therein not misleading,  and shall reimburse such Holder or such
director,  officer, partner, agent or participating person or controlling person
for any legal or any other expenses  reasonably  incurred by such Holder or such
director,  officer or participating  person or controlling  person in connection
with  investigating  or defending  any such loss,  claim,  damage,  liability or
action; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based  upon any  untrue or  alleged  untrue  statement  or  omission  or alleged
omission made in such registration statement, preliminary prospectus, prospectus
or amendment  or  supplement  in reliance  upon and in  conformity  with written
information  furnished  to the  Company  by  such  Holder  specifically  for use
therein.  Such indemnity shall remain in full force and effect regardless of any
investigation  made by or on behalf of such  Holder or such  director,  officer,
partner,  agent or participating person or controlling person, and shall survive
the transfer of such Registrable Securities by such Holder.

     (b)  Each  Holder  shall  indemnify  and hold  harmless  the  Company,  its
directors and officers and each other  person,  if any, who controls the Company
within the meaning of the Securities Act against any losses,  claims, damages or
liabilities,  joint or  several,  to which the  Company or any such  director or
officer or any such person may become  subject under the  Securities  Act or any
other  statute or at common  law,  insofar as such  losses,  claims,  damages or
liabilities  (or  actions  in  respect  thereof)  arise out of or are based upon
information in writing  provided to the Company by such Holder  specifically for
use in the following documents and contained,  on the effective date thereof, in
any  Registration  Statement under which  securities  were registered  under the
Securities  Act at the request of such Holder,  any  preliminary  prospectus  or
final  prospectus  contained  therein,  or any amendment or supplement  thereto.
Notwithstanding  the  provisions  of this  paragraph  (b),  no  Holder  shall be
required to  indemnify  any person  pursuant  to this  Section 7 in an amount in
excess of the amount of the  aggregate  net proceeds  received by such Holder in
connection with any such registration under the Securities Act.

     (c) If any claim,  action,  suit or  proceeding (a  "Proceeding")  shall be
brought or asserted  against  any Person  entitled to  indemnity  hereunder  (an
"Indemnified  Party"),  such Indemnified  Party promptly shall notify the Person
from whom indemnity shall be sought (the "Indemnifying  Party") in writing,  and
the  Indemnifying  Party shall assume the defense thereof and the payment of all
fees and expenses  incurred in connection with defense thereof;  provided,  that
the failure of any  Indemnified  Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally  determined  by a court
of competent jurisdiction (which determination shall not be subject to appeal or
further  review as a matter of right) that such failure  shall have  proximately
and materially adversely prejudiced the Indemnifying Party. An Indemnified Party
shall have the right to employ  separate  counsel in any such  Proceeding and to
participate  in the  defense  thereof if (1) the  Indemnifying  Party shall have
failed  promptly to assume the  defense of such  Proceeding  promptly  after its
receipt of notice thereof from the  Indemnifying  Party or (2) the named parties
to any such  Proceeding  (including  any  impleaded  parties)  include both such
Indemnified  Party and the Indemnifying  Party, and such Indemnified Party shall
have been  advised in writing by  counsel,  a copy of which shall be provided to
Indemnifying  Party,  that a conflict of interest will exist if the same counsel
were to represent such Indemnified  Party and the  Indemnifying  Party (in which
case, if such Indemnified Party notifies the Indemnifying  Party in writing that
it shall elect to employ  separate  counsel at the  expense of the  Indemnifying
Party,  the  Indemnifying  Party  shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected  without its written  consent,  which consent shall not be unreasonably
withheld.  No Indemnifying Party shall, without the prior written consent of the
Indemnified  Party,  which  shall  not  be  unreasonably  withheld,  effect  any
settlement of any pending  Proceeding in respect of which any Indemnified  Party
shall be a party, unless such settlement shall include an unconditional  release
of such  Indemnified  Party from all  liability  on claims  that are the subject
matter  of such  Proceeding.  All fees and  expenses  of the  Indemnified  Party
(including  reasonable  fees and expenses to the extent  incurred in  connection
with  investigating  or  preparing  to defend  such  Proceeding  in a manner not
inconsistent  herewith)  shall be paid to the  Indemnified  Party,  as incurred,
within ten (10)  Business  Days of written  notice  thereof to the  Indemnifying
Party  (regardless  of  whether  it  shall  be  ultimately  determined  that  an
Indemnified Party shall not be entitled to indemnification hereunder;  provided,
that the Indemnifying  Party may require such Indemnified  Party to undertake to
reimburse  all such  fees  and  expenses  to the  extent  it  shall  be  finally
judicially  determined  that such  Indemnified  Party  shall not be  entitled to
indemnification hereunder).

     (d)  If the  indemnification  provided  for  in  this  Section  7 from  the
Indemnifying  Party is unavailable to an Indemnified  Party hereunder in respect
of any losses,  claims,  damages,  liabilities or expenses  referred to therein,
then the Indemnifying  Party, in lieu of indemnifying  such  Indemnified  Party,
shall  contribute to the amount paid or payable by such  Indemnified  Party as a
result  of  such  losses,  claims,  damages,  liabilities  or  expenses  in such
proportion as is appropriate  to reflect the relative fault of the  Indemnifying
Party and  Indemnified  Party in connection  with the actions which  resulted in
such losses,  claims,  damages,  liabilities  or expenses,  as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and  Indemnified  Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material  fact or  omission or alleged  omission to state a material  fact,
shall  have been  made by, or shall  relate to  information  supplied  by,  such
Indemnifying  Party or  Indemnified  Party,  and the parties'  relative  intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages,  liabilities and expenses  referred to above shall be deemed to include
any  legal  or other  fees or  expenses  reasonably  incurred  by such  party in
connection with any  investigation or proceeding.  The parties hereto agree that
it would not be just and equitable if contribution pursuant to this Section 7(d)
were  determined  by pro rata  allocation  or by any other method of  allocation
which does not take account of the equitable  considerations referred to herein.
No Person guilty of fraudulent  misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to  contribution  from any Person
who  was  not  guilty  of  such  fraudulent  misrepresentation.  Notwithstanding
anything to the contrary  contained herein, a Holder shall be liable or required
to  contribute  under this Section 7(d) for only that amount as shall not exceed
the  net  proceeds  to such  Holder  as a  result  of the  sale  of  Registrable
Securities pursuant to such registration statement.

     8. Rule 144. As long as any Holder shall own  Registrable  Securities,  the
Company,  at all  times  while it shall be  reporting  under the  Exchange  Act,
covenants  to file  timely (or obtain  extensions  in respect  thereof  and file
within the  applicable  grace  period) all  reports  required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act. The Company further  covenants that it will take such further action as any
Holder may reasonably  request,  all to the extent required from time to time to
enable such Holder to sell  shares of Common  Stock held by such Holder  without
registration  under the  Securities  Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act,  including  providing
any legal opinions. Upon the request of any Holder, the Company shall deliver to
such Holder a written  certification of a duly authorized  officer as to whether
it has complied with such requirements.

     9. Miscellaneous.

     (a) No Inconsistent Agreements.  The Company has not entered into, and will
not hereafter enter into, any agreement with respect to its securities  which is
inconsistent  with the rights  granted to the  Holders  in this  Agreement.  The
Company has not previously entered into any agreement with respect to any of its
securities  granting any registration  rights to any person that is currently in
effect, except as set forth in the Schedules to the Purchase Agreement.

     (b) Remedies.  Each Holder,  in addition to being  entitled to exercise all
rights  granted by law,  including  recovery  of  damages,  will be  entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary  damages  would not be adequate  compensation  for any loss incurred by
reason of a breach by it of the  provisions of this  Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate.  In any action or proceeding brought to enforce any provision
of this Agreement or where any provision  hereof shall be validly  asserted as a
defense, the successful party shall be entitled to recover reasonable attorneys'
fees in addition to any other available remedy.

     (c)  Amendments  and Waivers.  Except as  otherwise  provided  herein,  the
provisions of this Agreement may not be amended,  modified or supplemented,  and
waivers or consents to  departure  from the  provisions  hereof may not be given
unless the Company has obtained the written consent of the Requisite Holders.

     (d) Notice  Generally.  Any notice,  demand,  request,  consent,  approval,
declaration,  delivery or other  communication  hereunder to be made pursuant to
the  provisions  of this  Agreement  shall be  sufficiently  given or made if in
writing and either  delivered  in person with  receipt  acknowledged  or sent by
registered or certified mail, return receipt requested,  postage prepaid,  or by
telecopy and confirmed by telecopy answerback, addressed as follows:

     (i) If to any Holder,  at its last known address  appearing on the books of
the Company maintained for such purpose.

    (ii) If to Company, at:

                           Semiconductor Laser International Corporation
                           15 Link Drive
                           Binghamton, New York  13904
                           Attention: Chief Executive Officer
                           Facsimile:  (607) 722-5045


or at such other  address as may be  substituted  by notice given as herein
provided.  The giving of any notice required  hereunder may be waived in writing
by the party  entitled to receive such notice.  Every notice,  demand,  request,
consent, approval, declaration,  delivery or other communication hereunder shall
be  deemed to have  been  duly  given or served on the date on which  personally
delivered,  with  receipt  acknowledged,  telecopied  and  confirmed by telecopy
answerback or three  Business  Days after the same shall have been  deposited in
the United States mail.

     (e)  Successors and Assigns.  This Agreement  shall inure to the benefit of
and be binding upon the  successors  and assigns of each of the parties  hereto,
including any person to whom  Registrable  Securities  shall be transferred in a
private transaction exempt from registration.

     (f)  Headings.  The  headings  in this  Agreement  are for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

     (g) Governing Law;  Jurisdiction.  This Agreement  shall be governed by and
construed  in  accordance  with the laws of the State of New  York.  Each of the
Company and the Holders  irrevocably  consents to the exclusive  jurisdiction of
the United States  Federal  courts and state courts  located in New York County,
New York, in any suit or proceeding based on or arising under this Agreement and
irrevocably  agrees that all claims in respect of such suit or proceeding may be
determined  in such  courts.  The Company  irrevocably  waives the defense of an
inconvenient  forum to the  maintenance of such suit or  proceeding.  Service of
process  on the  Company  mailed by first  class  mail  shall be deemed in every
respect  effective  service  of  process  upon the  Company  in any such suit or
proceeding. Nothing herein shall affect the right of any Holder to serve process
in any manner  permitted by law. The parties  hereto waive all right to trial by
jury in any action or  proceeding  to  enforce  or defend any rights  under this
Agreement.

     (h) Severability. Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this  Agreement  shall be prohibited by or invalid under
applicable  law,  such  provision  shall be  ineffective  to the  extent of such
prohibition or invalidity,  without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

     (i) Entire Agreement. This Agreement,  together with the Purchase Agreement
and the Warrants,  represents the complete  agreement and  understanding  of the
parties  hereto in respect of the subject matter  contained  herein and therein.
This Agreement  supersedes all prior agreements and  understandings  between the
parties with respect to the subject matter hereof.

     (j)  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of which shall be deemed to be an original  and all of which
together shall be deemed to be one and the same instrument.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be executed by their duly appointed
representatives as of the date first above written.

                                           SEMICONDUCTOR LASER INTERNATIONAL
                                           CORPORATION


                                           By:__________________________________
                                              Name:
                                              Title:






                                           By:__________________________________
                                              Name:
                                              Title:






                                           By:__________________________________
                                              Name:
                                              Title:

[TYPE]     EX-10.30


                      MORTGAGE AND SECURITY AGREEMENT

     THIS  MORTGAGE  (herein  "Instrument")  is made this _____ day of  January,
2000,  between the Mortgagor,  BROOME COUNTY  INDUSTRIAL  DEVELOPMENT  AGENCY, a
public  benefit  corporation  of the State of New York  with an  office  for the
transaction  of business  located at 49 Court Street,  Binghamton,  New York and
SEMICONDUCTOR LASER  INTERNATIONAL  CORPORATION,  a New York corporation,  whose
address  is  15  Link  Drive,   Binghamton,   New  York   (herein   collectively
"Mortgagor"),  and the Mortgagee,  BSB BANK & TRUST COMPANY,  a domestic banking
corporation  organized  and  existing  under  the laws of the State of New York,
whose address is 58-68 Exchange Street, Binghamton, New York (herein "Lender").

     WHEREAS,  SEMICONDUCTOR LASER INTERNATIONAL CORPORATION (herein "Borrower")
is indebted to Lender in the principal sum of $1,000,000.00 of which $750,000.00
is secured by this mortgage,  which indebtedness is evidenced by Borrower's note
dated the same date as this Mortgage (herein "Note").

     TO SECURE TO LENDER (a) the repayment of the indebtedness  evidenced by the
Note with interest  thereon,  and all  renewals,  extensions  and  modifications
thereof;  (b) the payment of all other sums, with interest thereon,  advanced in
accordance  herewith to protect the  security  of this  Instrument;  and (d) the
performance  of the  covenants  and  agreements  of Borrower  herein  contained,
Borrower does hereby mortgage,  grant, convey and assign to Lender the following
described property:

                             SEE SCHEDULE A ATTACHED.

     Borrower  is the  lessee  of the  premises  described  above  under a lease
between  itself and Broome  County  Industrial  Development  Agency  dated as of
December  18,  1996.  Borrower  executes  this  Mortgage  to subject  all of its
interest together with its leasehold interest in the above described premises to
this Mortgage.  Broome County Industrial  Development Agency is the owner of the
premises which are leased to Semiconductor Laser  International  Corporation and
executes this Mortgage for the purpose of subjecting  its ownership  interest in
the above-described premises to the lien of this Mortgage.

     This  mortgage  secures a note which  provides  for the  payment of varying
rates of interest.

         This mortgage is second and subordinate to a mortgage in the amount of
$816,000.00 given to BSB Bank & Trust Company which mortgage is recorded in the
Broome County Clerk's Office on December 18, 1996 in Book 2433 of Mortgages at
Page 80.

     If Borrower  fails to keep any of the promises made in the prior  mortgage,
the Lender may (a) require immediate payment of the entire amount then remaining
unpaid  under the Note and this  Mortgage,  (b) make any  payment or do anything
else necessary to correct any default under the prior mortgage. Any payment made
or cost by Borrower in  correcting  any default  shall be added to the principal
owed to Lender and become  immediately  payable by Borrower with interest at the
rate stated in the Note.

     TOGETHER with all buildings,  improvements,  and tenements now or hereafter
erected on the  property,  and all  heretofore or hereafter  vacated  alleys and
streets abutting the property, and all easements, rights, appurtenances,  rents,
royalties,  mineral,  oil and gas rights and profits,  water,  water rights, and
water stock appurtenant to the property, and all fixtures, machinery, equipment,
engines,  boilers,  incinerators,  building  materials,  appliances and goods of
every nature whatsoever now or hereafter located in, or on, or used, or intended
to be used in connection with the property, including, but not limited to, those
for the purpose of supplying or distributing heating, cooling, electricity, gas,
water,  air and light; and all elevators,  and related  machinery and equipment,
fire  prevention  and  extinguishing  apparatus,  security  and  access  control
apparatus  and  plumbing;  all of which,  including  replacements  and additions
thereto, shall be deemed to be and remain a part of the real property covered by
this Instrument;  and all of the foregoing,  together with said property (or the
leasehold  estate in the event this  Instrument  is on a  leasehold)  are herein
referred to as the "Property".

     It is stipulated that the maximum  indebtedness secured by this mortgage at
execution,  or which under any contingency may be secured thereby at any time in
the  future,  shall be the  principal  amount  hereof as stated,  together  with
accrued interest thereon.

     Borrower  covenants  that Borrower is lawfully  seized of the estate hereby
conveyed  and has the right to mortgage,  grant,  convey and assign the Property
(and,  if this  Instrument  is on a leasehold,  that the ground lease is in full
force and effect without  modification except as noted above and without default
on the part of  either  lessor  or  lessee  thereunder),  that the  Property  is
unencumbered,  and that Borrower will warrant and defend  generally the title to
the  Property  against  all claims and  demands,  subject to any  easements  and
restrictions  listed  in a  schedule  of  exceptions  to  coverage  in any title
insurance policy insuring Lender's interest in the Property.

         Borrower and Lender covenant and agree as follows:

     1. Payment of Principal and Interest.  Borrower shall promptly pay when due
the  principal of and interest on the  indebtedness  evidenced by the Note,  any
prepayment  and late charges  provided in the Note and all other sums secured by
this Instrument.

     2. Funds for Taxes, Insurance and Other Charges.  Subject to applicable law
and at the demand of  Lender,  Borrower  shall pay to Lender on the day  monthly
installments  of principal or interest are payable under the Note (or on another
day  designated  in writing by  Lender),  until the Note is paid in full,  a sum
(herein  "Funds")  equal to  one-twelfth of (a) the yearly water and sewer rates
and taxes and  assessments  which may be levied on the Property,  (b) the yearly
ground rents,  if any, (c) the yearly  premium  installments  for fire and other
hazard  insurance,  rent loss  insurance and such other  insurance  covering the
Property as Lender may require  pursuant to  paragraph 5 hereof,  (d) the yearly
premium installments for mortgage insurance,  if any, and (e) if this Instrument
is on a leasehold,  the yearly fixed rents, if any, under the ground lease,  all
as reasonably  estimated  initially and from time to time by Lender on the basis
of assessments and bills and reasonable  estimates thereof. Any waiver by Lender
of a  requirement  that  Borrower  pay such Funds may be  revoked by Lender,  in
Lender's sole discretion, at any time upon notice in writing to Borrower. Lender
may require  Borrower to pay to Lender,  in advance,  such other Funds for other
taxes,  charges,  premiums,  assessments  and  impositions  in  connection  with
Borrower or the Property which Lender shall reasonably deem necessary to protect
Lender's  interests (herein "Other  Impositions").  Unless otherwise provided by
applicable  law,  Lender may require Funds for Other  Impositions  to be paid by
Borrower in a lump sum or in periodic installments, at Lender's option.

     The  Funds  shall be held in  trust by  Lender  in a  non-interest  bearing
account.  Lender  shall  apply  the  Funds  to pay  said  rates,  rents,  taxes,
assessments, insurance premiums and Other Impositions so long as Borrower is not
in breach of any covenant or agreement  of Borrower in this  Instrument.  Lender
shall make no charge for so  holding  and  applying  the Funds,  analyzing  said
account or for verifying and compiling said assessments and bills, unless Lender
pays  Borrower  interest,  earnings or profits on the Funds and  applicable  law
permits  Lender to make such a charge.  Borrower and Lender may agree in writing
at the time of execution of this  Instrument that interest on the Funds shall be
paid to Borrower,  and unless such  agreement is made or applicable law requires
interest,  earnings or profits to be paid,  Lender  shall not be required to pay
Borrower any  interest,  earnings or profits on the Funds.  Lender shall give to
Borrower,  without charge,  an annual accounting of the Funds in Lender's normal
format  showing  credits  and debits to the Funds and the purpose for which each
debit to the Funds was made.  The Funds are pledged as  additional  security for
the sums secured by this Instrument.

     If at any time the  amount of the Funds  held by Lender  shall be less than
the  amount  deemed  necessary  by Lender to pay  water and sewer  rates,  taxes
assessments,  insurance premiums, rents and Other Impositions, as they fall due,
Borrower  shall pay to Lender any  amount  necessary  to make up the  deficiency
within  thirty days after  notice from  Lender to  Borrower  requesting  payment
thereof.

     Upon  Borrower's  breach of any  covenant or  agreement of Borrower in this
Instrument,  Lender  may apply,  in any amount and in any order as Lender  shall
determine in Lender's sole  discretion,  any Funds held by Lender at the time of
application (i) to pay rates, rents, taxes, assessments,  insurance premiums and
Other  Impositions  which are now or will  hereafter  become  due,  or (ii) as a
credit against sums secured by this Instrument. Upon payment in full of all sums
secured by this  Instrument,  Lender shall promptly refund to Borrower any Funds
held by Lender.

     3. Application of Payments.  Unless applicable law provides otherwise,  all
payments  received by Lender  from  Borrower  under the Note or this  Instrument
shall be  applied  by Lender in the  following  order of  priority:  (i)  amount
payable to Lender by Borrower under paragraph 2 hereof; (ii) interest payable on
the Note;  (iii) principal of the Note;  (iv) interest  payable on advances made
pursuant to  paragraph 8 hereof;  (v)  principal  of advances  made  pursuant to
paragraph 8 hereof;  and (vi) any other sums secured by this  Instrument in such
order as Lender,  at Lender's option,  may determine;  provided,  however,  that
Lender may, at Lender's  option,  apply any sums payable pursuant to paragraph 8
hereof  prior to interest on and  principal  of the Note,  but such  application
shall not  otherwise  affect the order of priority of  application  specified in
this paragraph 3.

     4. Charges;  Liens.  Borrower  shall pay all water and sewer rates,  rents,
taxes, assessments, premiums, and Other Impositions attributable to the Property
at Lender's  option in the manner  provided under  paragraph 2 hereof or, if not
paid in such manner, by Borrower making payment, when due, directly to the payee
thereof,  or in such other manner as Lender may  designate in writing.  Borrower
shall promptly furnish to Lender all notices of amounts due under this paragraph
4, and in the  event  Borrower  shall  make  payment  directly,  Borrower  shall
promptly  furnish to Lender receipts  evidencing  such payments.  Borrower shall
promptly  discharge  any lien which has, or may have,  priority over or equality
with, the lien of this Instrument,  and Borrower shall pay, when due, the claims
of all  persons  supplying  labor  or  materials  to or in  connection  with the
Property.  Without Lender's prior written  permission,  Borrower shall not allow
any lien inferior to this Instrument to be perfected against the Property.

     5. Hazard  Insurance.  Borrower shall keep the improvements now existing or
hereafter  erected on the Property insured by carriers at all time  satisfactory
to Lender  against  loss by fire,  hazards  included  within the term  "extended
coverage",  rent  loss and  such  other  hazards,  casualties,  liabilities  and
contingencies  as Lender (and, if this Instrument is on a leasehold,  the ground
lease)  shall  require and in such  amounts and for such periods as Lender shall
require.  All premiums on insurance  policies shall be paid, at Lender's option,
in the manner provided under paragraph 2 hereof,  or by Borrower making payment,
when due,  directly  to the  carrier,  or in such  other  manner  as Lender  may
designate in writing.

     All insurance  policies and renewals  thereof shall be in a form acceptable
to Lender and shall include a standard  mortgage  clause in favor of and in form
acceptable  to Lender.  Lender  shall have the right to hold the  policies,  and
Borrower shall promptly  furnish to Lender all renewal  notices and all receipts
of paid premiums. At least thirty days prior to the expiration date of a policy,
Borrower  shall  deliver  to Lender a renewal  policy  in form  satisfactory  to
Lender. If this Instrument is on the leasehold,  Borrower shall furnish Lender a
duplicate of all policies,  renewal  notices,  renewal  policies and receipts of
paid premiums if, by virtue of the ground lease,  the originals  thereof may not
be supplied by Borrower to Lender.

     In the event of loss,  Borrower shall give immediate  written notice to the
insurance carrier and to Lender.  Borrower hereby authorizes and empowers Lender
as attorney-in-fact for Borrower to make proof of loss, to adjust and compromise
any claim  under  insurance  policies,  to appear in and  prosecute  any  action
arising from such insurance policies, to collect and receive insurance proceeds,
and to deduct  therefrom  Lender's  expenses  incurred in the collection of such
proceeds;  provided  however,  that nothing  contained in this paragraph 5 shall
require  Lender to incur any  expense  or take any  action  hereunder.  Borrower
further  authorizes  Lender, at Lender's option, (a) to hold the balance of such
proceeds to be used to  reimburse  Borrower  for the cost of  reconstruction  or
repair of the  Property  or (b) to apply the  balance  of such  proceeds  to the
payment of the sums secured by this Instrument,  whether or not then due, in the
order of application set forth in paragraph 3 hereof.

     If the insurance  proceeds are held by Lender to reimburse Borrower for the
cost of restoration  and repair of the Property,  the Property shall be restored
to the  equivalent of its original  condition or such other  condition as Lender
may approve in writing.  Lender may, at Lender's option,  condition disbursement
of said  proceeds on Lender's  approval of such plans and  specifications  of an
architect  satisfactory  to Lender,  contractor's  cost  estimates,  architect's
certificates,  waivers of liens,  sworn  statements of mechanics and materialmen
and such  other  evidence  of  costs,  percentage  completion  of  construction,
application  of payments,  and  satisfaction  of liens as Lender may  reasonably
require.  If the  insurance  proceeds  are  applied  to the  payment of the sums
secured by this Instrument,  any such application of proceeds to principal shall
not extend or postpone the due dates of the monthly installments  referred to in
paragraphs  1 and 2 hereof or change the  amounts of such  installments.  If the
Property is sold pursuant to paragraph 27 hereof or if Lender  acquires title to
the Property, Lender shall have all of the right, title and interest of Borrower
in and to any insurance policies and unearned premiums thereon and in and to the
proceeds  resulting  from any  damage  to the  Property  prior  to such  sale or
acquisition.

     6. Preservation and Maintenance of Property.  Borrower (a) shall not commit
waste or permit  impairment  or  deterioration  of the  Property,  (b) shall not
abandon the  Property,  (c) shall  restore or repair  promptly and in a good and
workmanlike manner all

or any part of the Property to the equivalent of its original condition, or
such other  condition  as Lender may  approve  in  writing,  in the event of any
damage, injury or loss thereto,  whether or not insurance proceeds are available
to cover in whole or in part the costs of such restoration or repair,  (d) shall
keep the Property, including improvements,  fixtures,  equipment,  machinery and
appliances  thereon  in good  repair  and  shall  replace  fixtures,  equipment,
machinery and  appliances  on the Property when  necessary to keep such items in
good  repair,  (e) shall  comply  with all  laws,  ordinances,  regulations  and
requirements  of any  governmental  body  applicable to the Property,  (f) shall
generally  operate  and  maintain  the  Property  in a manner to ensure  maximum
rentals, and (g) shall give notice in writing to Lender of and, unless otherwise
directed  in writing by  Lender,  appear in and defend any action or  proceeding
purporting to affect the Property, the security of this Instrument or the rights
or powers of  Lender.  Neither  Borrower  nor any tenant or other  person  shall
remove,  demolish or alter any improvement now existing or hereafter  erected on
the  Property or any  fixture,  equipment,  machinery  or appliance in or on the
Property  except  when  incident  to the  replacement  of  fixtures,  equipment,
machinery and appliances with items of like kind.

     7. Use of Property and Right of Lender to Inspect.  Unless  required by law
or unless  Lender has  otherwise  agreed in  writing,  Borrower  shall not allow
changes in the use for which all or any part of the Property was intended at the
time this Instrument was executed. Borrower shall not initiate or acquiesce in a
change in the zoning  classification  of the  Property  without  Lender's  prior
written consent.

     Lender may make or cause to be made reasonable entries upon and inspections
of the Property.

     8.  Protection  of  Lender's  Security.  If  Borrower  fails to perform the
covenants  and  agreements  contained  in this  Instrument,  or if any action or
proceeding  is  commenced  which  affects the  Property or title  thereto or the
interest of Lender  therein,  including,  but not limited  to,  eminent  domain,
insolvency,  code  enforcement,  or arrange  ments or  proceedings  involving  a
bankrupt  or  decedent,  or any action at law or in equity  against  Borrower by
Lender to enforce Lender's rights hereunder,  then Lender at Lender's option may
make such  appearances,  disburse such sums and take such action as Lender deems
necessary, in its sole discretion, to protect Lender's interest,  including, but
not  limited  to,  (i)  disbursement  of  attorney's  fees,  (ii) entry upon the
Property  to make  repairs,  (iii)  procurement  of  satisfactory  insurance  as
provided in paragraph 5 hereof,  and (iv) if this  Instrument is on a leasehold,
exercise of any option to renew or extend the ground lease on behalf of Borrower
and the curing of any  default of Borrower  in the terms and  conditions  of the
ground lease.

     Any amounts disbursed by Lender pursuant to this paragraph 8, with interest
thereon,  shall  become  additional  indebtedness  of  Borrower  secured by this
Instrument.  Unless  Borrower and Lender  agree to other terms of payment,  such
amounts shall be

immediately  due and  payable  and  shall  bear  interest  from the date of
disbursement  at the rate stated in the Note unless  collection from Borrower of
interest at such rate would be contrary to  applicable  law, in which event such
amounts  shall bear  interest at the highest  rate which may be  collected  from
Borrower under applicable law.  Borrower hereby covenants and agrees that Lender
shall be  subrogated  to the lien of any mortgage or other lien  discharged,  in
whole or in part, by the indebtedness secured hereby.  Nothing contained in this
paragraph  8 shall  require  Lender  to incur  any  expense  or take any  action
hereunder.

     9.  Hazardous  Materials.  Except  as  otherwise  described  in the Phase I
Environmental Site Assessment Report by Gaynor Associates,  Inc. dated December,
1996,  Borrower  represents  and  warrants  that,  to  the  best  of  Borrower's
knowledge, after due inquiry and investigation,  the Property is not now and has
never been used to  generate,  manufacture,  refine,  transport,  treat,  store,
handle,  dispose,  transfer,  produce,  process  or in  any  manner  deal  with,
Hazardous  Materials,  and that no Hazardous Materials have ever been installed,
placed,  or in any manner dealt with on the  Property,  and that no owner of the
Property or any tenant,  subtenant,  occupant,  prior tenant,  prior  subtenant,
prior occupant or person  (collectively,  "Occupant") has received any notice or
advice from any  governmental  agency or any  Occupant  with regard to Hazardous
Materials on, from or affecting the Property. Except for the use of the Property
by Syracuse  Supply  Company,  Inc., in accordance  with all Federal,  State and
local  environmental  laws, rules and regulations,  Borrower  covenants that the
Property  shall be kept free of  Hazardous  Materials,  and shall not be used to
generate,  manufacture,   refine,  transport,  treat,  store,  handle,  dispose,
transfer,  produce, process or in any manner deal with, Hazardous Materials, and
Borrower  shall  not  cause  or  permit,  as a  result  of  any  intentional  or
unintentional  act or  omission on the part of  Borrower  or any  Occupant,  the
installation  or  placement  of  Hazardous  Materials in or on the Property or a
release of Hazardous  Materials  onto the Property or onto any other property or
suffer the  presence of  Hazardous  Materials on the  Property.  Borrower  shall
comply  with,  and ensure  compliance  by all  Occupants  with,  all  applicable
federal, state and local laws, ordinances, rules or regulations, with respect to
Hazardous  Materials,  and shall keep the  Property  free and clear of any liens
imposed pursuant to such laws,  ordinances,  rules or regulations.  In the event
that Borrower receives any notice or advice from any governmental agency, or any
Occupant with regard to Hazardous  Materials on, from or affecting the Property,
Borrower shall  immediately  notify Lender.  Borrower shall conduct and complete
all investigations,  studies, sampling, and testing, and all remedial,  removal,
and other actions necessary to clean up and remove all Hazardous Materials,  on,
from or affecting the Property in accordance with all applicable federal, state,
and local laws, ordinances,  rules,  regulations,  and policies.  Borrower shall
defend, indemnify, and hold harmless Lender, its employees, agents, officers and
directors from and against any claims, demands,  penalties,  fines, liabilities,
settlements,  damages,  costs or expenses of  whatever  kind or nature  known or
unknown, contingent or otherwise, arising out of in any way related to Hazardous

                                     7

materials at or  affecting  the  Property or the soil,  water,  vegetation,
buildings,  personal  property,  persons,  animals or otherwise and any personal
injury  (including  wrongful death) or property damage arising out of or related
to such  Hazardous  Materials.  The term  "Hazardous  Materials" as used in this
Mortgage  shall  include,  without  limitation,  gasoline,  petroleum  products,
explosives,   radioactive  materials,  hazardous  materials,  hazardous  wastes,
hazardous or toxic substances,  polychlorinated  biphenyls or related or similar
materials,  asbestos or any material containing asbestos, or any other substance
or material as may be defined as a hazardous or toxic  substance by any Federal,
state or local  environmental  law,  ordinance,  rule, or regulation  including,
without limitation, the Comprehensive Environmental Response,  Compensation, and
Liability  Act of 1980,  as amended  (42 U.S.C.  Sections  9601,  et seq.),  the
Hazardous Materials  Transportation Act, as amended (49 U.S.C. Sections 1801, et
seq.),  the  Resource  Conservation  and  Recovery  Act,  as amended  (42 U.S.C.
Sections  6901 et seq.),  the  Federal  Water  Pollution  Control Act (33 U.S.C.
Sections 1251 et seq.), the Clean Air Act (42 U.S.C.  Sections 7401 et seq.) and
in the regulations adopted and publications  promulgated  pursuant thereto.  The
obligations  and  liabilities of Borrower under this paragraph shall survive the
foreclosure  of this Mortgage or the delivery of a deed in lieu of  foreclosure,
and shall  continue to be binding  upon  Borrower  notwithstanding  any contrary
language  contained  in  this  Mortgage  or  any  other  document,  specifically
including without limitation any document which otherwise relieves Borrower from
personal liability under the note secured by this Mortgage, this Mortgage or any
other document.

     10.  Books and  Records.  Borrower  shall keep and maintain at all times at
Borrower's  address  stated above,  or such other place as Lender may approve in
writing, complete and accurate books of accounts and records adequate to reflect
correctly the results of the operation of the Property and copies of all written
contracts,  leases and other instruments which affect the Property.  Such books,
records,  con  tracts,   leases  and  other  instruments  shall  be  subject  to
examination  and  inspection at any  reasonable  time by Lender.  Borrower shall
furnish to Lender,  within  ninety  days  after the end of each  fiscal  year of
Borrower,  a balance  sheet,  an  income  and  expense  statement  covering  the
operation of the Property for such period. Borrower shall furnish, together with
the foregoing financial  statements and at any other time upon Lender's request,
a rent  schedule for the  Property,  certified by Borrower,  showing the name of
each tenant, and for each tenant, the space occupied, the lease expiration date,
the rent payable and the rent paid.

     11.  Condemnation.  Borrower shall promptly  notify Lender of any action or
proceeding  relating to any  condemnation  or other  taking,  whether  direct or
indirect,  of the Property,  or part thereof,  and Borrower  shall appear in and
prosecute any such action or proceeding  unless otherwise  directed by Lender in
writing. Borrower authorizes Lender, at Lender's option, as attorney-in-fact for
Borrower, to commence,  appear in and prosecute, in Lender's or Borrower's name,
any action or proceeding

                                        8

relating  to any  condemnation  or other  taking of the  Property,  whether
direct  or  indirect,  relating  to any  condemnation  or  other  taking  of the
Property,  whether direct or indirect,  and to settle or compromise any claim in
connection with such  condemnation  or other taking.  The proceeds of any award,
payment or claim for damages,  direct or conse quential,  in connection with any
condemnation or other taking,  whether direct or indirect,  of the Property,  or
part thereof, or for conveyances in lieu of condemnation, are hereby assigned to
and shall be paid to Lender subject,  if this  Instrument is on a leasehold,  to
the rights of lessor under the ground lease.

     Borrower  authorizes  Lender to apply such  awards,  payments,  proceeds or
damages,  after the deduction of Lender's expenses incurred in the collection of
such amounts, at Lender's option, to restoration or repair of the Property or to
payment of the sums secured by this Instrument,  whether or not then due, in the
order of application set forth in paragraph 3 hereof,  with the balance, if any,
to  Borrower.  Unless  Borrower  and  Lender  otherwise  agree in  writing,  any
application  of proceeds to principal  shall not extend or postpone the due date
of the monthly  installments  referred to in paragraphs 1 and 2 hereof or change
the  amount of such  installments.  Borrower  agrees  to  execute  such  further
evidence of assignment  of any awards,  proceeds,  damages or claims  arising in
connection with such condemnation or taking as Lender may require.

     12.  Borrower  and Lien Not  Released.  From time to time,  Lender  may, at
Lender's  option,  without  giving  notice or obtaining  the consent of Borrower
(except as hereinafter  provided in this  paragraph),  Borrower's  successors or
assigns or of any junior lienholder or guarantors, without liability on Lender's
part and  notwithstanding  Borrower's  breach of any  covenant or  agreement  of
Borrower in this Instrument, extend the time for payment of said indebtedness or
any part thereof,  reduce the payments thereon,  release anyone liable on any of
said indebtedness, accept a renewal note or notes therefor, modify the terms and
time of payment of said  indebtedness,  release from the lien of this Instrument
any part of the Property, take or release other or additional security, reconvey
any part of the Property, consent to any map or plan of the Property, consent to
the granting of any easement, join in any extension or subordination  agreement,
and agree in writing  with  Borrower to modify the rate of interest or period of
amortization  of the Note or  change  the  amount  of the  monthly  installments
payable  thereunder.  Any actions taken by Lender  pursuant to the terms of this
paragraph  12  shall  not  affect  the  obligation  of  Borrower  or  Borrower's
successors or assigns to pay the sums secured by this  Instrument and to observe
the covenants of Borrower contained herein, shall not affect the guaranty of any
person, corporation, partnership or other entity for payment of the indebtedness
secured hereby,  and shall not affect the lien or priority of lien hereof on the
Property.  Borrower shall pay Lender a reasonable service charge,  together with
such title insurance premiums and attorney's fees as may be incurred at Lender's
option, for any such action if taken at Borrower's request.

                                     9

     13.  Forbearance  By Lender  Not A  Waiver.  Any  forbearance  by Lender in
exercising any right or remedy  hereunder,  or otherwise  afforded by applicable
law,  shall not be a waiver of or preclude  the exercise of any right or remedy.
The acceptance by Lender of payment of any sum secured by this Instrument  after
the due date of such payment  shall not be a waiver of Lender's  right to either
require  prompt  payment  when due of all other  sums so secured or to declare a
default for failure to make prompt payment.  The procurement of insurance or the
payment of taxes or other  liens or  charges by Lender  shall not be a waiver of
Lender's  right to accelerate the maturity of the  indebtedness  secured by this
Instrument,  nor shall Lender's receipt of any awards, proceeds or damages under
paragraphs  5 and 11  hereof  operate  to cure or waive  Borrower's  default  in
payment of sums secured by this Instrument.

     14.  Estoppel  Certificate.  Borrower  shall  within  ten days of a written
request from Lender furnish Lender with a written statement,  duly acknowledged,
setting  forth the sums  secured by this  Instrument  and any right of  set-off,
counterclaim or other defense which exists against such sums and the obligations
of this Instrument.

     15. Uniform Commercial Code Security Agreement. This Instrument is intended
to be a security  agreement  pursuant to the Uniform  Commercial Code for any of
the items specified above as part of the Property which,  under  applicable law,
may be subject to a security interest  pursuant to the Uniform  Commercial Code,
and Borrower  hereby grants Lender a security  interest in said items.  Borrower
agrees that Lender may file this Instrument,  or a reproduction  thereof, in the
real estate records or other appropriate index, as a financing statement for any
of the items specified above as part of the Property.  Any  reproduction of this
Instrument or of any other security  agreement or financing  statement  shall be
sufficient as a financing statement. In addition, Borrower agrees to execute and
deliver to Lender, upon Lender's request, any financing  statements,  as well as
extensions,   renewals  and  amendments  thereof,   and  reproductions  of  this
Instrument  in such form as Lender may  require  to perfect a security  interest
with  respect  to said  items.  Borrower  shall  pay all  costs of  filing  such
financing  statements  and any  extensions,  renewals,  amendments  and releases
thereof,  and shall pay all reasonable costs and expenses of any record searches
for  financing  statements  Lender may  reasonably  require.  Without  the prior
written  consent  of Lender,  Borrower  shall not create or suffer to be created
pursuant  to the Uniform  Commercial  Code any other  security  interest in said
items,  including  replacements and additions thereto. Upon Borrower's breach of
any covenant or agreement of Borrower  contained in this  Instrument,  including
the covenants to pay when due all sums secured by this Instrument,  Lender shall
have the remedies of a secured party under the Uniform  Commercial  Code and, at
Lender's option,  may also invoke the remedies  provided in paragraph 27 of this
Instrument as to such items.  In  exercising  any of said  remedies,  Lender may
proceed  against the items of real  property and any items of personal  property
specified above as part of the Property  separately or together and in any order
whatsoever, without in any way affecting the availability of Lender's remedies

                                      10

under the Uniform  Commercial Code or of the remedies  provided in paragraph
27 of this Instrument.

     16.  Leases  of the  Property.  Borrower  shall  comply  with  and  observe
Borrower's  obligations as landlord under all leases of the Property or any part
thereof.  Borrower,  at Lender's  request,  shall  furnish  Lender with executed
copies of all leases now  existing or  hereafter  made of all or any part of the
Property,  and all  leases  now or  hereafter  entered  into will be in form and
substance  subject to the approval of Lender.  All leases of the Property  shall
specifically  provide that such leases are subordinate to this Instrument;  that
the tenant  attorns to Lender,  such  attornment  to be effective  upon Lender's
acquisition  of title to the  Property;  that the tenant  agrees to execute such
further  evidences of attornment  as Lender may from time to time request,  that
the  attornment of the tenant shall not be terminated by  foreclosure;  and that
Lender may,  at Lender's  option,  accept or reject such  attornments.  Borrower
shall not,  without  Lender's written  consent,  execute,  modify,  surrender or
terminate, either orally or in writing, any lease now existing or hereafter made
of all or any part of the  Property,  permit an assignment or sublease of such a
lease  without  Lender's   written  consent,   or  request  or  consent  to  the
subordination  of any  lease  of all or any  part of the  Property  to any  lien
subordinate  to this  Instrument.  If  Borrower  becomes  aware  that any tenant
proposes  to do, or is doing,  any act or thing which may give rise to any right
of  set-off  against  rent,  Borrower  shall  (i)  take  such  steps as shall be
reasonably  calculated to prevent the accrual of any right to a set-off  against
rent,  (ii) notify Lender thereof and of the amount of said set-offs,  and (iii)
within ten days after such accrual, reimburse the tenant who shall have acquired
such right to set-off or take such other steps as shall  effectively  dis charge
such set-off and as shall assure that rents  thereafter due shall continue to be
payable without set-off or deduction.

     Upon  Lender's  request,  Borrower  shall  assign  to  Lender,  by  written
instrument  satisfactory to Lender, all leases now existing or hereafter made of
all or any part of the  Property and all  security  deposits  made by tenants in
connection  with such leases of the  Property.  Upon  assignment  by Borrower to
Lender of any leases of the  Property,  Lender  shall have all of the rights and
powers  possessed by Borrower prior to such assignment and Lender shall have the
right to modify,  extend or terminate  such  existing  leases and to execute new
leases, in Lender's sole discretion.

     17.  Remedies  Cumulative.  Each  remedy  provided  in this  Instrument  is
distinct and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently,  independently, or
successively, in any order whatsoever.

     18.  Acceleration  in Case of  Borrower's  Insolvency.  If  Borrower  shall
voluntarily  file a petition under the Federal  Bankruptcy  Act, as such Act may
from time to time be amended,  or under any similar or successor Federal statute
relating to bankruptcy,

                                        11

insolvency,  arrangements or reorganizations, or under any state bankruptcy
or  insolvency  act, or file an answer in an  involuntary  proceeding  admitting
insolvency  or  inability  to pay debts,  or if Borrower  shall fail to obtain a
vacation or stay of  involuntary  proceedings  brought  for the  reorganization,
dissolution  or  liquidation  of  Borrower,  or if Borrower  shall be adjudged a
bankrupt,  or if a trustee  or  receiver  shall be  appointed  for  Borrower  or
Borrower's property, or if the Property shall become subject to the jurisdiction
of a Federal  bankruptcy court or similar state court, or if Borrower shall make
an  assignment  for the  benefit  of  Borrower's  creditors,  or if  there is an
attachment,  execution or other  judicial  seizure of any portion of  Borrower's
assets and such seizure is not discharged  within ten days,  then Lender may, at
Lender's  option,  declare  all of the sums  secured  by this  Instrument  to be
immediately  due and payable  without  prior notice to Borrower,  and Lender may
invoke any remedies permitted by paragraph 27 of this Instrument. Any attorney's
fees and  other  expenses  incurred  by  Lender in  connection  with  Borrower's
bankruptcy or any of the other aforesaid events shall be additional indebtedness
of Borrower secured by this Instrument pursuant to paragraph 8 hereof.

     19. Transfers of the Property or Beneficial Interests in Borrower.  On sale
or transfer of (i) all or any part of the  Property,  or any legal or  equitable
interest therein, whether voluntary or involuntary, or (ii) beneficial interests
in  Borrower  (if  Borrower  is  not  a  natural  person  or  persons  but  is a
corporation,  partnership,  limited  liability  company,  trust or  other  legal
entity), Lender may, at Lender's option, declare all of the sums secured by this
Instrument to be immediately due and payable, and Lender may invoke any remedies
permitted by paragraph 27 of this Instrument.

     20. Notice. Except for any notice required under applicable law to be given
in another manner, (a) any notice to Borrower provided for in this Instrument or
in the Note shall be given by mailing such notice by certified mail addressed to
Borrower at Borrower's address stated above or at such other address as Borrower
may  designate  by notice to Lender as  provided  herein,  and (b) any notice to
Lender shall be given by certified mail, return receipt  requested,  to Lender's
address stated herein or to such other address as Lender may designate by notice
to Borrower as provided herein. Any notice provided for in this Instrument or in
the Note shall be deemed to have been given to  Borrower or Lender when given in
the manner designated herein.

     21.  Successors and Assigns  Bound;  Joint and Several  Liability;  Agents;
Captions.  The covenants and  agreements  herein  contained  shall bind, and the
rights hereunder shall inure to, the respective successors and assigns of Lender
and Borrower,  subject to the  provisions of paragraph 19 hereof.  All covenants
and agreements of Borrower shall be joint and several.  In exercising any rights
hereunder or taking any actions provided for herein,  Lender may act through its
employees,  agents or  independent  contractors  as  authorized  by Lender.  The
captions and

                                       12

headings of the paragraphs of this Instrument are for convenience  only and
are not to be used to interpret or define the provisions hereof.

     22. Governing Law;  Severability.  This Instrument shall be governed by the
law of the State of New York. In the event that any provision of this Instrument
or the Note conflicts with  applicable law, such conflict shall not affect other
provisions of this Instru ment or the Note which can be given effect without the
conflicting  provisions,  and to this end the provisions of this  Instrument and
the Note are  declared to be  severable.  In the event that any  applicable  law
limiting the amount of interest or other charges  permitted to be collected from
Borrower is interpreted so that any charge provided for in this Instrument or in
the Note, whether considered separately or together with other charges levied in
connection with this Instrument and the Note, violates such law, and Borrower is
entitled to the benefit of such law, such charge is hereby reduced to the extent
necessary to eliminate such violation.  The amounts,  if any, previously paid to
Lender in excess of the amounts  payable to Lender  pursuant to such  charges as
reduced shall be applied by Lender to reduce the  principal of the  indebtedness
evidenced by the Note. For the purpose of determining whether any applicable law
limiting the amount of interest or other charges  permitted to be collected from
Borrower has been violated, all indebtedness which is secured by this Instrument
or evidenced by the Note and which  constitutes  interest,  as well as all other
charges levied in connection with such indebtedness  which constitute  interest,
shall be deemed to be  allocated  and spread  over the stated  term of the Note.
Unless otherwise required by applicable law, such allocation and spreading shall
be  effected  in such a manner  that the rate of  interest  computed  thereby is
uniform throughout the stated term of the Note.

     23. Waiver of Statute of  Limitations.  Borrower hereby waives the right to
assert any statute of  limitations  as a bar to the  enforcement  of the lien of
this  Instrument  or to any  action  brought  to  enforce  the Note or any other
obligation secured by this Instrument.

     24.  Waiver of  Marshalling.  Notwithstanding  the  existence  of any other
security interests in the Property held by Lender or by any other party,  Lender
shall have the right to determine  the order in which any or all of the Property
shall be subjected to the remedies provided herein.  Lender shall have the right
to determine the order in which any or all portions of the indebtedness  secured
hereby  are  satisfied  from the  proceeds  realized  upon the  exercise  of the
remedies  provided herein.  Borrower,  any party who consents to this Instrument
and any party who now or hereafter  acquires a security interest in the Property
and who has actual or constructive notice hereof hereby waives any and all right
to require the  marshalling  of assets in  connection  with the  exercise of the
remedies permitted by applicable law or provided herein.

     25.  Construction  Loan  Provisions.  Borrower  agrees to  comply  with the
covenants and conditions of the Building Loan Contract, if any, which is hereby

                                       13

incorporated  by  reference  in and  made a part  of this  Instrument.  All
advances  made by  Lender  pursuant  to the  Building  Loan  Contract  shall  be
indebtedness of Borrower  secured by this  Instrument,  and such advances may be
obligatory  as provided in the Building  Loan  Contract.  All sums  disbursed by
Lender prior to completion of the  improvements  to protect the security of this
Instrument  up to  the  principal  amount  of  the  Note  shall  be  treated  as
disbursements  pursuant to the Building Loan Contract.  All such sums shall bear
interest from the date of  disbursement  at the rate stated in the Note,  unless
collection  from  Borrower  of  interest  at such  rate  would  be  contrary  to
applicable  law in which event such amounts  shall bear  interest at the highest
rate which may be collected  from  Borrower  under  applicable  law and shall be
payable upon notice from Lender to Borrower requesting payment therefor.

     From time to time as Lender deems necessary to protect Lender's  interests,
Borrower shall,  upon request of Lender,  execute and deliver to Lender, in such
form as Lender shall direct,  assignments  of any and all rights or claims which
relate to the  construction  of the Property and which Borrower may have against
any  party  supplying  or who has  supplied  labor,  materials  or  services  in
connection with  construction of the Property.  In case of breach by Borrower of
the covenants and conditions of the Building Loan Contract,  Lender, at Lender's
option,  with or  without  entry  upon the  Property,  (i) may invoke any of the
rights or remedies  provided in the Building Loan Contract,  (ii) may accelerate
the sums  secured by this  Instrument  and invoke  those  remedies  provided  in
paragraph  27  hereof,  or (iii)  may do both.  If,  after the  commencement  of
amortization of the Note, the Note and this Instrument are sold by Lender,  from
and after such sale the Building Loan Contract  shall cease to be a part of this
Instrument and Borrower shall not assert any right of set-off,  counterclaim  or
other claim or defense  arising out of or in  connection  with the Building Loan
Contract against the obligations of the Note and this Instrument.

     26. Assignment of Rents; Appointment of Receiver;  Lender in Possession. As
part of the consideration for the indebtedness  evidenced by the Note,  Borrower
hereby  absolutely and  unconditionally  assigns and transfers to Lender all the
rents and revenues of the  Property,  including  those now due,  past due, or to
become due by virtue of any lease or other agreement for the occupancy or use of
all or any part of the Property, regardless of to whom the rents and revenues of
the Property are payable.  Borrower hereby  authorizes Lender or Lender's agents
to collect the  aforesaid  rents and revenues and hereby  directs each tenant of
the Property to pay such rents to Lender or Lender's agents; provided,  however,
that  prior to  written  notice  given by Lender to  Borrower  of the  breach by
Borrower of any covenant or agreement of Borrower in this  Instrument,  Borrower
shall  collect and receive all rents and revenues of the Property as trustee for
the benefit of Lender and Borrower, to apply the rents and revenues so collected
to the sums  secured by this  Instrument  in the order  provided in  paragraph 3
hereof with the balance, so long as no such breach has occurred,  to the account
of Borrower, it being intended by Borrower and Lender that this assignment of

                                        14

rents  constitutes  an  absolute  assignment  and  not  an  assignment  for
additional  security only. Upon delivery of written notice by Lender to Borrower
of the breach by  Borrower  of any  covenant  or  agreement  of Borrower in this
Instrument,  and without the  necessity of Lender  entering  upon and taking and
maintaining  full  control  of  the  Property  in  person,  by  agent  or  by  a
court-appointed  receiver, Lender shall immediately be entitled to possession of
all rents and revenues of the Property as specified in this  paragraph 26 as the
same  become due and  payable,  including  but not limited to rents then due and
unpaid,  and all such rents shall  immediately  upon  delivery of such notice be
held by Borrower as trustee for the benefit of Lender only;  provided,  however,
that the written  notice by Lender to  Borrower of the breach by Borrower  shall
contain a statement  that Lender  exercises  its rights to such rents.  Borrower
agrees that commencing upon delivery of such written notice of Borrower's breach
by Lender to Borrower, each tenant of the Property shall make such rents payable
to and pay such rents to Lender or Lender's agents on Lender's written demand to
each  tenant  therefor,  delivered  to  each  tenant  personally,  by mail or by
delivering such demand to each rental unit, without any liability on the part of
said tenant to inquire further as to the existence of a default by Borrower.

     Borrower  hereby  covenants  that  Borrower  has  not  executed  any  prior
assignment of said rents, that Borrower has not performed, and will not perform,
any acts or has not executed,  and will not execute,  any instrument which would
prevent  Lender from  exercising its rights under this paragraph 26, and that at
the time of  execution  of this  Instrument  there has been no  anticipation  or
prepayment of any of the rents of the Property for more than two months prior to
the due dates of such rents. Borrower covenants that Borrower will not hereafter
collect  or accept  payment  of any rents of the  Property  more than two months
prior to the due dates of such rents.  Borrower further  covenants that Borrower
will  execute  and  deliver  to Lender  such  further  assignments  of rents and
revenues of the Property as Lender may from time to time request.

     Upon  Borrower's  breach of any  covenant or  agreement of Borrower in this
Instrument,  Lender may in person,  by agent or by a  court-appointed  receiver,
regardless  of the  adequacy  of  Lender's  security,  enter  upon  and take and
maintain full control of the Property in order to perform all acts necessary and
appropriate for the operation and maintenance thereof including, but not limited
to, the execution, cancellation or modification of leases, the collection of all
rents and  revenues of the  Property,  the making of repairs to the Property and
the  execution or  termination  of contracts  providing  for the  management  or
maintenance of the Property, all on such terms as are deemed best to protect the
security of this Instrument.  In the event Lender elects to seek the appointment
of a  receiver  for the  Property  upon  Borrower's  breach of any  covenant  or
agreement of Borrower in this Instrument,  Borrower hereby expressly consents to
the  appointment of such  receiver.  Lender or the receiver shall be entitled to
receive a reasonable fee for so managing the Property.

                                         15

     All rents and revenues  collected  subsequent to delivery of written notice
by Lender to Borrower of the breach by Borrower of any  covenant or agreement of
Borrower  in this  Instrument  shall be applied  first to the costs,  if any, of
taking control of and managing the Property and collecting the rents, including,
but not limited to,  attorney's fees,  receiver's  fees,  premiums on receiver's
bonds, costs of repairs to the Property,  premiums on insurance policies, taxes,
assessments and other charges on the Property,  and the costs of discharging any
obligation  or  liability  of Borrower as lessor or landlord of the Property and
then to the sums secured by this  Instrument.  Lender or the receiver shall have
access to the books and records used in the  operation  and  maintenance  of the
Property and shall be liable to account only for those rents actually  received.
Lender  shall  not be liable  to  Borrower,  anyone  claiming  under or  through
Borrower or anyone having an interest in the Property by reason of anything done
or left undone by Lender under this paragraph 26.

     If the rents of the Property are not sufficient to meet the costs,  if any,
of taking  control of and managing the Property and  collecting  the rents,  any
funds expended by Lender for such purposes shall become indebtedness of Borrower
to Lender  secured by this  Instrument  pursuant to  paragraph 8 hereof.  Unless
Lender and  Borrower  agree in writing to other terms of payment,  such  amounts
shall be payable upon notice from Lender to Borrower  requesting payment thereof
and shall bear interest from the date of  disbursement at the rate stated in the
Note unless  payment of  interest  at such rate would be contrary to  applicable
law, in which event such amounts  shall bear  interest at the highest rate which
may be collected from Borrower under applicable law.

     Any entering upon and taking and  maintaining of control of the Property by
Lender or the receiver and any application of rents as provided herein shall not
cure or waive any default  hereunder or invalidate  any other right or remedy of
Lender under applicable law or provided herein.  This assignment of rents of the
Property  shall  terminate  at such  time as this  Instrument  ceases  to secure
indebtedness held by Lender.

     27.  Acceleration;  Remedies.  Upon  Borrower's  breach of any  covenant or
agreement  of Borrower in this  Instrument,  including,  but not limited to, the
covenants  to pay  when due any  sums  secured  by this  Instrument,  Lender  at
Lender's  option,  may declare all of the sums secured by this  Instrument to be
immediately  due  and  payable  without  further  demand,   may  foreclose  this
Instrument by judicial  proceeding,  shall be entitled to the  appointment  of a
receiver,  without  notice,  and may  invoke  any other  remedies  permitted  by
applicable  law or  provided  herein.  Lender  may,  at  Lender's  option,  also
foreclose  this  Instrument  for any portion of the sums secured hereby which is
then due and payable,  subject to the continuing  lien of this Instrument of the
balance of the Instrument  debt then due. Lender shall be entitled to collect in
pursuing  such  remedies  all costs  and  expenses  allowed  by  applicable  law
including, but not limited to,

                                       16

attorney's fees and applicable statutory costs. The rights of Lender herein
specified  shall be in addition to Lender's rights under Section 254 of the Real
Property Law.

     28. Release.  Upon payment of all sums secured by this  Instrument,  Lender
shall discharge this  Instrument.  Borrower shall pay Lender's  reasonable costs
incurred in discharging this Instrument.

     29. Lien Law. Borrower will receive advances hereunder subject to the trust
fund provisions of Section 13 of the Lien Law.

     30. Late  Payment.  If any payment  required to be made by Borrower in this
Instrument or the Note is not made before the tenth day of the month in which it
becomes due, Borrower shall pay to Lender with such payment an additional charge
equal to 5% of the payment due.

     31. Subsequent Liens. In the event a mortgage or other lien,  secondary and
subordinate  to the lien of this Mortgage,  is placed upon the Property  without
the written consent of Lender,  Lender may at Lender's option declare all of the
sums secured by this  Instrument to be due and payable and Lender may invoke any
remedy permitted by paragraph 27 of this Instrument.

     32.   Exculpation   of  Broome  County   Industrial   Development   Agency.
Notwithstanding  any contrary provision of this Mortgage,  neither Broome County
Industrial  Development  Agency,  nor any of the  members,  officers,  agents or
employees,  thereof shall be personally  liable for payment of any  indebtedness
represented  by the Note which this  Mortgage  secures or any other  amounts due
hereunder or for any other  indebtedness  or liabilities to Lender;  and neither
Broome County Industrial  Development Agency, nor any of the members,  officers,
agents or  employees  thereof  shall be  personally  liable  for any  deficiency
between  the  total  amount  of the  judgment  entered  in any  action,  suit or
proceeding brought to foreclose this Mortgage,  and the net proceeds of the sale
of the Property in such action,  suit or proceeding,  and no deficiency judgment
will be sought or taken against Broome County Industrial  Development Agency, or
any of the members,  officers,  agents or employees  thereof in any such action,
suit or proceeding;  provided, however, that nothing contained in this paragraph
shall impair the validity of the  indebtedness  evidenced by the Note which this
Mortgage secures or in any way affect or impair the lien of this Mortgage or the
right of Lender to foreclose  this  Mortgage or exercise any of its other rights
and remedies  hereunder upon  Borrower's  breach of any covenant or agreement of
Borrower  in this  Mortgage.  This  Mortgage  is not and  shall not be deemed to
constitute a debt of the State of New York (including,  without limitation,  the
County of Broome) neither the State of New York (including,  without limitation,
the County of Broome) shall be liable hereunder.

                                  17

        IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused
the same to be executed by its representatives thereunto duly authorized.


                                            BROOME COUNTY INDUSTRIAL
                                            DEVELOPMENT AGENCY


                                            By ____________________________
                                                     Richard D'Attilio
                                                     Executive Director


                                            SEMICONDUCTOR LASER INTERNATIONAL
                                            CORPORATION


                                            By ____________________________
                                                    Geoffrey Burnham, President



                                       18


STATE OF NEW YORK                   )
                                    ) SS.:
COUNTY OF BROOME                    )

     On this _____ day of January,  in the year 2000, before me, the undersigned
personally appeared RICHARD D'ATTILIO, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
capacity,  and that by his signature on the instrument,  the individual,  or the
person upon behalf of which the individual acted, executed the instrument.

                                                   __________________________
                                                         Notary Public



STATE OF NEW YORK                   )
                                    ) SS.:
COUNTY OF BROOME                    )

     On this _____ day of January,  in the year 2000, before me, the undersigned
personally appeared GEOFFREY BURNHAM,  personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
capacity,  and that by his signature on the instrument,  the individual,  or the
person upon behalf of which the individual acted, executed the instrument.

                                                   __________________________
                                                         Notary Public



                                         19


                                 SCHEDULE "A"

     All that certain parcel of land with the buildings and improvements thereon
erected  in the Town of  Kirkwood,  County  of  Broome,  and  State of New York,
bounded and described as follows:

     BEGINNING at a 5/8 inch rebar with cap on the existing  Northerly  boundary
of Link Drive at its  intersection  with the division  line between the property
owned by Broome  County  Industrial  Development  Agency  on the  East,  and the
property   leased  to  Richard  F.   George  on  the  West,   said  rebar  being
Northeasterly, a distance of 224.54 feet measured along said boundary from a 5/8
inch rebar with cap at its intersection with the existing Northeasterly boundary
of Corporate  Drive.  RUNNING THENCE North 18 degrees 20 minutes 25 seconds West
along said division line, a distance of 508.73 feet to a 5/8 inch rebar with cap
at its  intersection  with the  Southerly  boundary of Valley View  Subdivision;
thence along the last  mentioned  boundary the  following  three (3) courses and
distances: (1) North 81 degrees 12 minutes 42 seconds East, a distance of 275.00
feet to a 5/8 inch  rebar with cap;  (2)  thence  North 83 degrees 37 minutes 48
seconds  East, a distance of 427.70 feet to a 1 inch rebar;  (3) thence North 84
degrees 18 minutes 39 seconds East, a distance of 47.88 feet to a 5/8 inch rebar
with cap;  thence  South 06  degrees 22 minutes  12  seconds  East  through  the
property owned by said Broome County Industrial  Development  Agency, a distance
of  499.43  feet to a 5/8 inch  rebar  with cap at its  intersection  with  said
existing  Northerly  boundary of Link  Drive;  thence  along the last  mentioned
boundary  the  following  (2)  courses  and  distances:  (1) South 83 degrees 37
minutes 48 seconds  West, a distance of 580.20 feet to a 5/8 inch rebar with cap
at a point of  curvature;  (2) thence on a curve to the left  having a radius of
230.00 feet,  an arc distance of 65.50 feet to the POINT OR PLACE OF  BEGINNING.
Containing  348,480 square feet or 8.0000 acres more or less. The last mentioned
curve being subtended by a chord having a bearing of South 75 degrees 28 minutes
15 seconds West and a length of 65.29 feet.


                                     20
[TYPE]     EX-10.31


                    SEMICONDUCTOR LASER INTERNATIONAL CORPORATION



                              SUBSCRIPTION AGREEMENT



                            Dated as of February __, 2000



                               SUBSCRIPTION AGREEMENT

     SUBSCRIPTION  AGREEMENT,  dated as of February __, 2000 (this "Agreement"),
by  and  among  Semiconductor  Laser  International   Corporation,   a  Delaware
corporation (the  "Corporation"),  and certain subscribers whose names appear on
Schedule I attached hereto (each referred to individually as a "Subscriber"  and
collectively as the "Subscribers").

                                W I T N E S S E T H:

     WHEREAS, the Corporation desires to sell and issue to each Subscriber,  and
each  Subscriber  desires to purchase and subscribe from the Corporation (i) the
number of shares (the  "Shares") of common stock,  $.01 par value per share (the
"Common Stock"), of the Corporation set forth opposite their name on Schedule I,
and (ii) the number of warrants (the  "Warrants")  of Common Stock (the "Warrant
Shares") set forth  opposite  their name on Schedule I which may be exercised in
whole or in part at any time or from time to time commencing on the Closing Date
(as defined below) and prior to the fifth anniversary of the Closing Date for an
exercise price of $.___ per share (the closing bid price of the Company's Common
Stock on the date hereof); and

     WHEREAS,  certain  terms used in this  Agreement are defined in Section 7.1
hereof.

     NOW,  THEREFORE,  in consideration of these premises,  the mutual covenants
and  agreements  hereinafter   contained,   and  for  other  good  and  valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
intending to be legally bound, the parties hereto hereby agree as follows:

     1. Sale and Purchase of the Shares and the  Warrants.  Subject to the terms
and conditions of this Agreement, at the Closing, the Corporation shall sell and
deliver to each  Subscriber,  and each Subscriber  agrees,  individually and not
jointly,  to purchase and subscribe from the  Corporation,  the Shares of Common
Stock and the Warrants set forth opposite his name on Schedule I.

     2. Purchase Price.

     2.1.  Amount of the  Purchase  Price.  The  purchase  price (the  "Purchase
Price") for each unit (each  referred  to as a "Unit")  being  purchased  by the
Subscribers  pursuant to Section 1 is $.30. Each Unit shall consist of one Share
of Common Stock and one tenth of one Warrant being purchased by the Subscribers.
The aggregate Purchase Price to be paid by each Subscriber is set forth opposite
such  Subscriber's  name on Schedule I. The  Purchase  Price shall be payable as
provided in Section 2.2 hereof.

                                             2

     2.2.  Payment of the Purchase  Price.  At the Closing Date, each Subscriber
shall  deliver  the  aggregate  Purchase  Price owed by such  scriber  set forth
opposite his name on Schedule I to the  Corporation,  which Purchase Price shall
be payable  by  certified  or  official  bank check  payable to the order of the
Corporation  or  wire  transfer  of  immediately  available  funds.  As  soon as
practicable  after such payment,  the  Corporation  shall deliver to each of the
Subscribers (i) a certificate  representing the shares of Common Stock set forth
opposite their name on Schedule I and (ii) a warrant  representing the shares of
Common  Stock set forth  opposite  their name on Schedule I which shall  contain
dilution  protection  against  stock splits,  stock  dividends and other similar
recapitalization events and other customary terms.

     3. Closing.  The closing of this Agreement (the  "Closing") is scheduled to
take place on or prior to February  __, 2000 at the offices of the  Corporation,
or at such other time, date or place as the Corporation may decide.  The date on
which the  Closing is held is  referred  to in this  Agreement  as the  "Closing
Date."

     4. Representations and Warranties of the Corporation.

     The Corporation hereby represents and warrants to each Subscriber, that:

     4.1.  Organization of the Corporation;  Authority.  The Corporation is duly
formed, validly existing and in good standing under the laws of the jurisdiction
of its formation. The Corporation has all requisite power and authority to enter
into this Agreement, and to consummate the transactions contemplated hereby. The
execution, delivery and performance by the Corporation of this Agreement and the
consummation of the transactions  contemplated  hereby have been duly authorized
by all necessary action on the part of the Corporation.  This Agreement has been
duly executed and delivered by the Corporation and, assuming that this Agreement
constitutes  a valid and binding  obligation of each  Subscriber,  constitutes a
valid  and  binding  obligation  of the  Corporation,  enforceable  against  the
Corporation  in accordance  with its terms,  subject to  applicable  bankruptcy,
insolvency,  reorganization,  moratorium and similar laws  affecting  creditors'
rights and  remedies  generally  and  subject as to  enforceability,  to general
principles  of  equity  (regardless  of  whether  enforcement  is  sought  in  a
proceeding  at law or in equity).  The Shares,  when issued and sold pursuant to
this  Agreement,  and the shares of Common Stock  underlying the Warrants,  when
issued pursuant to the Warrants, will be duly and validly issued, fully paid and
nonassessable.

     4.2.  Consents of Third Parties.  None of the execution and delivery by the
Corporation of this Agreement, the consummation of the transactions contemplated
hereby,  or compliance by the Corporation with any of the provisions hereof will
(a)  conflict   with,  or  result  in  the  breach  of,  any  provision  of  the
organizational documents of the Corporation,  (b) conflict with, violate, result
in the breach or  termination  of, or  constitute  a default (or an event which,
with notice or lapse of time or both,  would  constitute a default) or give rise
to any right of termination or acceleration or right to increase the obligations
or otherwise  modify the terms thereof  under any  Contract,  Permit or Order to
which the Corporation is a party or by which the

                                          3

corporation  or any of its  properties  or assets is bound,  subject to the
rights of certain shareholders  to invest on the same terms and pro rata basis
(c) constitute a violation of any Law  applicable  to the  Corporation,  or (d)
result  in the  creation  of any  Lien  upon the  properties  or  assets  of the
Corporation.

     5. Representations and Warranties of the Subscribers.

     Each of the Subscribers  hereby represents and warrants,  severally and not
jointly, to the Corporation, that:

     5.1.  Capacity;  Authorization.  The  Subscriber  has the legal capacity to
enter into this Agreement and to carry out their obligations hereunder. Assuming
due execution and delivery by the Corporation of this Agreement,  this Agreement
will  constitute  a legal,  valid  and  binding  obligation  of the  Subscriber,
enforceable  against the  Subscriber  in accordance  with its terms,  subject to
applicable bankruptcy, insolvency,  reorganization,  moratorium and similar laws
affecting   creditors'  rights  and  remedies  generally  and  subject,   as  to
enforceability,   to  general   principles  of  equity  (regardless  of  whether
enforcement is sought in a proceeding at law or in equity).

     5.2.  Due  Diligence.   The  Subscriber  is  familiar  with  the  business,
operations  and management of the  Corporation.  The Subscriber has reviewed the
Company's  filings  with  the  Securities  Exchange  Commission  and  has had an
opportunity to ask questions of and receive answers from the Corporation and its
officers and other directors  concerning the terms and conditions of the sale of
the shares of Common  Stock and the warrants  set forth  opposite  their name on
Schedule I, and has had an opportunity to obtain additional information from the
Corporation  to the extent  deemed  necessary or advisable by the  Subscriber in
order to verify the accuracy of the information obtained. The Subscriber has, to
the extent deemed  necessary by the Subscriber,  consulted with his own advisors
(including  the  Subscriber's   attorney,   accountant  or  investment  advisor)
regarding  the  Subscriber's  investment  in the shares of Common  Stock and the
warrants  set forth  opposite  their  name on  Schedule  I and  understands  the
significance and effect of its  representations,  warrants,  acknowledgments and
agreements set forth in this Agreement. The Subscriber has, to the extent deemed
necessary  by  the  Subscriber,  completed  due  diligence  and  an  independent
investigation  concerning  the  Corporation  and the terms and conditions of the
sale of the shares of Common  Stock and the warrants  set forth  opposite  their
name on Schedule I.

     5.3.  Investment  Purposes.  (a) The  Subscriber is acquiring the shares of
Common Stock set forth opposite their name on Schedule I for investment purposes
only, for their own account, and not as a nominee or agent for any other Person,
and not with a view to,  or for  resale in  connection  with,  any  distribution
thereof  within the  meaning  of the  Securities  Act,  (b) the  Subscriber  has
knowledge and  experience in financial and business  matters as to be capable of
evaluating  the merits and risks of their  investment,  (c) the Subscriber is an
"accredited  investor"  within the meaning of Rule 501 of Regulation D under the
Securities Act (i.e., the

                                        4

subscriber's net worth,  or joint net worth with that of his spouse,  at the
time of his purchase of the shares of Common Stock set forth opposite their name
on Schedule I exceeds $1,000,000); (d) the Corporation has made available to the
Subscriber  the  opportunity  to ask  questions and to receive  answers,  and to
obtain the  information  the  Subscriber  has deemed  material and  necessary to
evaluate  the  merits  and  risks  of this  investment;  and (e) the  Subscriber
understands that the Company has had and continues to have insufficient  capital
and that this investment involves a high degree of risk.

     5.4.  Consents of Third Parties.  None of the execution and delivery by the
Subscriber of this Agreement, the consummation of the transactions  contemplated
hereby,  or compliance by the Subscriber with any of the provisions  hereof will
(a)  conflict  with,  violate,  result  in the  breach  or  termination  of,  or
constitute a default (or an event  which,  with notice or lapse of time or both,
would  constitute  a  default)  or give  rise to any  right  of  termination  or
acceleration or right to increase the obligations or otherwise  modify the terms
thereof under any Contract,  Permit or Order to which the  Subscriber is a party
or by which the  Subscriber or any of their  properties or assets is bound;  (b)
constitute a violation of any Law applicable to the Subscriber; or (c) result in
the creation of any Lien upon the properties or assets of the Subscriber.  Other
than those which have been  obtained  or made,  no  consent,  waiver,  approval,
Order,   Permit  or  authorization   of,  or  declaration  or  filing  with,  or
notification to, any Person or Governmental  Body is required on the part of the
Subscriber,  in connection with the execution and delivery of this Agreement, or
the compliance by the Subscriber with any of the provisions hereof.

     6. Transfer Restrictions; Private Placement.

     6.1.  The  Subscribers  understands  and agrees  that none of the Shares of
Common Stock,  the Warrants or the Warrant Shares have been registered under the
Securities Act, and that  accordingly  they will not be  transferable  except as
permitted  under various  exemptions  contained in the  Securities  Act, or upon
satisfaction of the  registration  and prospectus  delivery  requirements of the
Securities Act. The Subscribers acknowledges that it must bear the economic risk
of the Shares of Common Stock for an  indefinite  period of time since they have
not been registered under the Securities Act and therefore cannot be sold unless
they are subsequently registered or an exemption from registration is available.

     6.2. The  Subscribers  agrees with the  Corporation  that the  certificates
evidencing the Shares of Common Stock sold pursuant to this  Agreement  shall be
stamped or otherwise  imprinted  with a legend in  substantially  the  following
form:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
         PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE.
         SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
         HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A


                                        5

         REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH
         IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH
         ACT, OR (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH
         ACT, PROVIDED THAT, IF REQUESTED BY THE CORPORATION, AN OPINION
         OF COUNSEL REASONABLY SATISFACTORY IN FORM AND SUBSTANCE IS
         FURNISHED TO THE CORPORATION THAT AN EXEMPTION FROM THE
         REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.

     6.3. The legend endorsed on the certificates pursuant to Section 6.2 hereof
shall be removed and the  Corporation  shall issue a  certificate  without  such
legend to the holder  thereof at such time as the securities  evidenced  thereby
cease  to  be  restricted  securities  upon  the  earliest  to  occur  of  (i) a
registration  statement with respect to the sale of such  securities  shall have
become  effective under the Securities Act and such  securities  shall have been
disposed of in accordance with such registration statement,  (ii) the securities
shall  have  been  sold to the  public  pursuant  to Rule 144 (or any  successor
provision) under the Securities Act, or (iii) such securities may be sold by the
holder  without   restriction  or  registration  under  Rule  144(k)  under  the
Securities Act (or any successor provision).

     7. Miscellaneous.

     7.1. Certain Definitions.

     "Contract"  means any contract,  agreement,  indenture,  note,  bond, loan,
instrument,  lease,  conditional sale contract,  mortgage,  license,  franchise,
insurance policy, commitment or other arrangement or agreement,  whether written
or oral.

     "Governmental Body" means any government or governmental or regulatory body
thereof,  or political  subdivision  thereof,  whether federal,  state, local or
foreign,  or any agency,  instrumentality or authority thereof,  or any court or
arbitrator (public or private).

     "Law" means any applicable federal,  state, local or foreign law (including
common law), statute, code, ordinance,  rule, regulation or other requirement or
guideline.

     "Lien" means any mortgage, pledge, security interest,  encumbrance, lien or
charge of any kind, including, without limitation, any conditional sale or other
title retention agreement,  any lease in the nature thereof and the filing of or
agreement to give any financing  statement under the Uniform  Commercial Code of
any  jurisdiction  and including any lien or charge  arising by statute or other
law.

     "Order"  means any  order,  injunction,  judgment,  decree,  ruling,  writ,
assessment or arbitration award.

                                         6

     "Person"  means  any  individual,  corporation,  partnership,  firm,  joint
venture,  association,  joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.

     "Securities Act" means the Securities Act of 1933, as amended.

     7.2. Counterparts.  This Agreement may be executed simultaneously in two or
more  counterparts,  each of which shall be deemed an original  but all of which
together shall constitute one and the same instrument.

     7.3. Further Assurances.  The Corporation and the Subscribers each agree to
execute and deliver such other  documents or  agreements  as may be necessary or
desirable for the  implementation  of this Agreement and the consummation of the
transactions contemplated hereby.

     7.4.  Severability.  If any  provision  of this  Agreement  is  invalid  or
unenforceable, the balance of this Agreement shall remain in effect.

     7.5. Entire Agreement; Amendments and Waiver. This Agreement represents the
entire  understanding and agreement among the parties hereto with respect to the
subject  matter  hereof and can be amended,  supplemented  or  changed,  and any
provision  hereof can be  waived,  only by written  instrument  making  specific
reference  to this  Agreement  signed by the  parties  hereto.  No action  taken
pursuant to this Agreement,  including without limitation,  any investigation by
or on behalf of any party,  shall be deemed to  constitute a waiver by the party
taking such action of compliance with any representation,  Warrants, covenant or
agreement  contained  herein.  The waiver by any party hereto of a breach of any
provision  of this  Agreement  shall not operate or be construed as a further or
continuing  waiver of such  breach  or as a waiver  of any  other or  subsequent
breach.  No  failure  on the  part of any  party  to  exercise,  and no delay in
exercising,  any  right,  power or remedy  hereunder  shall  operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further  exercise thereof or the exercise of
any other right,  power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.

     7.6.  Governing Law. This  Agreement  shall be governed by and construed in
accordance  with the laws of the State of New York without  giving effect to the
principles of conflict of laws thereunder which would specify the application of
the law of another jurisdiction.

     7.7. Notices. All notices and other communications to the Subscribers shall
be in writing  (including  facsimile,  telecopy,  telex or similar  writing) and
shall be deemed given or made as of the date delivered,  if delivered personally
or by telecopy, one day after being delivered by overnight courier or three days
after  being  mailed  by  registered  or  certified  mail,  to the  Subscriber's
addresses provided on the signature page hereof.

                                          7

     7.8. Headings; Interpretive Matters. The section headings of this Agreement
are  for  reference  purposes  only  and  are  to be  given  no  effect  in  the
construction or interpretation of this Agreement. No provision of this Agreement
will be interpreted in favor of, or against, any of the parties hereto by reason
of the  extent  to which  any  such  party or its  counsel  participated  in the
drafting  thereof  or by reason of the  extent  to which any such  provision  is
inconsistent with any prior draft hereof or thereof.

     7.9. Binding Effect;  Assignment.  This Agreement shall be binding upon and
inure  to the  benefit  of the  parties  and  their  respective  successors  and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third-party  beneficiary  rights in any Person or entity not a party to this
Agreement  except as provided  below.  No assignment of this Agreement or of any
rights  or  obligations  hereunder  may  be  made  by  the  Corporation  or  the
Subscribers (by operation of law or otherwise) without the prior written consent
of the other party  hereto and any  attempted  assignment  without the  required
consents shall be void.  Upon any permitted  assignment,  the references in this
Agreement to the Corporation shall apply to any such assignee unless the context
otherwise requires.

                                      8

     IN WITNESS  WHEREOF,  the parties  hereto  have  caused  this  Subscription
Agreement to be duly executed as of the date and year first written above.

                                    SEMICONDUCTOR LASER
                                    INTERNATIONAL CORPORATION


                                    By:________________________
                                    Name: Geoffrey T. Burnham
                                    Title: President and Chief Executive Officer


                       Name of Subscriber:       ___________________________

                                                 Address:____________________

                                               ___________________________

                                                 Telephone:__________________

                                                 Fax:_______________________


                                         9



                                   SCHEDULE I

                                   SUBSCRIBERS


Name             Shares of Common Stock     Warrant Shares     Purchase Price





Totals



                                         10