VSCI logoVision-Sciences, Inc. (NASDAQ: VSCI, VSCI message board) , a medical device maker, announced on June 23, 2008, that they have signed a development agreement with SpineView Inc. for the production of a video-based endoscopic system. SpineView operates as a developer and manufacturer of disposable spinal surgery devices.

SpineView has agreed to order 50 devices each priced at $27,000. SpineView will also consider purchasing additional video scopes for $23,500 per unit, once the initial order has been delivered.

Further, SpineView will cover $225,000 of Vision-Sciences' engineering costs as well as reimburse the company with $40,000 for out-of-pocket costs.

The company's stock moved up 2.2% right after the news announcement, however it dropped afterwards. Such behavior seems rather odd, but might be based on Vision-Sciences' fundamentals. The stock had reached a 52-week high, earlier this year, and dropped afterwards. It might take some time before the company's activities will construct a new fundamental base that will strong enough to support a rally in the stock price.

VSCI chart

The company had negative cash flow from operations for the last few years, which was mainly due to low profit margins and high SG&A and R&D expenses. Although the new orders might not prove enough for Vision-Sciences to reach profitability, it will still greatly contribute towards it. The question only lies in the company's ability to deliver the order in a timely manner.

The company still had over $20 million in marketable securities at December 31, 2007. This liquid capital looks to be enough to support Vision-Sciences' activities for the coming year. The company should soon file their yearly earnings report, which will deliver more up to date financial information. As the stock is currently down, a strong earnings announcement could have a rather significant impact. We will see how it turns out shortly.

References:

http://sec.gov/Archives/edgar/data/894237/000117184308000460/newsrelease.htm