THIRD AMENDMENT TO LEASE

Exhibit 10.38

         THIS THIRD AMENDMENT TO LEASE dated as of December 26, 2006, made by and between 30 RAMLAND ROAD, LLC , having an office in care of GHP Office Realty, LLC, One West Red Oak Lane, White Plains, New York 10604, as Landlord, and VISION-SCIENCES, INC. , having an office at 40 Ramland Road, Orangeburg, New York 10962, as Tenant.

WITNESSETH

         WHEREAS , Landlord is the owner of the real property and building located thereon commonly known as and located at 40 Ramland Road, Orangeburg, New York 10962 (the "Building");

         WHEREAS , pursuant to that certain Agreement of Lease, dated as of March 23, 2000 (the "Original Lease"), as amended by that First Amendment of Lease dated as of August 31, 2000 and as further amended by Second Amendment to Lease dated as of January 7, 2005 (hereinafter referred to collectively as the "Lease"), Landlord's predecessor in interest leased to Tenant a portion of the First (1 ^st ) floor of the Building which shall be deemed to consist of Ten Thousand (10,000) rentable square feet and which premises are more particularly described in the Lease (the "Original Premises"), for a period ending on August 31, 2010;

         WHEREAS , Tenant has outgrown the Original Premises and wants to lease from the Landlord additional space located on the First (1st) floor of the Building which shall be deemed to consist of Five Thousand, Two Hundred Fifty (5,250) rentable square feet, as more particularly shown on EXHIBIT "A"annexed hereto—pls. send me this exhibit (the "Additional Space") for the Additional Space Term (as hereinafter defined);

         WHEREAS , Landlord and Tenant want to extend and modify the Lease, as hereinafter provided;

         NOW, THEREFORE , in consideration of the mutual agreements of the parties hereinafter contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as follows:

ARTICLE—1 DEFINITION

        SECTION 1.01.    For the purposes of this Third Amendment to Lease, and all agreements supplemental to this Third Amendment to Lease, unless the context otherwise requires:

•         A.    All capitalized terms used herein and not otherwise defined herein but defined in the Lease shall have the meanings ascribed to said terms as set forth in the Lease, unless otherwise so noted.

          B.    "Additional Space Commencement Date" shall mean January 1, 2007.

          C.    "Additional Space Term" shall mean the period commencing on the Additional Space Commencement Date and expiring on August 31, 2010.

ARTICLE—2 THE ADDITIONAL SPACE

        SECTION 2.01.    A. Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the Additional Space for the Additional Space Term. Tenant has inspected the Additional Space and the state of title thereto and, subject to Landlord's express obligations herein to paint and carpet the Additional Space, Tenant accepts the Additional Space in its "AS IS" state and condition on the Additional Space Commencement Date and without any representation or warranty (except as expressly set forth herein), express or implied, in fact or by law, by Landlord, and without recourse to Landlord, as to title thereto, the nature, condition, square footage or usability thereof or as to the use or occupancy which may be made thereof.

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        B.    Tenant hereby waives any right to terminate, cancel or rescind this Third Amendment to Lease or the Lease by reason of Landlord's failure to deliver possession of the Additional Space or otherwise perform its obligations under this Article, which Tenant might otherwise have pursuant to any law now or hereafter in force or otherwise. Tenant further waives the right to recover any damages which may result from Landlord's failure to deliver possession of the Additional Space or otherwise to perform its obligations under this Article. Landlord and Tenant agree that this Section 2.01.B is an express provision to the contrary pursuant to Section 223-a of the New York Real Property Law as to the delivery of possession of the Additional Space.

        SECTION 2.02.    Landlord (which term as used herein may be deemed to mean Landlord and/or Landlord's affiliated or non-affiliated general contractor) shall carpet portions of the Additional Space with carpeting selected by Tenant from building standard selections; create a new doorway in the Additional Premises; and shall paint the Additional Space in a color selected by Tenant from building standard paint selections as per the attached plan (collectively, the "Additional Space Work"). Tenant shall select the carpeting and paint within ten (10) days of this Third Amendment to Lease.

        SECTION 2.03.    Other than as specifically provided for in Section 2.03 hereof, Tenant shall not do any construction, work or alterations to the Additional Space, nor shall Tenant install any items other than Tenant's trade fixtures without first: (1) obtaining Landlord's written consent, which consent shall not be unreasonably withheld or delayed and (2) complying with all of the terms, covenants and conditions contained in the Lease.

ARTICLE—3 LEASE AMENDMENTS

        SECTION 3.01.    Effective as of the date of the Additional Space Commencement Date, the Lease, is hereby modified as follows:

        A.    The term "demised premises" or "Demised Premises" as defined in