Viking Systems Inc (VKNG)

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TheCHEAPINVESTOR
Published Since 1981
T1h9e8 1In19v8e1stor’s Guide to MicroCap & Turnaround Stocks under $5 per Share
ISSN 0747-7236
2011© The CHEAP Investor 3 Golf Center, Suite 404
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Volume 29 Issue 7 August, 2011

Viking Systems, Inc.
OTC Bulletin Board Stock Symbol – VKNG Price: $0.27
Viking Systems develops, manufactures, and markets three dimensional (3D) and two dimensional
(2D) visualization systems used for complex, minimally invasive surgery, which reduce patient
recovery time. Its Viking 3Di Vision System is an advanced three dimensional system for minimally
invasive laparoscopic surgery with applications in bariatric, cardiac, neurologic, urologic, gynecologic,
and general surgery. The Company also offers two dimensional digital cameras and other
components for several leading medical instrument companies worldwide.
At this extremely low price, Viking Systems is very speculative. However, the stock has some very
unique 3D medical device technology. The
Company reported good revenues and a
slightly higher loss. Insiders own 33% of the
72 million total shares outstanding, while only
one institution owns 5,000 shares. The
Company has just $405,000 ($0.01 per
share) in cash, a book value of $0.03 and no
debt.
The Company recently offered a $3 million
private placement for 12 million units of
common stock for $0.25 per unit. Each unit
includes one share of common stock and a
warrant to buy 0.75 shares of common stock.
The warrants, which expire in 2016, have an
exercise price of $0.25 per share. Proceeds from this offering are expected to be used for general
corporate expenses and working capital. In particular, Viking Systems will use some of the proceeds
to expand sales and marketing and to fund more demonstrations of its 3D High Definition Vision
Systems.
According to the May 6 news release, “In connection with the private placement, Clinton Group, Inc.
has reached an agreement with Midsummer Investment Ltd. to purchase all of Midsummer's holdings
of Viking Systems common stock and warrants. At the time of this agreement, Midsummer owned
7,223,457, or approximately 12% of the total shares outstanding, and warrants to acquire an
additional 5,551,034 shares of Viking Systems with an exercise price of $0.18 per share.”
The capital infusion is good news for this cash-strapped company. However, with the price so low
and so many shares outstanding, there is always a chance of a reverse stock split. What we are
betting on here is that its 3D technology will be a winner. The Company’s first quarter financial results for the period ended March 31 are shown below.

Jed Kennedy, President and CEO of Viking Systems, said, "We are very pleased with the progress we
made this quarter, which represents the first full quarter of sales of our new 3DHD Vision System since
its launch in October 2010. Not only did we experience 63% growth in sales in this quarter but we now
also have twenty 3DHD demonstration systems deployed which we believe is essential to ramping up
sales later in the year."
During the quarter, Viking processed orders for 22 of its recently-released 3DHD Vision Systems as well
as for four of its previous generation 3Di systems. Of the 22 3DHD systems, the Company has shipped
19 of them, with the other 3 units being delayed due either to financing or regulatory delays in the
receiving countries. Of the 19 shipped systems, 7 were sold to customers, 10 were sold to distributors as
demonstration systems, and the 2 others were shipped at no charge -- one for research and the other
for market development. The 4 previous-generation 3Di systems had been sold in an order that had
been in process prior to the launch of Viking's new system.
On May 10, the Company's 3DHD Vision System was used in the first human surgery utilizing Terumo's
Kymerax Precision Drive Articulating Surgical System. The surgery was successfully performed in
Austria by Professor Gunter Janetschek, Medical University Salzburg, Department of Urology. The
combination of these technologies, which was presented in Viking's booth at the recent European
Association of Urology Congress in Vienna, demonstrated the enabling value 3D vision brings to
surgeons using articulating instrumentation. It drew a tremendous amount of attention from surgeons
interested in alternatives to more expensive robotic solutions.
During the first quarter of the year, Viking Systems signed an agreement for Medychny Komplex-MK Ltd.
to distribute its 3DHD Vision Systems in Russia and the Ukraine and certain other countries that are part
of the Commonwealth of Independent States.
If Viking Systems continue to grow its sales and perhaps become profitable, we think the price could
move 50 to 100% from this low point. The stock is very speculative, but the company does have
intriguing technology. The stock can be followed daily through Internet quote services. For more
information contact: Viking Systems, Inc., 134 Flanders Road, Westborough, Massachusetts 01581 or
call 508-366-3668. The fax number is 508-366-8858. The Website: http://www.vikingsystems.com.