Viking Systems Expects Record Quarterly Revenues for First Quarter 2011

Revenues Expected to Increase More Than 50% Over Last Year’s First Quarter

Also Provides Preliminary Information On First Quarter 3DHD Vision System Placements

WESTBOROUGH, Mass.--(BUSINESS WIRE)-- Viking Systems, Inc. (OTCBB: VKNG), a leading worldwide developer, manufacturer and marketer of 3D and 2D visualization solutions for complex minimally invasive surgery, expects to report record sales for the quarter ended March 31, 2011 that will exceed $3.0 million, an increase of more than 50% compared with $1.9 million in revenue reported for last year’s first quarter, and more than a 30% sequential increase over the fourth quarter of 2010.

During the quarter, Viking has processed orders for 22 of its recently-released 3DHD Vision Systems as well as for four of its previous generation 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.

Jed Kennedy, President and CEO of Viking Systems said, “We are pleased to be off to such a good start with Viking’s 3DHD system. Considering a typical capital equipment sales cycle is six to twelve months and that the first demonstration units essentially did not get deployed by distributors until early January 2011, this is a very encouraging start. All reports from our distributors indicate that the product is well-received and the purchasing process for systems is underway in most markets. Many of our distributors are now inquiring about purchasing additional demonstration systems to keep up with their demonstration schedules.”

All of the customer system sales in the quarter were in markets outside the United States. Viking has 11 distributors covering major markets outside the United States, with more planned. The Company believes that a majority of its 3DHD sales in 2011 will be through these distributors.

Mr. Kennedy commented, “We have always believed that sales would ramp up more quickly outside the United States, especially in those markets where our distributors previously carried our earlier generation product, and our first quarter sales confirm this belief. In the United States, we first instituted the distributor model in conjunction with the launch of 3DHD in the past six months. Additionally, in the United States, we believe current 2D suppliers and existing buying group contracts will affect our rate of market penetration.

Viking Systems also reported that as of March 31, 2011 a cumulative total of 21 demonstration units, including the 10 units mentioned above, have been placed since initial shipments began in December 2010. Since nearly all customer sales require “hands-on” demonstrations, placement of these units is critical to future sales success. Additionally, since distributors are required to purchase demonstration systems, such purchases represent their confidence in the product.

“We are pleased with our first quarter results, and we remain on target with our production schedule. We plan to continue the placement of demonstration units, as we believe they will be one of the keys to our market success. The sales process has three distinct steps: a surgical demonstration of the system, then a quotation for the configuration requested by the customer and, finally, working through the administrative process to get the purchase approved. The process varies a little depending on the particular market, but the three steps are fairly consistent and it usually starts with a successful demonstration. We look forward to increasing our footprint in the industry as end-users are introduced to the benefits of our 3DHD visualization systems for complex minimally invasive surgeries,” concluded Mr. Kennedy.

Viking Systems will report its full first quarter results when it files its first quarter 2011 Form 10-Q with the SEC, which is due not later than May 15, 2011.

About Viking Systems, Inc.

Viking Systems, Inc., is a leading worldwide developer, manufacturer and marketer of 3D and 2D visualization solutions for complex minimally invasive surgery. It markets and sells the only stand alone, cost-effective 3D system for use in minimally invasive surgery. Viking partners with medical device companies and healthcare facilities to provide surgeons with proprietary visualization systems enabling minimally invasive surgical procedures, which reduce patient trauma and recovery time. Viking, through its OEM business, also manufactures and assembles 3-D and 2-D cameras and components for several leading medical instrument companies worldwide. For more information, please visit our website at www.vikingsystems.com.

This press release contains forward-looking statements. These forward-looking statements are estimates reflecting the best judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements should, therefore, be considered in light of various important factors as described in our annual report on Form 10-K under the heading "Risk Factors" as updated from time to time by our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission. Statements concerning forecasts, revenue growth, profitability, production and shipment of units, future financial results, and statements using words such as "estimate", "project", "plan", "intend", "expect", "anticipate", "believe" and similar expressions are intended to identify forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.



CONTACT:

Viking Systems, Inc.
Robert Mathews, 508-366-3668 Ext. 8392
EVP & CFO
or
Porter, LeVay & Rose, Inc.
Michael Porter, 212-564-4700
President – Investor Relations

KEYWORDS:   United States  North America  Massachusetts

INDUSTRY KEYWORDS:   Technology  Hardware  Health  Hospitals  Medical Devices

MEDIA: