Exhibit 99.2
Viking Systems, Inc.
Form 8-K/A
File No. 000-49636
VIKING SYSTEMS, INC.
AND VISTA MEDICAL VISUALIZATION TECHNOLOGY BUSINESS
PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[Unaudited]
The following unaudited proforma condensed combined balance sheet aggregates the
balance sheet of Viking Systems, Inc. ("Viking") and the balance sheet of the
Vista Medical Visualization Technology Business Segment ("the Segment") as of
March 31, 2004, accounting for the transaction as a purchase of the Segment by
Viking, and using the assumptions described in the following notes, giving
effect to the transaction, as if the transaction had occurred as of the end of
the period. The transaction was not completed as of March 31, 2004.
The following unaudited proforma condensed combined statements of operations
combine the results of operations of Viking and the results of operations of the
Segment for the three months ended March 31, 2004 and the year ended December
31, 2003 as if the transaction had occurred January 1, 2003.
The proforma condensed combined financial statements should be read in
conjunction with the separate financial statements and related notes thereto of
Viking and the Segment. These proforma financial statements are not necessarily
indicative of the combined financial position, had the acquisition occurred on
the date indicated above, or the combined results of operations which might have
existed for the period indicated or the results of operations as they may be in
the future.
1
VIKING SYSTEMS, INC.
PRO FORMA UNAUDITED CONDENSED COMBINED BALANCE SHEET
March 31, 2004
Vista Medical
Viking Visualization
Systems, Technology
Inc. Business Adjustments PRO FORMA
----------------------------------------------------------
ASSETS
CURRENT ASSETS
CASH & CASH EQUIVALENTS $ 361,975 $ - $ (166,278) (1) $ 195,697
ACCOUNTS RECEIVABLE - 357,605 357,605
INVENTORIES - 878,578 (612,235) (2) 266,343
----------------------------------------------------------
TOTAL CURRENT ASSETS 361,975 1,236,183 (778,513) 819,645
PROPERTY & EQUIPMENT 6,263 - 153,817 (4) 160,080
OTHER ASSETS
INTANGIBLE ASSETS ACQUIRED - - - -
----------------------------------------------------------
TOTAL ASSETS $ 368,238 $ 1,236,183 (624,696) 979,725
==========================================================
LIABILITIES & EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE 65,607 323,327 388,934
PAYABLE TO AFFILIATE - 63,387 63,387
PAYROLL LIABILITIES - 140,915 140,915
DEFERRED REVENUE - 9,250 9,250
OTHER ACCRUED LIABILITIES - 13,528 13,528
----------------------------------------------------------
TOTAL CURRENT LIABILITIES 65,607 550,407 616,014
ROYALTIES PAYABLE 0
----------------------------------------------------------
TOTAL LIABILITIES 65,607 550,407 616,014
STOCKHOLDERS EQUITY
COMMON STOCK 6,295 - 3,054 (3) 9,349
PREFERRED STOCK 5,000 - 5,000
ADDITIONAL PAID-IN CAPITAL 733,705 67,947,643 58,026 (3) 791,731
ADDITIONAL PAID-IN CAPITAL (67,947,643) (5)
ACCUMULATED DEFICIT (442,369) (67,261,867) 67,261,867 (5) (442,369)
----------------------------------------------------------
TOTAL STOCKHOLDERS EQUITY 302,631 685,776 (624,696) 363,711
----------------------------------------------------------
TOTAL LIABILITIES & EQUITY $ 368,238 $ 1,236,183 $ (624,696) $ 979,725
==========================================================
2
VIKING SYSTEMS, INC.
PRO FORMA UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED 03/31/2004
Vista Medical
Visualization
Viking Technology
Systems, Inc. Business Adjustments PRO FORMA
----------------------------------------------------------
Sales $ - $ 1,111,627 $1,111,627
Cost of sales - 914,464 914,464
Research and development - 204,312 204,312
Sales and marketing - 63,818 63,818
Royalty expense - - 75,000 (6) 75,000
General and administrative 111,676 231,501 343,177
----------------------------------------------------------
Total cost and expenses 111,676 1,414,095 1,600,771
----------------------------------------------------------
Loss from continuing operations (111,676) (302,468) (489,144)
Loss from discontinued operations - - -
----------------------------------------------------------
Interest expense - (300) (300)
Other income - -
----------------------------------------------------------
Total other income (expense) - (300) (300)
----------------------------------------------------------
Net loss applicable to common stockholders $ (111,676) $ (302,768) $ (489,444)
==========================================================
Basic and diluted loss per share $ (0.04) $ (0.08)
Share used in computing basic and
diluted loss per share 3,061,000 3,054,000 (7) 6,115,000
3
VIKING SYSTEMS, INC.
PRO FORMA UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED 12/31/03
Vista Medical
Visualization
Viking Technology
Systems, Inc. Business Adjustments PRO FORMA
----------------------------------------------------------
Sales $ - $ 6,220,091 $ 6,220,091
Cost of Sales - 5,048,878 5,048,878
Research and development - 739,017 739,017
Sales and marketing - 330,612 330,612
Royalty expense - - 420,000 (6) 420,000
General and administrative - 1,091,005 1,091,005
----------------------------------------------------------
Total cost and expenses - 7,209,512 7,629,512
----------------------------------------------------------
Loss from continuing operations - (989,421) (1,409,421)
Loss from discontinued operations (41,646) - (41,646)
----------------------------------------------------------
Interest Expense (134) (134)
Other Income 1,629 1,629
----------------------------------------------------------
Total Other Income 1,495 1,495
----------------------------------------------------------
Net loss applicable to common stockholders $ (41,646) $ (987,926) $(1,449,572)
==========================================================
Basic and diluted loss per share $ (0.01) $ (0.24)
Share used in computing basic and
diluted loss per share 3,061,000 3,054,000 (7) 6,115,000
4
VIKING SYSTEMS, INC.
AND VISTA MEDICAL VISUALIZATION TECHNOLOGY BUSINESS
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1 - VIKING SYSTEMS, INC.
Viking Systems, Inc. ("Viking") is incorporated under the laws of the state of
Nevada and was previously involved in the development of software applications,
hardware sales and leasing, and training and support. As of December 31, 2002,
Viking discontinued its current operations.
NOTE 2 - VISTA MEDICAL VISUALIZATION TECHNOLOGY BUSINESS
Vista Medical Technologies Visualization Business Segment ("the Segment"), based
in Westborough, MA, was a segment of Vista Medical Technologies, Inc. ("Vista").
The Segment develops, manufactures, and markets products that provide
information to physicians performing minimally invasive general surgical,
cardiac surgical and other selected endoscopic and interventional procedures.
The Segment's technology products combine a head mounted display with video
cameras to provide surgeons with critical visual information during complex
minimally invasive procedures, and also incorporate the benefit of viewing
complementary information in a voice-controlled, picture-in-picture format, to
facilitate real-time decision making during surgery. The Segment also
manufactures compact, high resolution endoscopic cameras for original equipment
manufacturer customers and strategic partners.
NOTE 3 - PROFORMA ADJUSTMENTS
On April 15, 2004, Vista Medical Technologies, Inc. ("Vista") sold all of the
assets of the Segment to Viking Systems, Inc. ("Viking"). Pursuant to the terms
of the Asset Purchase Agreement, Viking purchased all assets related to the
Segment in exchange for a combination of cash, common stock and assumed
liabilities. Specifically, at closing, Viking is required to pay Vista cash of
the sum of $132,000 and the difference between accounts receivable and accounts
payable of the Segment at closing, and issue shares of its common stock equal to
ten percent (10%) of the fully-diluted common shares of Viking stock (3,054,000
shares). Additionally, at closing, Vista entered into a License Agreement with
Viking pursuant to which Vista will exclusively license to Viking all
intellectual property and product rights used in the operation of the Segment.
In exchange for this license grant, Viking will pay Vista royalties over the
next five (5) years based on sales of the products of the Segment by Viking. The
License Agreement will contain minimum royalties of $150,000 in year one,
$300,000 in each of years two, three and four, and $375,000 in year five. The
royalties payable by Viking under the License Agreement are capped at
$4,500,000, in the aggregate, over the five year period. Vista will retain
ownership of all intellectual property and product rights under the License
Agreement until these royalty obligations have been satisfied, at which time
Vista will transfer ownership of such intellectual property and product rights
to Viking. Lastly, Vista will consign to Viking at closing its current inventory
of products and parts. Viking will reimburse Vista the value of that inventory,
if and when sold, over the course of the next year.
5
Pro forma adjustments on the attached financial statements include the
following:
(1) Assumed cash paid in acquisition; equals $132,000 plus the difference
between accounts receivable acquired and accounts payable assumed.
(2) $612,235 of inventory was not acquired but assumed on a consignment basis;
any inventory sold will be paid to the seller at its book value.
(3) Adjustments to show Viking's issuance of 3,054,000 shares, valued at $.02
per share, to Vista.
(4) To allocate the excess of the purchase over the net book value of assets
acquired to property and equipment based on fair values at the date of
acquisition
(5) To eliminate the equity of the business acquired.
(6) To record the actual royalty expense, that would have been in accordance
with the License Agreement described above for 2003 and to record the minimum
for Q1 2004.
(7) The pro-forma (loss) per share is computed based on the number of shares
outstanding, after adjustment for shares issued in the acquisition, as though
such shares had been outstanding from the beginning of the periods presented.
Dilutive earnings per share were not presented, as the effect was anti-dilutive
for the periods presented.
6