Toronto, Ontario – August 11, 2005 Novadaq™ Technologies Inc. today reported its results for the second quarter ended June 30, 2005. During the quarter, Novadaq completed its initial public offering (IPO) and began trading its shares on the Toronto Stock Exchange under the symbol “NDQ”.

“The closing of our IPO solidifies our financial position and will allow us to expedite the execution of the SPY™ System commercialization and the clinical development of the OPTTX™ System”, said Arun Menawat, President and CEO of Novadaq Technologies Inc. “This first quarter as a public company was a very active one. We completed a strategic launch of the SPY System to six prominent cardiac centers. We also negotiated a North American distribution agreement with a leading cardiovascular multi-national partner to distribute this innovative vascular imaging technology, which in the coming quarters will facilitate a broader launch of the SPY System.”

Key Developments

• Installed the SPY System in five strategic centers, including: The Cleveland Clinic Foundation, Medical City Dallas, The Methodist Hospital’s Debakey Heart Institute, Lenox Hill and Stanford. Within each center, physicians have recognized the value of information the SPY System provides and continue to use this technology in their procedures. A sixth hospital was added to the list in June with the installation of the SPY System at the Enloe Medical Center in Chico, California.

  Signed a strategic North American distribution agreement with the Sorin Group to accelerate the penetration of the SPY System into the United States cardiac surgery market. One of the key assets Sorin, a world leader in the development of medical technologies for cardiac surgery, brings to this emerging partnership is the strength of its relationships with cardiac surgeons and operating room teams throughout the United States.
  

• Finalized a United States service agreement with KODAK to provide on-going service and maintenance for the SPY System.

• Received a patent grant for the SPY Intra-operative Imaging device and procedure, a technology exclusively licensed from the National Research Council of Canada. The U.S. patent is titled "Method and Apparatus For Performing Intra-Operative Angiography".

• Continued to advance the progress of the OPTTX System with the initiation of a 30 patient phase II study at Toronto Western Hospital, Toronto, Canada led by Patricia Harvey, MD, a leading retinal specialist. The study in Toronto is designed to demonstrate the effectiveness of the OPTTX System in improving the delivery and clinical outcomes of feeder vessel therapy (FVT), a known and medically accepted treatment for Wet AMD.

Financial Results

Revenue in 2005 Q2 was $64,057, representing an increase of $51,341, over revenue in 2004 Q2 of $12,716. $45,600 of this increase is attributable to increased procedural revenue generated by SPY imaging devices installed in the United States during 2005 Q2. The SPY System received regulatory clearance in the United States in January 2005; the first device was installed in the United States in March 2005 and; as at June 30, 2005 there were a total of 6 SPY imaging devices installed in the United States.

Cost of sales increased by $35,264 to $41,271 in 2005 Q2 as compared to $6,007 in 2004 Q2. Gross profit for the period increased by $16,077. As a percentage of sales, gross margin decreased to 36% in 2005 Q2 from 53% in 2004 Q2. The decrease in gross profit percentage is attributable primarily to one time royalties and installation costs associated with the placement of SPY imaging devices in 2005 Q2. These costs will become less significant as the installation base grows.

Sales and marketing expenses increased to $300,889 in 2005 Q2 from $34,320 in 2004 Q2. The increase in sales and marketing expenses was a result of the commercial launch of the SPY System in the United States in March 2005, and included an increase in employee and related office and travel costs – (approximately $90,000); market development costs – (approximately $63,000); marketing materials and advertising – (approximately $35,000) and trade shows costs (approximately $78,000).

Research and development expenses increased by $731,240, to $948,924 in 2005 Q2 from $217,684 in 2004 Q2. This increase related primarily to costs incurred to design and build next generation OPTTX devices for use in clinical trials (increase of approximately $408,000), which are currently in the testing phase. The overall increase also reflects the addition of engineering staff to support the design efforts, and clinical staff to plan and execute OPTTX trials (increase of approximately $187,000); as well as a significant increase in patent costs (increase of approximately $122,000). The increase in patent costs relates to additional SPY and OPTTX patents filed during 2005 Q2.

General and administration expenses increased by $805,972, to $1,255,573 in 2005 Q2 from $449,601 in 2004 Q2. Approximately $738,000 of this increase is attributable to increased stock based compensation expense which related to 647,070 employee stock options which vested in 2005 Q2, primarily as a result of the Company’s initial public offering on June 10, 2005. General and administration employee cost also increased by $58,000 to support the United States commercial launch of the SPY System, the Company’s increased level of research and development activity, and to add infrastructure appropriate for a public company. Insurance and other administrative costs increased by approximately $81,000. These increases were partially offset by a reduction in legal fees due to the settlement of litigation in June 2004.

Depreciation expense decreased by $9,259 from 2004 Q2 to 2005 Q2 as certain SPY imaging devices that were being used in research and development in 2004 Q2, were converted to revenue producing assets during 2005 Q2. Amortization of these devices was included in depreciation expense in 2004 Q2 and cost of sales in 2005 Q2. Amortization increased by $6,663 from 2004 Q2 to 2005 Q2 as a result of license payments made in the second half of 2004 which are capitalized and amortized.

Interest income increased by $87,061 from 2004 Q2 to 2005 Q2 as a result of the increase in cash and short term investment balances following the financing completed in July 2004, and as a result of the further increase in cash and short-term investment balances following the completion of the Company’s initial public offering on June 10, 2005.

Net loss increased by $1,472,216 to $2,283,999 in 2005 Q2 from $811,783 in 2004 Q2. The increase in net loss related primarily to increases in sales and marketing expenses (approximately $267,000); research and development expenses (approximately $731,000) and increased general and administrative expenses (approximately $806,000, of which approximately $738,000 related to the vesting of outstanding stock options following the completion of the Company’s initial public offering), and was partially offset by increased foreign exchange gains (approximately $225,000), and increased interest income (approximately $87,000).

On June 30, 2005 the Company had cash, cash equivalents and short-term investments totaling $26.7 million compared to $9.4 million at December 31, 2004. On June 10th, 2005 the Company completed an initial public offering for total gross proceeds of approximately $20.1 million.

The number of common shares outstanding as of June 30, 2005 was 17,984,950 common shares.

Conference call

Novadaq will host a conference call on Friday, August 12, 2005 at 10:00 a.m. ET to discuss its second quarter 2005 results. To access the conference call by telephone, dial 1-800-240-5318. Please connect approximately ten minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until August 19, 2005 at midnight. To access the archived conference call, dial 416-640-1917 or 1-877-289-8525 enter the reservation number 21132810 followed by the number sign.

About Novadaq Technologies

Novadaq Technologies (TSX: NDQ) develops and commercializes medical devices based on its proprietary imaging platform for the diagnosis and treatment of human vascular and ophthalmic diseases and conditions. Novadaq's SPY Intra-operative Imaging System enables surgeons to visually assess coronary vasculature and bypass graft functionality during the course of cardiac surgery. Novadaq's ophthalmic product, the OPTTX™ System, is aimed at the diagnosis, evaluation and treatment of wet Age-related Macular Degeneration (AMD) by using the same core imaging technology that is used in the SPY System. The OPTTX System is currently being evaluated in clinical trials.

For more information, please visit the company's website at www.novadaq.com.

Certain statements included in this press release may be considered forward-looking. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on Novadaq's current beliefs as well as assumptions made by and information currently available to Novadaq and relate to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance and future commitments. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by Novadaq in its public securities filings; actual events may differ materially from current expectations. Novadaq disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For additional information:

Arun Menawat
President & CEO
Novadaq Technologies Inc.
Phone: 905-629-3822 x 202
amenawat@novadaq.com

Investor Relations:
Christina Bessant
The Equicom Group
Phone: 416 815 0700 x 269
cbessant@equicomgroup.com

Summary financial statements attached:

For complete financial statements please go to www.sedar.com

Second Quarter Summary Financial Statements