Toronto, Ontario - March 17, 2006 Novadaq® Technologies Inc. (TSX: NDQ), a developer of medical imaging systems for the operating room, today announced its financial results for the fourth quarter and year ended December 31, 2005. In this press release, unless otherwise indicated, all dollar amounts are expressed in US dollars.

"We entered the public markets on June 10, 2005, with a vision to commercialize disease specific diagnostic and therapeutic image guided procedures, with the potential to improve clinical outcomes and the cost of healthcare," said Arun Menawat, President and CEO of Novadaq Technologies Inc. "Since that time we have met major milestones. The fourth quarter of 2005 was the first full quarter in which SPY, our cardiac surgery imaging product, was marketed commercially in the United States, meeting our first key milestone. We now have 30 systems installed in the United States. Clinical trials for the treatment of wet AMD continued in Europe and North America, using our unique imaging based device, the OPTTX System. Also, in February 2006 we signed an exclusive license with the University of Rochester over a broad portfolio of patents in the field of intra-operative fluorescence guided imaging of nerves, and we have now begun development of a new device, LUNATM, for the visualization of nerves and lymphatics to potentially reduce negative outcomes including impotency, during critical operations such as radical prostatectomy."

Selected Fiscal 2005 Financial Highlights and Operating Highlights

• Received FDA clearance for SPY Intra-operative Imaging System

• United States patent issued for SPY: Method and Apparatus For Performing Intra-Operative Angiography

• Signed North American distribution agreement with the Sorin Group for SPY

• Signed U.S. service agreement with Kodak for SPY

• Established U.S. subsidiary to extend infrastructure and ensure support for SPY

• Hired U.S. based clinical educators to support sales to the cardiac surgery market

• Executed on clinical advancement for OPTTX, completing the product development of the first generation device

• Cdn. $25 million initial public offering on June 10, 2005 (TSX: NDQ)

• Strengthened intellectual property platform and filed 6 new patent applications in several areas including nerve mapping

Financial Results

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Revenue from all sources in 2005 was $623,439, representing a decrease of $523,835 from revenue in 2004 of $1,147,274. The overall decrease includes a reduction in capital sale revenue of $808,864 offset by an increase in procedure based revenue of $285,029. Approximately 92% of procedure based revenue was generated from Company owned imaging systems installed in the US, with the remainder representing sales of consumable supplies to customers outside the US who have purchased systems. The decrease in capital sale revenue reflects the sale of 2 imaging systems in 2005 versus 10 in 2004. The Company agreed to sell an additional 6 imaging systems in Japan in the fourth quarter of 2005 and revenue will be recorded when the systems are shipped in 2006. In addition, a decision was made to change the revenue model in Japan to a blended capital sale/procedure based model. This change involved a significant reduction in the capital sale price offset by a planned increase in the price of consumable supplies.

The launch of SPY in the US, our key market is still in the early stage. December 31, 2005 represented the end of the first full quarter of commercial activities conducted by Sorin, our sales partner in the US during which time over half of the annual procedure based revenue for the year was recorded.

Gross profit as a percentage of sales decreased from 72.2% in 2004 to 55.9% in 2005 as a result of a shift in focus from capital device sales to procedure based revenue. The gross profit percentage earned on capital sales is higher than the percentage earned on procedural revenue as the procedural gross profit is net of sales commissions, and the cost of consumable supplies

Sales and marketing expenses increased to $1,248,551 in 2005 from $247,892 in 2004. The increase in sales and marketing expenses was a result of the commercial launch of the SPY System in the US in 2005, and included an increase in employee costs (approximately $450,000); an increase in travel costs (approximately $165,000) and an increase in costs incurred for trade shows, surgical meetings, marketing materials and advertising (approximately $318,000). Sales and Marketing expenses are expected to continue to increase moderately during 2006 as the Company continues to build its team of clinical educators and other internal resources.

Research and development expenses increased by $2,336,481 from $1,277,386 in 2004 to $3,613,867 in 2005. The overall increase reflects increases in employee and related office and travel costs for additional engineering staff to support the OPTTX design efforts and to support commercial manufacturing of SPY, and additional clinical staff to plan and execute OPTTX trials (increase of approximately $1,052,000).The increase also related to increased costs incurred to design and build next generation OPTTX devices for use in clinical trials (increase of approximately $685,000), an increase in patent costs (approximately $340,000) and an increase in SPY product development costs (approximately $79,000). Research and development costs are expected to continue to increase during 2006 to support the patient registry and product development initiatives for SPY and clinical trials for OPTTX and LUNA.

General and administration expenses increased by $1,166,173 to $2,894,494 in 2005 from $1,728,321 in 2004. This increase related to increases in employee costs to support the commercial launch of SPY and public company costs (increase of approximately $203,000), an increase in stock based compensation of approximately $400,000 which substantially related to the contractual vesting of options upon the completion of the Company's initial public offering, insurance costs related to public company D&O and product liability coverage (increase of approximately $173,000), investor relations costs (increase of approximately $170,000) and professional fees (increase of approximately $101,000).

Depreciation expense decreased by $32,562 from 2004 to 2005 as certain SPY imaging devices that were being used in research and development in 2004 were converted to revenue producing assets during 2005. Amortization of these devices was included in depreciation expense in 2004 and cost of sales in 2005. Amortization increased by $22,063 from 2004 to 2005 as a result of license payments made in June 2005 which are capitalized and amortized.

Interest income increased by $460,759 from 2004 to 2005 as a result of the increase in cash and short term investment balances following completion of the Company's initial public offering on June 10, 2005.

Net loss increased by approximately $4,102,000 as a result of a reduction in gross profit of approximately $480,000, an increase in sales and marketing costs of approximately $1,000,000, an increase in research and development expenses of approximately $2,336,000, an increase in general and administrative expenses of approximately $1,166,000, offset partially by an increase in foreign exchange gain of approximately $411,000 and increased interest income of approximately $460,000.

As at December 31, 2005 the Company had cash, cash equivalents and short-term investments of $22,774,263, an increase of $13,375,989 over December 31, 2004. The increase in these balances was primarily the result of the initial public offering completed on June 10, 2005 for net proceeds of $17,850,019 offset by cash used in operations during 2005 YTD. Cash used in operating activities increased from $2,157,185 in 2004 to $4,287,270 in 2005.

As at December 31, 2005 there were a total of 18,006,689 common shares (21,367,578 on a fully diluted basis) and no preferred shares outstanding.

Quarter Ended December 31, 2005 Compared to Quarter Ended September 30, 2005

The fourth quarter of 2005 was the first full quarter of sales activity by Sorin and procedure based revenue more than doubled from the third quarter of 2005. Capital sale revenue was down from the third quarter of 2005 as there were no SPY systems shipped in the fourth quarter.

Gross profit as a percentage of sales decreased from 65% in the third quarter of 2005 to 34% because of the reduction in capital sales. The gross profit percentage earned on capital sales is higher than the percentage earned on procedural revenue as the procedural gross profit is net of sales commissions in the range of 30% to 40% based on pricing, and the cost of consumable supplies.

Sales and marketing and general administrative expenses increased from the third to the fourth quarter of 2005 to support the increase in SPY sales activity in the US. The increase in R&D expense related primarily to increased engineering salary and other costs to support OPTTX device development and increased patent costs incurred to develop the Company's intellectual property portfolio.

Conference call

Novadaq will host a conference call on Monday, March 20, 2006 at 4:30 p.m. E.T. to discuss the financial results for the fourth quarter and full year ended December 31, 2005. To access the conference call by telephone, dial 416-644-3427 or 1-800-814-4890. Please connect approximately ten minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until March 27, 2006 at midnight. To access the archived conference call, dial 416-640-1917 or 1-877-289-8525 and enter the reservation number 21180888 followed by the number sign.

A live audio webcast of the conference call will be available at www.novadaq.com. Please connect at least ten minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above website for 90 days.

About Novadaq Technologies

Novadaq® Technologies Inc. (TSX: NDQ) develops and commercializes medical devices based on its proprietary imaging platform for the diagnosis and treatment of human vascular, ophthalmic, and neurologic diseases and conditions. Novadaq's SPY® Intra-operative Imaging System, commercially available worldwide, enables cardiac surgeons to visually assess coronary vasculature and bypass graft functionality during the course of open-heart bypass 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. Novadaq's product for nerve visualization in prostate surgery, LUNA™ is designed to enable surgeons to visualize nerve bundles during the course of radical prostatectomy in order to reduce negative outcomes including impotency.

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

This press release contains certain information that may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management’s future outlook and anticipated events or results, and may include statements or information regarding the future financial position, business strategy and strategic goals, research and development activities, projected costs and capital expenditures, financial results, research and clinical testing outcomes, taxes and plans and objectives of or involving Novadaq. Particularly, information regarding future sales and marketing activities and research and development activities, as well as the Company’s plans for each of the SPY System and the OPTTX System, and the potential for development of an application for the Company’s imaging device in image guided conventional and minimally invasive nerve-sparing radical prostatectomy (LUNA™), is forward-looking information.

Forward-looking information is based on certain factors and assumptions regarding, among other thinks, market acceptance and the rate of market penetration of Novadaq’s SPY System, the clinical results of the use of the SPY System, the results from clinical tests of the OPTTX System, and potential opportunities in the AMD treatment market and in image guided conventional and minimally invasive urological applications including nerve-sparing radical prostatectomy. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Forward looking-information is subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what we currently expect. These factors include risks relating to the transition from research and development activities to commercial activities, market acceptance and adoption of the SPY System, dependence on key suppliers for components of the SPY System and the OPTTX System, regulatory and clinical risks, risks relating to the protection of intellectual property, risks inherent in the conduct of research and development activities, including the risk of unfavorable or inconclusive clinical trial outcomes, potential product liability, competition and the risks posed by potential technological advances, and risks relating to fluctuations in the exchange rate between the US dollar and the Canadian dollar.

You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While Novadaq may elect to, Novadaq is under no obligation and does not undertake to update this information at any particular time.

For additional information:

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

Investor Relations:
Michael Moore
The Equicom Group
Phone: 416-815-0700 x 241
mmoore@equicomgroup.com

03.17.06-ndq-q4-06

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