Q1- 2009 Highlights

SPY(R) continued to gain momentum:

SPY kits sales up 64% over Q1-2008 and up 27% from Q4-2008; and

SPY capital sales up 51% over Q1-2008 and up 75% from Q4-2008.

Signed License, Development and Supply Agreements with Intuitive Surgical Inc.

Positive interim results from the SPY VICTORIA(TM) Cardiac Surgery Registry were released during the Society of Thoracic Surgery meeting in San Francisco.

Reduced cost structure, extending the company’s cash so that it can continue to work toward achieving net profitability through direct sales and technology alliances.

Completed a $5.15 million private placement of senior unsecured convertible debentures, which further strengthened the balance sheet.

Initiated human studies of SPY scope at the University of Rochester and submitted FDA 510(k) application for SPY scope.

Events Subsequent to Q1

Achieved first development milestone outlined in the License Agreement with Intuitive Surgical and received $1.0 million payment;

Showcased SPY scope at the annual meeting of the Society of Gastrointestinal and Endoscopic Surgeons (SAGES), the largest meeting of endoscopic surgeons in the U.S.; and

Added one new peer-reviewed journal article authored by plastic reconstructive surgeons from Duke University, which concluded that SPY can positively impact the outcomes of a variety of reconstructive surgeries and potentially reduce the costs of complications.

Three Months Ended March 31, 2009

As at March 31, 2009, the company had cash and cash equivalents of $8,636,000. The company’s cash used in operating activities was $355,000 in Q1-2009 down from $2,921,000 in Q4-2008. The company increased their cash and cash equivalents largely due to funds received from our development agreement and from issuance of convertible debentures.

“Our strategy of becoming the SPY imaging company continues to take shape. SPY registry data analysis further validates that SPY imaging improves clinical outcomes and reduces hospital costs. We also made major progress towards entering the minimally invasive surgical market, by creating a technology alliance with Intuitive Surgical for SPY imaging in robotic surgery and by furthering the development of SPY scope for non-robotic procedures,” commented Dr. Arun Menawat, Novadaq’s president and chief executive officer. “Our revenues are up over last year and the revenue mix continues to move towards higher margin products. We have successfully adjusted to the current economic reality by reducing our cash burn and raising the necessary capital to continue focusing on the execution of our business plan.”