6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 6-K

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

For the month of April, 2016

(Commission File No. 001-35446)

____________________________

NOVADAQ TECHNOLOGIES INC.

(Translation of registrant’s name into English)

____________________________

5090 Explorer Drive

Suite 202, Mississauga

Ontario, Canada L4W 4T9

(Address of registrant’s principal executive office)

____________________________

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F o   Form 40-F x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1):

Yes o   No x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7):

Yes o   No x

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o   No x

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

NOVADAQ TECHNOLOGIES INC.
(Registrant)
By:	/s/ Roger Deck
Name:	Roger Deck
Title:	Chief Financial Officer

Date: April 28, 2016

EXHIBIT INDEX

Exhibit	Description
99.1	Interim Unaudited Consolidated Financial Statements
99.2	Management’s Discussion and Analysis
99.3	CEO Certification
99.4	CFO Certification

EX-99.1

Exhibit 99.1

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)

(expressed in U.S. dollars, except common shares outstanding)

	Notes		As at March 31, 2016				As at December 31, 2015
ASSETS
Current assets
Cash and cash equivalents		$		96,607,988		$		106,790,202
Accounts receivable				21,775,829				21,767,746
Prepaid expenses and other assets				3,026,256				3,362,854
Inventories	3			11,694,214				10,680,885
				133,104,287				142,601,687
Non-current assets
Property and equipment, net	4			15,780,818				14,830,114
Intangible assets, net	5			18,103,388				18,539,790
Total Assets		$		166,988,493		$		175,971,591
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities		$		10,190,147		$		12,145,572
Provisions				464,580				454,579
Deferred revenue				1,492,491				1,124,808
Income taxes payable				1,600				12,500
Distribution rights payable				250,000				250,000
				12,398,818				13,987,459
Non-current liabilities
Deferred revenue				899,965				849,299
Distribution rights payable				1,509,040				1,735,012
Shareholder warrants	6			-				16,437,795
Total Liabilities		$		14,807,823		$		33,009,565
Shareholders' Equity
Share capital	9	$		337,864,162		$		322,687,011
Contributed surplus	7			17,422,057				16,400,830
Deficit				(203,105,549	)			(196,125,815	)
Total Shareholders' Equity		$		152,180,670		$		142,962,026
Total Liabilities and Shareholders' Equity		$		166,988,493		$		175,971,591
Total number of common shares outstanding	9			57,431,414				56,253,327

See accompanying notes to the interim condensed consolidated financial statements

1

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Unaudited)

(expressed in U.S. dollars)

			For the three month period ended
	Notes		March 31, 2016				March 31, 2015
Product sales		$		16,779,708		$		11,067,180
Royalty revenue				495,250				452,380
Service revenue				451,113				171,781
Total revenues				17,726,071				11,691,341
Cost of sales	3			5,068,043				4,220,144
Gross profit				12,658,028				7,471,197
Selling and distribution expenses				15,308,081				12,497,654
Research and development expenses				3,163,368				3,622,553
Administrative expenses				2,556,259				2,686,706
Total operating expenses				21,027,708				18,806,913
Loss from operations				(8,369,680	)			(11,335,716	)
Finance costs				(24,028	)			(26,048	)
Finance income				89,681				53,743
Warrants revaluation adjustment	6			1,324,293				22,630
Net loss and comprehensive loss for the period		$		(6,979,734	)	$		(11,285,391	)
Basic loss and comprehensive loss per share for the period	10	$		(0.12	)	$		(0.20	)
Diluted loss and comprehensive loss per share for the period	10	$		(0.14	)	$		(0.20	)

See accompanying notes to the interim condensed consolidated financial statements

2

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(expressed in U.S. dollars)

Three months ended March 31, 2016		Share capital			Contributed surplus				Deficit				Total
As at December 31, 2015	$		322,687,011	$		16,400,830		$		(196,125,815	)	$		142,962,026
Net loss and comprehensive loss for the period			—			—				(6,979,734	)			(6,979,734	)
Exercise of options (note 9)			63,649			(26,116	)			—				37,533
Exercise of warrants (note 6)			15,113,502			—				—				15,113,502
Stock-based compensation (note 7)			—			1,047,343				—				1,047,343
As at March 31, 2016	$		337,864,162	$		17,422,057		$		(203,105,549	)	$		152,180,670
Three months ended March 31, 2015		Share capital			Contributed surplus				Deficit				Total
As at December 31, 2014	$		315,651,455	$		12,134,913		$		(165,295,336	)	$		162,491,032
Net loss and comprehensive loss for the period			—			—				(11,285,391	)			(11,285,391	)
Exercise of options (note 9)			931,321			(422,380	)			—				508,941
Exercise of warrants (note 6)			5,113,522			—				—				5,113,522
Stock-based compensation (note 7)			—			1,347,748				—				1,347,748
As at March 31, 2015	$		321,696,298	$		13,060,281		$		(176,580,727	)	$		158,175,852

See accompanying notes to the interim condensed consolidated financial statements

3

Novadaq Technologies Inc.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(expressed in U.S. dollars)

				For the three month period ended
	Notes			March 31, 2016				March 31, 2015
OPERATING ACTIVITIES
Net loss and comprehensive loss for the period			$		(6,979,734	)	$		(11,285,391	)
Items not affecting cash
Depreciation of property and equipment		4			1,311,122				1,216,374
Amortization of intangible assets		5			436,402				436,401
Stock-based compensation		7			1,047,343				1,347,748
Imputed interest on distribution rights payable					24,028				26,048
Shareholder warrants revaluation adjustment		6			(1,324,293	)			(22,630	)
					(5,485,132	)			(8,281,450	)
Changes in non-cash working capital
Increase in accounts receivable					(8,083	)			(1,434,355	)
Increase in inventories					(1,013,329	)			(414,813	)
Decrease in income taxes payable					(10,900	)			—
Decrease (Increase) in prepaid expenses and other assets					336,598				(986,653	)
(Decrease) increase in accounts payable and accrued liabilities and    provisions					(1,951,375	)			2,050,284
Increase in deferred revenue					367,683				186,363
Net change in non-cash working capital balances related to operations					(2,279,406	)			(599,174	)
Increase in non-current deferred revenue					50,666				273,021
Cash used in operating activities					(7,713,872	)			(8,607,603	)
INVESTING ACTIVITIES
Purchase of property and equipment		4			(2,774,422	)			(1,206,099	)
Disposal of property and equipment		4			512,596				204,935
Cash used in investing activities					(2,261,826	)			(1,001,164	)
FINANCING ACTIVITIES
Proceeds from exercise of options		7			37,533				508,941
Proceeds from exercise of warrants		6			—				699,209
Repayment of distribution rights payable					(250,000	)			—
Cash provided by financing activities					(212,467	)			1,208,150
Net decrease in cash and cash equivalents					(10,188,165	)			(8,400,617	)
Net foreign exchange difference					5,951				(32,732	)
Cash and cash equivalents at beginning of period					106,790,202				141,447,544
Cash and cash equivalents at end of period			$		96,607,988		$		133,014,195

See accompanying notes to the interim condensed consolidated financial statements

4

Novadaq Technologies Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016

(Unaudited)

(expressed in U.S. dollars, except as otherwise indicated)

1. DESCRIPTION OF THE ENTITY  

Novadaq Technologies Inc. [“Novadaq” or the "Company"] was incorporated under the Canada Business Corporations Act on April 14, 2000.  These consolidated financial statements include the accounts of the Company and its subsidiaries.  The Company is a listed company incorporated and domiciled in Canada whose shares are publicly traded on the Toronto Stock Exchange ["TSX"] and NASDAQ.  The registered office is located at 5090 Explorer Drive, Suite 202, Mississauga, Ontario, Canada.  The Company develops and commercializes medical imaging and therapeutic devices for use in the operating room.  The Company's proprietary imaging platform can be used to visualize blood vessels, nerves and the lymphatic system during surgical procedures. The Company is also the exclusive worldwide distributor of DermACELL® tissue products for wound and breast reconstruction surgery.

2. ACCOUNTING POLICIES

These interim condensed consolidated financial statements for the three month period ended March 31, 2016 of the Company were prepared in accordance with International Accounting Standard 34, Interim Financial Reporting ["IAS 34"] as issued by the International Accounting Standards Board ["IASB"].

The same accounting policies and methods of computation were followed in the preparation of these interim condensed consolidated financial statements as were followed in the preparation of the annual consolidated financial statements for the year ended December 31, 2015 prepared in accordance with International Financial Reporting Standards ["IFRS"] as issued by the IASB.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements. Accordingly, these interim condensed consolidated financial statements for the three month period ended March 31, 2016 should be read together with the annual consolidated financial statements for the year ended December 31, 2015, which are available on SEDAR at www.sedar.com.

The preparation of interim condensed consolidated financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are consistent with those disclosed in the notes to the annual consolidated financial statements for the year ended December 31, 2015. These interim condensed consolidated financial statements were authorized for issue by the Board of the Directors on April 27, 2016.

New standards, interpretations and amendments adopted by the Company

Disclosure Initiative: Amendments to IAS 1

On December 18, 2014 the IASB issued amendments to IAS 1, Presentation of Financial Statements, as part of its initiative to improve presentation and disclosure in financial reports.  The amendments are effective for annual periods beginning on or after January 1, 2016.  The Company adopted these amendments in its financial statements for the annual period beginning on January 1, 2016.  The adoption of the amendments did not have a material effect on the Company’s consolidated financial statements.

New standards, interpretations and amendments not yet adopted by the Company

The IASB has issued the following new standards, which are not yet effective or adopted by the Company:

[a] IFRS 9, Financial instruments (effective January 1, 2018)

[b] IFRS 15, Revenue from contracts with customers (effective January 1, 2018)

[c] IFRS 16, Leases (effective January 1, 2019)

The extent of the impact of adoption of these standards has not yet been determined.

5

Novadaq Technologies Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016

(Unaudited)

(expressed in U.S. dollars, except as otherwise indicated)

3. INVENTORIES 

Inventories by category are as follows:

	March 31, 2016		December 31, 2015
	$		$
Raw materials		8,483,923		7,943,924
Medical devices, software and parts		3,144,196		2,661,247
TMR kits		66,095		75,714
		11,694,214		10,680,885

During the three month period ended March 31, 2016, $3,817,087 [three month period ended March 31, 2015 - $3,066,674] of inventory has been recognized in cost of sales.

4. PROPERTY AND EQUIPMENT

	Medical devices			Furniture and fixtures			Computer equipment			Leasehold improvements			Total
	$			$			$			$			$
Cost:
Balance at January 1, 2016		26,737,427			474,573			1,892,522			1,611,150			30,715,672
Additions		2,552,361			14,121			81,742			126,198			2,774,422
Disposals		(1,437,942	)		—			—			—			(1,437,942	)
Balance at March 31, 2016		27,851,846			488,694			1,974,264			1,737,348			32,052,152
Depreciation:
Balance at January 1, 2016		(13,522,500	)		(438,942	)		(1,648,587	)		(275,529	)		(15,885,558	)
Depreciation		(1,215,536	)		(5,713	)		(52,168	)		(37,705	)		(1,311,122	)
Disposals		925,346			—			—			—			925,346
Balance at March 31, 2016		(13,812,690	)		(444,655	)		(1,700,755	)		(313,234	)		(16,271,334	)
Net book value at March 31, 2016		14,039,156			44,039			273,509			1,424,114			15,780,818

6

Novadaq Technologies Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016

(Unaudited)

(expressed in U.S. dollars, except as otherwise indicated)

	Medical devices			Furniture and fixtures			Computer equipment			Leasehold improvements			Total
	$			$			$			$			$
Cost:
Balance at January 1, 2015		24,913,546			450,791			1,663,792			294,180			27,322,309
Additions		6,488,498			23,782			228,730			1,316,970			8,057,980
Disposals		(4,664,617	)		—			—			—			(4,664,617	)
Balance at December 31, 2015		26,737,427			474,573			1,892,522			1,611,150			30,715,672
Depreciation:
Balance at January 1, 2015		(11,557,846	)		(419,792	)		(1,448,474	)		(248,378	)		(13,674,490	)
Depreciation		(4,888,278	)		(19,150	)		(200,113	)		(27,151	)		(5,134,692	)
Disposals		2,923,624			—			—			—			2,923,624
Balance at December 31, 2015		(13,522,500	)		(438,942	)		(1,648,587	)		(275,529	)		(15,885,558	)
Net book value at December 31, 2015		13,214,927			35,631			243,935			1,335,621			14,830,114

As at March 31, 2016, medical devices includes construction-in-progress of $7,166,385 [December 31, 2015 - $6,136,442] which are not being depreciated.  Depreciation will commence when the devices are placed at medical institutions.  

5. INTANGIBLE ASSETS

Intangible assets include licenses, patent rights and distribution rights as summarized below:

	Licenses			Patent rights			Distribution rights			Total
	$			$			$			$
Cost:
Balance at January 1, 2016		5,913,642			14,920,855			7,880,819			28,715,316
Additions		—			—			—			—
Balance at March 31, 2016		5,913,642			14,920,855			7,880,819			28,715,316
Amortization:
Balance at January 1, 2016		(5,913,642	)		(3,426,306	)		(835,578	)		(10,175,526	)
Amortization		—			(239,383	)		(197,019	)		(436,402	)
Balance at March 31, 2016		(5,913,642	)		(3,665,689	)		(1,032,597	)		(10,611,928	)
Net book value at March 31, 2016		—			11,255,166			6,848,222			18,103,388

7

Novadaq Technologies Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016

(Unaudited)

(expressed in U.S. dollars, except as otherwise indicated)

	Licenses			Patent rights			Distribution rights			Total
	$			$			$			$
Cost:
Balance at January 1, 2015		5,913,642			14,920,855			7,880,819			28,715,316
Additions		—			—			—			—
Balance at December 31, 2015		5,913,642			14,920,855			7,880,819			28,715,316
Amortization:
Balance at January 1, 2015		(5,913,642	)		(2,504,258	)		(47,501	)		(8,465,401	)
Amortization		—			(922,048	)		(788,077	)		(1,710,125	)
Balance at December 31, 2015		(5,913,642	)		(3,426,306	)		(835,578	)		(10,175,526	)
Net book value at December 31, 2015		—			11,494,549			7,045,241			18,539,790

6. SHAREHOLDER WARRANTS

	February  2010						March  2011
	Shareholder Warrants						Shareholder Warrants						Total
	#			$			#			$			$
December 31, 2014		290,089			4,080,925			1,561,515			21,792,160			25,873,085
Exercised		(290,089	)		(4,414,313	)		—			—			(4,414,313	)
Revaluation		—			333,388			—			(5,354,365	)		(5,020,977	)
December 31, 2015		—			—			1,561,515			16,437,795			16,437,795
Exercised		—			—			(1,561,515	)		(15,113,502	)		(15,113,502	)
Revaluation		—			—			—			(1,324,293	)		(1,324,293	)
March 31, 2016		—			—			—			—			—

On March 24, 2011, the Company closed a private placement of $14,280,240, net of transaction costs of $998,207, in exchange for 4,731,864 units at a price of CDN $3.17 per unit.  Each unit consists of one common share and 0.45 of a warrant, representing 2,129,339 warrants.  Each warrant has a five-year term and is exercisable either for one common share at an exercise price of CDN $3.18 or on a cashless basis in accordance with the Warrant Agreement.  Because such warrants were denominated in Canadian dollars [a currency different from the Company's functional currency], they are recognized as a financial liability at fair value through profit or loss.  In determining the initial fair value of the warrants, the Company used the Black‑Scholes option pricing model with the following assumptions: weighted average volatility rate of 66%; risk-free interest rate of 1.98%; expected life of five years; and an exchange rate of 1.026.  The value of $3,695,513, net of transaction costs, was established on March 24, 2011 and subsequently revalued on December 31, 2011 utilizing the Black‑Scholes option pricing model with the following assumptions: volatility rate of 64%; risk‑free interest rate of 1.85%; expected life of 4.23 years; and exchange rate of 0.980. The fair value of the warrants before transaction costs were initially U.S. $1.86 per warrant at issuance and at December 31, 2015 were valued at U.S. $10.53 per warrant.

During the three month period ended March 31, 2016, the remaining warrants of 1,561,515 were exercised on a cashless basis whereby the Company issued 1,166,753 common shares from treasury [see Note 9]. Upon conversion of the warrants to common shares, the warrants were de-recognized and the fair value of the warrants of $15,113,502 was recognized as share capital.

In February 2010, the Company closed a private placement of U.S. $6,610,157, net of transaction costs of $511,180, in which 3,049,205 units at CDN $2.43 per unit were issued.  Each unit is comprised of one common share and one-fifth of a warrant.  Each warrant has a five-year term and is exercisable for one common share at an exercise price of CDN $3.00.  Because such

8

Novadaq Technologies Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016

(Unaudited)

(expressed in U.S. dollars, except as otherwise indicated)

warrants were denominated in Canadian dollars [a currency different from the Company’s functional currency], they are recognized as a financial liability at fair value through profit or loss.  In determining the initial fair value of the shareholder warrants, the Company used the Black‑Scholes option pricing model with the following assumptions: volatility rate of 69%; risk-free interest rate of 1.88%; expected life of 5 years for shareholder warrants and 3 years for broker warrants; and exchange rate of 0.960. Shareholder warrants were initially valued at U.S. $1.47 and revalued at December 31, 2014 at U.S. $14.07 per warrant.

During the three month period ended March 31, 2015, the remaining warrants of 290,089 were exercised [see Note 9] for cash consideration of $699,209.

7. STOCK-BASED COMPENSATION PLAN

Stock Option Plan

On March 29, 2005, the Company established an amended stock option plan [the "Plan"] for the employees, directors, senior officers and consultants of the Company and any affiliate of the Company which governs all options issued under its previously existing stock option plans and future option grants made under the Plan.  On May 15, 2008, the shareholders at the annual and special meeting approved the "Second Amended and Restated Stock Option Plan", which was an amendment to the Plan.

Under the Plan, options to purchase common shares of the Company may be granted by the Board of Directors.  Options granted under the Plan will have an exercise price of not less than the volume-weighted average trading price of the common shares for the five trading days preceding the date on which the options are granted.  The maximum aggregate number of common shares which may be subject to options under the Plan is 10% of the common shares of the Company outstanding from time to time.

Options granted under the Plan will generally vest over a three-year period and may be exercised in whole or in part at any time as follows:  33% on or after the first anniversary of the grant date, 67% on or after the second anniversary of the grant date and 100% on or after the third anniversary of the grant date.  Options expire on the tenth anniversary of the grant date.  Any options not exercised prior to the expiry date will become null and void.  In connection with certain change of control transactions, including a take-over bid, merger or other structured acquisition, the Board of Directors may accelerate the vesting date of all unvested options such that all optionees will be entitled to exercise their full allocation of options and in certain circumstances, where such optionee's employment is terminated in connection with such transaction, such accelerated vesting will be automatic.  Options granted under the Plan will terminate on the earlier of the expiration of the option or 180 days following the death of the optionee or termination of the optionee's employment because of permanent disability, as a result of termination of the optionee's employment because of retirement of an optionee or as a result of such optionee ceasing to be a director, or 30 days following termination of an optionee.

The stock‑based compensation cost, related to options, that has been recognized for the three month period ended March 31, 2016 and included in the respective function line in the consolidated statements of loss and comprehensive loss is $1,016,256 [three month period ended March 31, 2015 - $1,347,748] with a corresponding increase to contributed surplus.

9

Novadaq Technologies Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016

(Unaudited)

(expressed in U.S. dollars, except as otherwise indicated)

A summary of the options outstanding as at March 31, 2016 and December 31, 2015 under the Plan are presented below (all weighted average exercise prices expressed in CDN dollars):

	For the three month period ended					For the year ended
	March 31, 2016					December 31, 2015
	Number outstanding			Weighted average exercise price		Number outstanding			Weighted average exercise price
	#			$		#			$
Options outstanding, beginning of period		3,894,805			12.25		3,691,962			11.32
Options granted		134,500			12.81		1,085,000			14.17
Options exercised		(11,334	)		4.40		(390,670	)		3.68
Options cancelled		(31,223	)		18.84		(95,932	)		12.24
Options forfeited		(67,943	)		17.22		(395,555	)		17.58
Options outstanding, end of period		3,918,805			12.15		3,894,805			12.25
Options exercisable, end of period		2,028,247			8.36		1,944,472			8.88

The Company uses the Black-Scholes option pricing model to determine the fair value of options. On February 17, 2016, the Company issued 134,500 options under the Plan. For the three month period ended March 31, 2016, the Company used the following assumptions to determine the fair value of each of the options granted:

	February 17, 2016 Grant
	Employees
Weighted average volatility rate		52%
Expected dividend yield	Nil
Weighted average expected life (in years)		3.7
Weighted average interest rate	0.57%
Exchange rate		0.7297
Fair Value per option	$	3.55

The expected life of the options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur.  The expected volatility reflects the assumption that the historical volatility over a period similar to the expected life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

There have been no modifications to the Plan during the periods presented in the interim condensed consolidated financial statements.

Long-Term Incentive Plan

On April 7, 2015 the Company established a long-term incentive plan comprised of Restricted Share Units (RSUs) and Deferred Share Units (DSUs).    

In connection with certain change of control transactions, including a take-over bid, merger or other structured acquisition, the Board of Directors may accelerate the vesting date of all unvested RSUs and DSUs such that all participants will be entitled to settle their full allocation of RSUs and/or DSUs and in certain circumstances, where such participant's employment is terminated in connection with such transaction, such accelerated vesting will be automatic.    

10

Novadaq Technologies Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016

(Unaudited)

(expressed in U.S. dollars, except as otherwise indicated)

RSUs

RSUs granted under the plan will generally vest over a three-year period and may be settled in whole or in part at any time as follows:  one-third on or after the first anniversary of the grant date, one third on or after the second anniversary of the grant date, one third on or after the third anniversary of the grant date, and in certain cases, if specified performance objectives are met as determined by the Board of Directors.  RSUs granted under the plan will expire upon the termination of the participant’s employment, retirement, permanent disability or death.  RSUs must be settled no later than December 31 of the third calendar year following the year in which the services giving rise to the award were rendered.  RSUs may be settled for their cash equivalent or by the issuance of the Company’s common shares, subject to discretion of the Board of Directors. Each RSU is the equivalent of one Novadaq common share. The fair value for each RSU granted, which approximates the market value of a Novadaq common share at the date of grant, is recognized over the term of the vesting period, with a corresponding increase to contributed surplus based on the number of RSUs expected to vest.

The table below is a summary of the RSUs outstanding as at March 31, 2016 and December 31, 2015:

	For the three month period ended			For the year ended
	March 31, 2016			December 31, 2015
	Number outstanding			Number outstanding
	#			#
RSU's outstanding, beginning of period		29,302			-
RSU's granted		-			30,302
RSU's forfeited		(1,077	)		(1,000	)
RSU's outstanding, end of period		28,225			29,302

The stock‑based compensation cost that has been recognized for the three month period ended March 31, 2016 and included in the respective function lines in the consolidated statements of loss and comprehensive loss is $31,087 [three month period ended March 31, 2015 – nil].

DSUs

DSUs granted under the plan may be settled when the participant ceases to be a member of the Board of Directors.  The participant may elect to settle DSUs for their cash equivalent or for the issuance of the Company’s common shares. Outstanding DSUs are initially recorded as a liability on the statement of financial position, measured at the awards’ fair value on the date of grant based on the market price of the Company’s common shares, with a corresponding charge to operating costs.  If an award’s fair value changes after it has been granted and before the settlement date, the resulting change in the liability is recorded as a charge to operating costs in the period that the change occurs.  

There were no DSUs granted during the three month periods ended March 31, 2016 and March 31, 2015.

There have been no modifications to the long-term incentive plan during the three month periods ending March 31, 2016 and March 31, 2015.

11

Novadaq Technologies Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016

(Unaudited)

(expressed in U.S. dollars, except as otherwise indicated)

8. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT  

[a] Fair value

Set out below is a comparison by type of the carrying amounts and fair values of the Company's recognized financial instruments that are recorded in the consolidated statements of financial position:

	March 31, 2016				December 31, 2015
	Carrying amount		Fair value		Carrying amount		Fair value
	$		$		$		$
Financial assets
Held-for-trading
Cash and cash equivalents		96,607,988		96,607,988		106,790,202		106,790,202
Loans and receivables
Accounts receivable		21,775,829		21,775,829		21,767,746		21,767,746
		118,383,817		118,383,817		128,557,948		128,557,948

Financial liabilities
Derivative financial liabilities at fair value through profit or    loss
Shareholder warrants	-	-	16,437,795	16,437,795
Other financial liabilities
Distribution rights payable	1,759,040	1,759,040	1,985,012	1,985,012
Accounts payable and accrued liabilities	10,190,147	10,190,147	12,145,572	12,145,572
	11,949,187	11,949,187	30,568,379	30,568,379

The fair values of the financial assets and liabilities are shown at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

· cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

· the fair value of the distribution rights payable is estimated by discounting the future contractual payments; and

· the fair value of shareholder warrants is estimated using the Black‑Scholes option pricing model incorporating various inputs including the underlying price volatility and discount rate.

[b] Fair value hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

· Level 1 - Inputs to the valuation methodology are quoted prices [unadjusted] for identical assets or liabilities in active markets.

· Level 2 - Inputs to valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

· Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

12

Novadaq Technologies Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016

(Unaudited)

(expressed in U.S. dollars, except as otherwise indicated)

The fair value hierarchy of financial instruments measured at fair value on the consolidated statements of financial position is as follows:

	March 31, 2016						December 31, 2015
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	$		$		$		$		$		$
Financial assets
Cash and cash equivalents		96,607,988		-		-		106,790,202		-		-
Financial liabilities
Shareholder warrants		-		-		-		-		16,437,795		-

During the reporting periods, there were no transfers between Level 1 and Level 2 fair value measurements.

[c] Management of risks arising from financial instruments

As at March 31, 2016, one customer had an accounts receivable balance exceeding 10% of total accounts receivable [December 31, 2015 – one customer]. Concentration of this customer comprised 33% of total accounts receivable as at March 31, 2016 as compared to 21% as at December 31, 2015.

9. SHARE CAPITAL

The Company has authorized share capital as follows: common shares - unlimited, no par value; preference shares - unlimited, no par value, issuable in one or more series.

Issued and outstanding

	Common shares
	#		$
Balance at December 31, 2014		55,572,568		315,651,455
Exercise of stock options		390,670		1,922,034
Exercise of shareholder warrants		290,089		5,113,522
Balance at December 31, 2015		56,253,327		322,687,011
Exercise of stock options		11,334		63,649
Exercise of shareholder warrants		1,166,753		15,113,502
Balance at March 31, 2016		57,431,414		337,864,162

10. LOSS PER SHARE

Basic loss per share amounts are calculated by dividing net loss for the period attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period.  Diluted loss per share amounts are calculated by dividing the net loss attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all of the dilutive potential ordinary shares into ordinary shares.

13

Novadaq Technologies Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016

(Unaudited)

(expressed in U.S. dollars, except as otherwise indicated)

The following reflects the loss and share data used in the basic and diluted loss per share computations:

	For the three month period ended
	March 31, 2016			March 31, 2015
Net loss and comprehensive loss    attributable to shareholders for basic loss per share		(6,979,734	)		(11,285,391	)
Net loss and comprehensive loss    attributable to shareholders for diluted loss per    share		(8,304,027	)		(11,285,391	)
Weighted average number of shares for basic loss    per share		56,464,036			55,913,270
Weighted average number of shares for diluted loss    per share		57,474,701			55,913,270

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these interim condensed consolidated financial statements.

The conversion of outstanding stock options or RSUs has not been included in the determination of basic and diluted loss per share as to do so would have been anti‑dilutive.

11. SEGMENTED INFORMATION

The Company’s business activities are conducted through one segment which consists of medical devices and related products and services. Segment performance is based on gross margin and is measured consistently with the gross margin of the consolidated financial statements since there is only one segment.  

Revenue by region is as follows:

	For the three month period ended
	March 31, 2016		March 31, 2015
	$		$
United States		15,760,357		10,298,599
Outside United States		1,965,714		1,392,742
Total		17,726,071		11,691,341

For the three month period ended March 31, 2016, there were sales to one customer that exceeded 10% of total revenue [three month period ended March 31 2015 - none]. Concentration of this customer comprised of 29% of total revenue for the three month period ended March 31, 2016.  

14

Novadaq Technologies Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016

(Unaudited)

(expressed in U.S. dollars, except as otherwise indicated)

Property and equipment, net are domiciled as follows:

	March 31, 2016		December 31, 2015
	$		$
Canada		8,837,299		7,955,468
United States		5,821,457		5,765,396
Outside North America		1,122,062		1,109,250
Total		15,780,818		14,830,114

Intangible assets are domiciled as follows:

	March 31, 2016		December 31, 2015
	$		$
Canada		2,660,197		2,733,434
Outside Canada		15,443,191		15,806,356
Total		18,103,388		18,539,790

15

EX-99.2

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis [“MD&A”] for NOVADAQ® Technologies Inc. [“NOVADAQ” or the “Company”] should be read in conjunction with the unaudited interim condensed consolidated financial statements for the three-month period ended March 31, 2016, which have been prepared in accordance with International Financial Reporting Standards [“IFRS”] as issued by the International Accounting Standards Board [“IASB”]. All of the amounts are expressed in United States [“U.S.”] dollars unless otherwise indicated. References to “NOVADAQ” or “the Company” mean NOVADAQ and/or its management.

Forward-Looking Information

This MD&A contains certain information that may constitute forward-looking information within the meaning of Canadian securities laws and forward-looking statements within the meaning of United States federal securities laws, both of which the Company refers to as forward-looking information. 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 statements about the present or 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, competitive conditions, 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. Without limitation, information regarding future sales and marketing activities, SPY, SPY Elite Fluorescence Imaging System [the “SPY Elite Imaging System”], PINPOINT Endoscopic Fluorescence Imaging System [the “PINPOINT Imaging System”], PINPOINT upgrade kit, LUNA™ Fluorescence Angiography System [the “LUNA Imaging System”], the Firefly™  component used in the da Vinci robot [“Firefly” and together with the SPY Elite, PINPOINT and LUNA Imaging Systems, collectively, the “SPY Imaging Systems”] and CO₂ Heart Laser System, EasyLDI Perfusion Camera [“EasyLDI Camera”] and DermACELL® tissue products [collectively, the “Other Products”, and together with the SPY Imaging Systems, the “Products”] sales, placements and utilization rates, reimbursement for the various SPY Imaging System procedures and DermACELL tissue products [“DermACELL”], future revenues arising from the sales of the Company’s Products, the sales and marketing arrangements with LifeNet Health® [“LifeNet Health”], the license and supply agreements with Intuitive Surgical®, Inc. [“Intuitive”],  the co-marketing agreement with Arthrex, Inc. [“Arthrex”], the distribution agreements with MAQUET Cardiovascular [“MAQUET”], the various international distribution agreements and future potential partnerships, research and development activities, the Company’s plans to seek further regulatory clearances for additional indications, as well as the Company’s plans for development of a surgical lymph node and tumor margin scintigraphy imaging system is forward-looking information.

Forward-looking information is based on certain factors and assumptions regarding, among other things, market acceptance and the rate of market penetration of NOVADAQ’s Products, the success of NOVADAQ’s partnerships and distribution arrangements, the effect of reimbursement codes for procedures involving use of the Products and the clinical results of the use of the Products. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect and actual results may vary materially from the disclosure herein. The successful commercialization of any one of the Products will depend on a number of financial, logistical, technical, legal, regulatory, competitive, economic and other factors, the outcome of which cannot be predicted, and some of which will be out of the Company’s control. Due to the early stage of commercialization for certain Products, it is difficult for the Company to accurately predict its future revenues or results of operations or the timing of its current research and development programs. In addition, despite the Company’s current focus on the commercialization of its products, the Company continues to invest in additional research and development in order to expand the applications of the SPY Imaging Systems, and these activities may require significant cash commitments which may, in turn, affect the profitability of the Company

Forward-looking information is subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from what the Company currently expects. These factors include: risks relating to the transition from research and development activities to commercial activities; market acceptance and adoption of the Products; risks relating to the Company’s transition to a direct sales and marketing model with respect to the SPY Imaging Systems; the risk that changes to current healthcare reimbursement codes or healthcare spending will negatively affect the acceptance or usage of the Products; quarter to quarter revenue fluctuations due to numerous external risk factors; risks related to third-party contractual performance; risks associated with the introduction of products or existing products by competitors that compete with the Products; risks associated with conducting business internationally; risks related to medical or scientific advances that could render the Products obsolete; market acceptance and adoption

1

of the SPY Imaging Systems and/or DermACELL; dependence on key suppliers for components of certain Products; regulatory and clinical risks; risks relating to the protection of its patents, trade secrets, trademarks and other intellectual property (“IP”) and third party IP; 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 U.S. and the Canadian dollar.

The Company has also included important factors in the cautionary statements included in the Company’s Annual Information Form [“AIF”] for the year ended December 31, 2015, which is filed on SEDAR at www.sedar.com and on EDGAR. Forward-looking information is provided in the AIF for the purpose of giving information about management’s current expectations and plans and allowing investors and others to get a better understanding of our operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking information for any other purpose. Prospective investors should give careful consideration to such risks and uncertainties. NOVADAQ believes that these factors could cause actual results or events to differ materially from the forward-looking statements that it makes.

Undue importance should not be placed on forward-looking information, nor should reliance be placed upon this information as of any other date. Unless required by law, NOVADAQ does not undertake to update this information at any particular time. These forward-looking statements are made as of the date of this MD&A. Unless otherwise indicated, this MD&A was prepared by management from information available through April 27, 2016.

COMPANY OVERVIEW

NOVADAQ (Toronto Stock Exchange (“TSX”): NDQ; NASDAQ Global Market (“NASDAQ”): NVDQ) primarily develops, manufactures and markets real-time fluorescence imaging products that are designed for use by surgeons in the operating room and other clinical settings where open and minimally invasive surgery or interventional procedures are performed. The focus of NOVADAQ’s operations began with research and development, and in mid-2005, the Company launched its first commercial application for the SPY Intraoperative Imaging System in the U.S. From 2009 through 2012, the Company formed certain alliances with market leading companies for the broader commercialization of NOVADAQ’s leading products. In 2013, NOVADAQ first established a direct sales team in North America to focus on the sale of the Company’s PINPOINT Imaging System and the LUNA Imaging System. In 2015, NOVADAQ rapidly expanded its direct sales team in order to sell and market the SPY Elite® Imaging System, which was previously distributed and marketed in North America by LifeCell Corporation (“LifeCell”). The Company also acquired exclusive worldwide distribution rights to LifeNet Health’s DermACELL tissue products, which are used in breast reconstruction surgery and wound care procedures, and the new direct sales team began selling DermACELL to the Company’s customers as of January 2015.

In January 2016, NOVADAQ further expanded its direct sales force in order to accommodate the establishment of two distinct sales divisions: (1) the surgical division which is focused on selling the SPY Elite® Imaging System, the PINPOINT Imaging System and DermACELL products used in breast reconstruction procedures; and (2) the wound care division which is focused on selling the LUNA™ Fluorescence Angiography System and DermACELL products used in diabetic foot ulcers and chronic non-healing wounds.

The SPY fluorescence imaging technology utilized in the SPY Elite, PINPOINT, LUNA Imaging Systems and Firefly (“SPY Fluorescence Imaging”) provides clinically relevant anatomic and physiologic images of blood flow in vessels and micro-vessels during a wide variety of complex surgical procedures performed in the operating room and for the treatment of acute and chronic wounds outside the operating room. The technology utilized in SPY Imaging Systems has a strong record of safety and does not expose the patient or the hospital or clinic staff to ionizing radiation. The SPY Fluorescence Imaging core technology platform is flexible and can be used to develop unique imaging devices specifically designed to meet the needs of different surgeons and the specialty procedures they perform. SPY images enable surgeons treating life-threatening illnesses such as breast, head and neck, colon, kidney and other cancers, complex hernias, diabetes and certain cardiovascular diseases that result in chronic non-healing wounds, to effectively visualize blood flow in vessels, co-joined vessels and micro-vessels and to visually assess the quality of blood perfusion in tissue, such as skin and organs.

More than 180 peer-reviewed publications report positive clinical experiences using SPY Imaging Systems in open, robotic and endoscopic surgeries and wound care. This body of academic literature supports the Company’s claims that the use of SPY Imaging Systems enhances intra-procedural decision-making and enables surgeons and other specialists to repair or remove tissue that could, otherwise, lead to post-operative or post procedure complications, which if not addressed during the procedure can negatively impact patient quality of life and significantly increase overall treatment costs.

2

The Company’s SPY, SPY Elite, LUNA and PINPOINT Imaging Systems are based upon the core SPY fluorescence technology. SPY and SPY Elite are 510(k) cleared by the U.S. Food and Drug Administration [“FDA”] for the visualization of blood flow in vessels and tissue perfusion during nine different open surgery applications.  

The LUNA system is FDA 510(k) cleared for use in cardiovascular applications, such as the assessment of blood flow in peripheral vessels and perfusion in extremities for patients with vascular disease and conditions that can lead to chronic and acute wounds. The SPY, SPY Elite, and LUNA Systems are also Conformité Européenne (CE Marked) for sale in Europe, are licensed by Health Canada and have regulatory authority approval for sale in certain other markets outside of the United States including Australia, Brazil, China, Israel, Japan, New Zealand, Philippines, South Korea, Taiwan and Turkey. The Company also markets the SPY Analysis Toolkit [“SPY-Q”], which is a companion post-processing software designed to allow physicians to enhance and apply objective analysis tools to SPY Elite and LUNA images. SPY-Q is also 510(k) cleared by the FDA and is also available in markets outside of the United States.

PINPOINT is FDA 510(k) cleared, CE Marked, licensed by Health Canada and approved by several other regulatory authorities outside of the U.S., for use in minimally invasive surgical procedures. PINPOINT is approved for sale in Australia, Brazil, China, Israel, Japan, Mexico, New Zealand, Philippines, South Korea, Taiwan, Thailand and Turkey. PINPOINT combines the capabilities of SPY imaging with state-of-the-art high definition visible light visualization offered by conventional endoscopes. PINPOINT provides surgeons with better visualization of important information related to anatomic structures and tissue perfusion during complex minimally invasive procedures.

DermACELL is a technologically advanced Acellular Dermal Matrix (“ADM”) that is used in breast reconstruction surgeries, as well as in the treatment of diabetic foot and venous stasis ulcers and chronic non-healing wounds. Adequate blood supply is critical for successful use of regenerative human tissue matrix allografts. The use of NOVADAQ’s SPY Imaging Systems alongside DermACELL will allow clinicians to visually assess the quality of blood flow in tissue in real time allowing for the validation of adequate perfusion to support integration with native tissue at the time of allograft implant.

In addition to marketing SPY Imaging Systems and DermACELL products, NOVADAQ markets the U.S. FDA premarket approved [“PMA”] CO2 Heart Laser™ System for TMR. TMR is a procedure aimed at improving blood flow to areas of the heart that cannot be successfully treated by standard revascularization techniques and is often performed adjunctively with coronary artery bypass graft surgery. The CO2 Heart Laser line of products is exclusively distributed in the U.S. by MAQUET.

NOVADAQ’s intellectual property consists of 64 patent families representing 102 granted or allowed patents and 136 pending applications in various stages of review and prosecution. While the industry is highly competitive and subject to rapid and significant technological changes, the Company believes that there currently is no widely adopted alternative practical method of routinely visually assessing blood flow in vessels and micro vessels and tissue perfusion during the course of complex open, robotic or minimally invasive operative procedures. NOVADAQ will vigorously defend its patent estate if infringement is deemed to occur.

Despite the Company’s current focus on the commercialization of the SPY Imaging Systems, the Company continues to invest in additional research and development and acquisitions in order to expand the applications of its current and future imaging platforms and direct sales offerings. As of the end of 2015, more than 200,000 procedures utilized the SPY Imaging Systems and more than 2,375 SPY Imaging Systems are in use in hospitals throughout the U.S. A portion of NOVADAQ’s current revenues comes from alliances formed with leading distributors in relevant markets outside North America. Additionally, NOVADAQ projects that a portion of its future revenues will be derived from the sale of DermACELL, which is offered to clinicians alongside of the SPY Imaging Systems.

Over the years, the Company has incurred recurring operating losses, having invested significantly in its research and development activities, as well as supporting its selling and marketing, and general and administrative expenses. The Company has financed its operations through different sources including the issuance of common shares and shareholder warrants, the formation of strategic alliances with licensee partners and research and development grants awarded by governmental agencies. The Company expects to continue to incur losses and may require significant capital to fulfill its future obligations. Please refer to the section on “Liquidity and Capital Resources” below. The Company believes that its market leadership position, the ongoing advancement of its technology and the quality of its direct sales and marketing infrastructure will allow it to operate profitably in the future.

3

SUMMARY OF QUARTERLY RESULTS

The following table sets forth information regarding NOVADAQ's revenues, loss from operations and other information for the periods presented, which were prepared in accordance with IFRS as issued by the IASB, and should be read in conjunction with the corresponding unaudited interim condensed consolidated financial statements and related notes.

	Q1			Q4			Q3			Q2			Q1			Q4			Q3			Q2
in $000’s, except per share amounts and %	2016			2015			2015			2015			2015			2014			2014			2014
Revenues
Product sales		16,780			19,104			16,290			14,337			11,067			9,803			11,111			10,391
Royalty revenue		495			587			443			541			452			745			489			270
Partnership fee revenue	––			––			––			––			––				2,316			325			325
Service revenue		451			327			303			189			172			158			203			166
Total revenues		17,726			20,018			17,036			15,067			11,691			13,022			12,128			11,152
Cost of sales		5,068			5,648			4,477			4,381			4,220			3,897			4,327			4,232
Gross profit		12,658			14,370			12,559			10,686			7,471			9,125			7,801			6,920
Gross profit percentage		71	%		72	%		74	%		71	%		64	%		70	%		64	%		62	%
Operating expenses
Selling and distribution expenses		15,308			13,157			13,370			15,493			12,498			7,505			6,279			7,192
Research and development expenses		3,163			4,817			3,981			5,129			3,622			3,394			2,802			2,331
Administrative expenses		2,557			2,587			1,319			2,458			2,687			3,935			2,413			1,968
Termination fee	––			––			––			––			––				4,500		––			––
Total operating expenses		21,028			20,561			18,670			23,080			18,807			19,334			11,494			11,491
Loss from operations		(8,370	)		(6,191	)		(6,111	)		(12,394	)		(11,336	)		(10,209	)		(3,693	)		(4,571	)
Finance costs		(24	)		(26	)		(26	)		(26	)		(26	)	––			––			––
Finance income		90			84			56			56			54			48			50			59
Warrant revaluation adjustment		1,324			(3,661	)		2,321			6,338			23			(7,356	)		6,670			10,794
Income (loss) before income taxes		(6,980	)		(9,794	)		(3,760	)		(6,026	)		(11,285	)		(17,517	)		3,027			6,282
Income tax recovery (expense)		—			(13	)		48		––			––				(34	)		1			(2	)
Net income (loss) and    comprehensive income    (loss) for the period		(6,980	)		(9,807	)		(3,712	)		(6,026	)		(11,285	)		(17,551	)		3,028			6,280
Basic income (loss) and    comprehensive income    (loss) per share for the    period		(0.12	)		(0.17	)		(0.07	)		(0.11	)		(0.20	)		(0.32	)		0.05			0.11
Diluted loss and    comprehensive    loss per share for the    period		(0.14	)		(0.17	)		(0.11	)		(0.22	)		(0.20	)		(0.32	)		(0.06	)		(0.08	)

4

Balance Sheet Data

in $000’s	As at March 31, 2016		As at December31, 2015		As at March 31, 2015
Cash and cash equivalents		96,608		106,790		133,014
Working Capital		120,705		128,614		149,096
Total assets		166,989		175,972		190,096
Total non-current liabilities		2,409		19,022		23,918
Total liabilities		14,808		33,010		32,457
Shareholders' equity		152,181		142,962		158,157

RESULTS OF OPERATIONS – Q1-2016 as compared to Q1-2015 and Q4-2015

Revenues

Revenues increased by 52% to $17,726,000 in Q1-2016 from $11,691,000 in Q1-2015.  Product sales increased by $5,713,000 or 52%, comprised of increases in total capital sales (direct, partnered and international) of $4,179,000, or 77% and total recurring revenue of $1,534,000 or 27%.

Royalty revenue for Q1-2016 increased from Q1-2015 by $43,000 due to more Firefly Illuminators being sold by our partner.

Service revenue increased by $279,000 to $451,000 in Q1-2016 from $172,000 in Q1-2015 as a result of the recognition of revenue previously deferred on extended service contracts.

Total direct revenue increased by $6,058,000 or 71% to $14,561,000 in Q1-2016 from $8,503,000 in Q1-2015 as a result of an increase in direct capital revenue of 113% and an increase in direct recurring revenue of 41%.  Direct revenues exclude our partnered revenues and sales outside of North America.  Direct recurring revenues include all kits, service, rental and DermACELL sales.

In comparison to Q4-2015, revenues decreased by $2,292,000 or 30% mainly due to lower capital sales.

In Q1-2016, an estimated 12,300 procedures using SPY technology systems were performed, representing an increase over Q1-2015 and Q4-2015 of 40% and 8%, respectively.

Gross Profit

Gross profit was $12,658,000 in Q1-2016 compared to $7,471,000  in Q1-2015.  As a percentage of revenue, gross profit increased by 7% from 64% in Q1-2015 to 71% in Q1-2016. The increase in gross profit percentage was primarily the result of higher capital sales.  In comparison to Q4-2015, gross profit as percentage of revenue decreased by 1% due to lower capital sales.

Operating Expenses

Selling and distribution expenses of $15,308,000 for Q1-2016 were $2,810,000 higher than Q1-2015 expenses of $12,498,000 as a result of additional direct sales force personnel and higher promotional spending. Similarly, in comparison to Q4-2015, selling and distribution expenses were higher by $2,151,000 or 16%.  

Research and development expenses of $3,163,000 in Q1-2016 were $459,000 lower than Q1-2015 expenses of $3,622,000 mainly due to lower patent and trademark expenses of $863,000 partially offset by higher costs related to clinical studies in the amount of $211,000. In comparison to Q4-2015, research and development expenses were $1,654,000 or 34% lower due to lower patent and trademark expenses of $1,525,000 and lower costs related to clinical studies of $271,000 partially offset by an increase in personnel costs of $208,000.

Administrative expenses of $2,557,000 in Q1-2016 were $130,000 lower than Q1-2015 expenses of $2,687,000. The decrease mainly related to lower professional fees of $752,000 in Q1-2016 mainly offset by higher bad debt expense in the amount of $459,000 and an unfavorable impact from foreign exchange in the amount of $147,000. In comparison to Q4-2015, administrative expenses were lower than the previous quarter by $30,000 due to lower professional fees in the amount of $700,000, offset by a higher bad debt expense of $402,000, higher personnel costs of $141,000 and an unfavorable impact from foreign exchange in the amount of $136,000.  

5

Finance Costs

Finance costs for the three-month periods presented were comprised of non-cash imputed interest for the distribution rights payable with LifeNet.

Finance Income

Finance income increased to $90,000 in Q1-2016 from $54,000 in Q1-2015 due to a higher interest rate earned on cash balances, partially offset by a reduction in cash balances resulting from cash usage to support operations.

Warrants Revaluation Adjustment

The Q1-2016 non-cash warrant revaluation income was $1,324,000 compared to $23,000 in Q1-2015. During the period the warrants were outstanding in Q1-2016, the Company’s share price decreased greater than it did during the three months the warrants were outstanding in Q1-2015 causing a larger valuation adjustment in Q1-2016 as compared to Q1-2015. During Q4-2015 the Company’s share price increased by $2.31 which resulted in a non-cash warrant revaluation expense of $3,661,000.

Net Income Loss

Net loss was $6,980,000 in Q1-2016 compared to a net loss of $11,285,000 in Q1-2015.  The decrease in net loss was primarily a result of an increase in gross profit of $5,187,000 and an increase in warrant revaluation income of $1,301,000.  Offsetting these amounts was an increase in operating expenses of $2,221,000.

In comparison to Q4-2015, net loss decreased by $2,827,000 primarily due to warrant revaluation income of $1,324,000 in Q1-2016 compared to warrant valuation expense of $3,661,000 in Q4-2015, partially offset by a decrease in gross profit of 1,712,000 and higher operating expenses of $467,000.

6

FINANCIAL POSITION

The following is a discussion of the changes to the Company’s financial position as at March 31, 2016 as compared to December 31, 2015:

in $000's, except %	As at March 31, 2016		As at December31, 2015		Change ($)			Change (%)			Comments
ASSETS
Current assets
Cash and cash equivalents		96,608		106,790		(10,182	)		(10	)	See Liquidity and Capital Resources section below.
Accounts receivable		21,776		21,768		8			—
Prepaid expenses and other assets		3,026		3,363		(337	)		(10	)	A decrease in prepaid insurance partially offset by deposits for sales and marketing events.
Inventories		11,694		10,681		1,013			9		An increase to meet forecasted sales.
		133,104		142,602		(9,498	)		(7	)
Non-current assets
Property and equipment, net		15,781		14,830		951			6		Net additions in Q1-2016 due to revenue generating assets of $2,136 and leasehold improvements of $126, less depreciation of $1,311.
Intangible assets, net		18,104		18,540		(436	)		(2	)	A decrease due to amortization recorded in Q1-2016.
Total Assets		166,989		175,972		(8,983	)		(5	)

7

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued    liabilities	10,190	12,145	(1,955	)	(16	)	A decrease due to timing of payments.
Provisions	465	455	10		2		An increase in warranty provision due to higher capital sales for the 12 month period ended March 31, 2016 compared to 12 month period ended December 31, 2015.
Deferred revenue	1,492	1,125	367		33		An increase in extended service contracts purchased by customers.
Income taxes payable	2	13	(11	)	(85	)	A decrease in state tax expense.
Distribution rights payable	250	250	—		—
	12,399	13,988	(1,589	)	(11	)
Non-current liabilities
Deferred revenue	900	849	51		6		An increase in extended service contracts purchased by customers.
Distribution rights payable	1,509	1,735	(226	)	(13	)	A decrease resulting from payments made to reduce the total outstanding balance in Q1-2016.
Shareholder warrants	—	16,438	(16,438	)	(100	)	Exercises of $15,113 and non-cash revaluation adjustment of $1,324.
Total Liabilities	14,808	33,010	(18,202	)	(55	)
Total Shareholders' Equity	152,181	142,962	9,219		6		Net loss of $6,380 offset by stock based compensation of $1,047 and exercise of shareholder warrants and stock options of $15,113 and $38, respectively.
Total Liabilities and    Shareholders' Equity	166,989	175,972	(8,983	)	(5	)

8

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, NOVADAQ has financed its cash requirements primarily through the issuance of securities and convertible debt, strategic alliances, licensing and development fees, investment tax credits and government funding and interest income. Given the Company’s history of continuing losses and its accumulated deficit, revenues will need to continue to increase over a sustained period. The Company does not yet generate sufficient operational cash flows to meet the Company's planned growth and to fund development activities. The Company relies on funding from outside sources to execute its current and future business development plans which include but are not limited to potential acquisitions, design and development and clinical trials, the investment required for the revenue generating assets utilized in the placement and rental models and the required funding for the recruitment and development of the direct sales team. The Company is dependent on the willingness of investors or strategic partners to continue to invest in the Company or to enter into strategic relationships to continue further development of the Company’s products. There can be no assurance, however, that NOVADAQ will be successful in securing partnerships or financing on terms that would be favorable to the Company, or at all.

Based on the cash on hand in the amount of $96,608,000 as at March 31, 2016, the capacity to borrow funds from its revolver loan (as further described below), and the sales and margins which the Company anticipates to generate from operations in the upcoming 12 months, the Company expects to have sufficient funds to support its cash requirements for at least the next 12 months. The Company invests its cash and cash equivalents in daily interest accounts at a chartered bank in Canada.

Operating Activities

For the three month period ended March 31, 2016, cash used in operating activities was $7,714,000 which included cash expenditures (cash burn) before change in working capital of $5,485,000, and an increase in non-cash working capital of $2,279,000.  The cash burn during the quarter was mainly driven by costs associated with the continued build-out of NOVADAQ’s direct sales and marketing infrastructure. The increase in working capital was driven by increased inventories and a reduction in accounts payable and accrued liabilities, partially offset by an increase in deferred revenue and a reduction in prepaid expenses and other assets.

Investing Activities

For the three month period ended March 31, 2016, cash used in investing activities was $2,262,000 comprised of net additions to revenue generating fixed assets which were primarily utilized in the placement of assets at hospitals and clinics.

Financing Activities

For the three month period ended March 31, 2016, cash used in financing activities was $212,000, comprised of a $250,000 repayment of the distribution rights payable partially offset by $38,000 of proceeds from the exercise of stock options.

Revolver Loan

On August 26, 2011, the Company executed a revolving credit agreement with a Canadian chartered bank, entitling the Company to borrow up to a maximum limit of $2,500,000 Canadian dollars, subject to a borrowing base formula, certain financial covenants and certain reporting requirements. The credit facility is secured by a general security agreement constituting a first-ranking security interest in all personal property of the Company with a conventional rate of interest. Currently, the Company has no committed sources of capital other than this revolving credit loan. Since its inception and as at March 31, 2016, the Company has not utilized this credit facility. As at March 31, 2016, the maximum amount that can be borrowed under the revolver loan was $2,307,446 Canadian dollars.

Contractual Obligations

The Company’s short-term and long-term contractual obligations are as follows:

in $000’s	0-1 year		1-5 years		After 5 years
Operating leases		642		1,912		2,202
Funding for clinical study		78		—		—

The long-term operating lease commitments are for premises located in: Mississauga, ON, Burnaby, BC, Taunton, MA, Germany and Switzerland.  

9

Critical Accounting policies and estimates

Except as disclosed in Note 2 to our interim condensed consolidated financial statements, there were no significant changes in our accounting policies and critical accounting estimates for the three months ended March 31, 2016.  We describe our significant accounting policies and critical accounting estimates in Note 2 to the audited consolidated financial statements and MD&A for the year ended December 31, 2015.

RELATED PARTY TRANSACTIONS

As at March 31, 2016 and December 31, 2015, the Company has no receivable or payable balances with key management personnel or directors. The key management personnel include the President and Chief Executive Officer; Chief Financial Officer; Senior Vice President and General Manager; Vice President of Regulatory, Clinical and Economic Affairs; and General Counsel.

NEW STANDARDS, INTERPRETATIONS & AMENDMENTS ADOPTED BY THE COMPANY

Disclosure Initiative: Amendments to IAS 1

On December 18, 2014 the IASB issued amendments to IAS 1, Presentation of Financial Statements, as part of its initiative to improve presentation and disclosure in financial reports.  The amendments are effective for annual periods beginning on or after January 1, 2016.  The Company adopted these amendments in its financial statements for the annual period beginning on January 1, 2016.  The adoption of the amendments did not have a material effect on the Company’s consolidated financial statements.

NEW STANDARDS, INTERPRETATIONS & AMENDMENTS NOT YET ADOPTED BY THE COMPANY

The IASB has issued the following new standards, which are not yet effective or adopted by the Company:

[a] IFRS 9, Financial instruments (effective January 1, 2018)

[b] IFRS 15, Revenue from contracts with customers (effective January 1, 2018)

[c] IFRS 16, Leases (effective January 1, 2019)

The extent of the impact of adoption of these standards has not yet been determined.

Financial Instruments and Other Instruments

The Company’s financial instruments were comprised of the following as at March 31, 2016: cash and cash equivalents of $96,608,000; accounts receivable of $21,776,000; accounts payable and accrued liabilities of $10,190,000; and distribution rights payable of $1,759,000. The Company invested its cash and cash equivalents in daily interest savings accounts. Accounts receivable not provided for is subject to minimal credit risk based on the nature of the Company’s customers and letters of credit securing certain international sales. The receivables are being carried at amortized cost. Accounts payable and accrued liabilities are carried at amortized cost, and are comprised of short-term obligations owing to suppliers relative to the Company’s operations. Distribution rights liability is payable over a 10-year term and is carried at amortized cost. The shareholder warrants are re-valued quarterly utilizing the Black-Scholes model to determine fair value.

Fair Value

Fair value is the estimated amount that the Company would pay or receive to dispose of financial instruments in an arm’s length transaction between knowledgeable, willing parties who are under no compulsion to act. The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices, without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques that are recognized by market participants. Such techniques may include using recent arm’s length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis or other valuation models.

10

Concentration of Accounts Receivable

As at March 31, 2016, one customer had an accounts receivable balance exceeding 10% of total accounts receivable [December 31, 2015 – one customer]. Concentration of this customer comprised 33% of total accounts receivable as at March 31, 2016 as compared to 21% as at December 31, 2015.

For the three month period ended March 31, 2016, there were sales to one customer that exceeded 10% of total revenue [three month period ended March 31 2015 - none]. Concentration of this customer comprised of 29% of total revenue for the three month period ended March 31, 2016.

Risks and Uncertainties

The results of operations and financial condition of the Company are subject to a number of risks and uncertainties, and are affected by a number of factors outside of the control of management. For a detailed discussion regarding the relevant risks and uncertainties, see the Company’s AIF for the year ended December 31, 2015, which is filed on SEDAR and EDGAR. There have been no changes during the three month period ended March 31, 2016.

Controls and Procedures

Disclosure Controls and Procedures

Management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the U.S. Exchange Act, and under National Instrument 52-109 in Canada) to provide reasonable assurance that all material information relating to the Company and its subsidiaries is gathered and reported to senior management on a timely basis so that appropriate decisions can be made regarding public disclosure.

The Chief Executive Officer [“CEO”] and Chief Financial Officer [“CFO”] have designed such disclosure controls and procedures, or caused them to be designed under their supervision, to provide reasonable assurance that material information relating to the Company, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which the disclosures are being prepared to provide reasonable assurance that information required to be disclosed under securities legislation is recorded, processed, summarized and reported within the time periods specified in the securities legislation.

Due to inherent limitations in control systems and procedures no matter how well conceived or operated, their evaluation can provide only reasonable, not absolute, assurance that such disclosure controls and procedures are operating effectively.

Internal Control over Financial Reporting

Management is also responsible for establishing and maintaining adequate internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial reports for external purposes in accordance with IFRS as issued by the IASB.  

The CEO and CFO have designed internal controls over financial reporting [“ICFR”], or caused it to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with IFRS as issued by the IASB.

Changes in Internal Control over Financial Reporting

There have been no material changes in the Company's internal control over financial reporting that occurred during the quarter ended March 31, 2016, which have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.

OUTSTANDING SHARE DATA AND OTHER INFORMATION

The Company is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares, issuable in series. As at the date of this MD&A, there are a total of 57,431,414 common shares, 3,902,694 stock options and 26,775 RSU’s outstanding.

ADDITIONAL INFORMATION

Additional information concerning the Company, including the most recently filed AIF, is available on both EDGAR and SEDAR at www.sedar.com.

11

EX-99.3

Exhibit 99.3

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Arun Menawat, President and Chief Executive Officer, Novadaq Technologies Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Novadaq Technologies Inc. (the “issuer”) for the interim period ended March 31, 2016.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

i. material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

ii. information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 ICFR – material weakness relating to design:   N/A

5.3 Limitation on scope of design:   N/A

- 2 -

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning onJanuary 1, 2016 and ended onMarch 31, 2016that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: April 28, 2016

/s/ Arun Menawat

Arun Menawat

President and Chief Executive Officer

EX-99.4

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Roger Deck, Chief Financial Officer, Novadaq Technologies Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Novadaq Technologies Inc. (the “issuer”) for the interim period ended March 31, 2016.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

i. material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

ii. information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 ICFR – material weakness relating to design:   N/A

5.3 Limitation on scope of design:    N/A

- 2 -

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning onJanuary 1, 2016 and ended onMarch 31, 2016that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: April 28, 2016

/s/ Roger Deck

Roger Deck

Chief Financial Officer