Exhibit 99.1

LOGO

NOVADAQ TECHNOLOGIES INC.

ANNUAL INFORMATION FORM

For the year ended December 31, 2014

March 25, 2015



---

TABLE OF CONTENTS



|                                                                |  |                                                            |    |                                                          |    |  |    | 
|--------------------------------------------------------------- |  | ---------------------------------------------------------- | -- | -------------------------------------------------------- | -- |  | -- | 
|ITEM 1.                                                         |  | CORPORATE STRUCTURE                                        |    |                                                          | 4  | 
|                                                                |  | 1.1                                                        |    | Name, Address and Incorporation                          |    |  | 4  | 
|                                                                |  | 1.2                                                        |    | Inter-Corporate Relationships                            |    |  | 4  | 
|ITEM 2.                                                         |  | GENERAL DEVELOPMENT OF THE BUSINESS                        |    |                                                          | 4  | 
|                                                                |  | 2.1                                                        |    | Overview                                                 |    |  | 4  | 
|                                                                |  | 2.2                                                        |    | Three-Year History                                       |    |  | 5  | 
|ITEM 3.                                                         |  | NARRATIVE DESCRIPTION OF THE BUSINESS                      |    |                                                          | 9  | 
|                                                                |  | 3.1                                                        |    | General                                                  |    |  | 9  | 
|                                                                |  | 3.2                                                        |    | Business Strategy                                        |    |  | 12 | 
|                                                                |  | 3.3                                                        |    | Business Operations                                      |    |  | 13 | 
|                                                                |  | 3.4                                                        |    | Manufacturing Operations                                 |    |  | 17 | 
|                                                                |  | 3.5                                                        |    | Alliances and Partnerships                               |    |  | 17 | 
|                                                                |  | 3.6                                                        |    | Major Customers and Segment Revenues                     |    |  | 18 | 
|ITEM 4.                                                         |  | BUSINESS RISK FACTORS                                      |    |                                                          | 21 | 
|ITEM 5.                                                         |  | ACQUISITIONS                                               |    |                                                          | 31 | 
|ITEM 6.                                                         |  | INTELLECTUAL PROPERTY                                      |    |                                                          | 31 | 
|ITEM 7.                                                         |  | HUMAN RESOURCES                                            |    |                                                          | 32 | 
|ITEM 8.                                                         |  | FACILITIES                                                 |    |                                                          | 32 | 
|ITEM 9.                                                         |  | DIVIDENDS                                                  |    |                                                          | 32 | 
|ITEM 10.                                                        |  | DESCRIPTION OF CAPITAL STRUCTURE                           |    |                                                          | 33 | 
|ITEM 11.                                                        |  | MARKET FOR SECURITIES                                      |    |                                                          | 35 | 
|                                                                |  | 11. 1                                                      |    | Trading Price and Volume                                 |    |  | 35 | 
|                                                                |  | 11. 2                                                      |    | Prior Sales                                              |    |  | 36 | 
|ITEM 12.                                                        |  | DIRECTORS AND OFFICERS                                     |    |                                                          | 36 | 
|                                                                |  | 12. 1                                                      |    | Directors and Executive Officers                         |    |  | 36 | 
|                                                                |  | 12. 2                                                      |    | Cease Trade Orders, Bankruptcies, Penalties or Sanctions |    |  | 40 | 
|                                                                |  | 12. 3                                                      |    | Conflicts of Interest                                    |    |  | 41 | 
|ITEM 13.                                                        |  | LEGAL PROCEEDINGS                                          |    |                                                          | 41 | 
|ITEM 14.                                                        |  | INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS |    |                                                          | 41 | 
|ITEM 15.                                                        |  | TRANSFER AGENT AND REGISTRARS                              |    |                                                          | 41 | 
|ITEM 16.                                                        |  | MATERIAL CONTRACTS                                         |    |                                                          | 41 | 
|ITEM 17.                                                        |  | INTERESTS OF AUDITORS                                      |    |                                                          | 42 | 
|ITEM 18.                                                        |  | ADDITIONAL INFORMATION                                     |    |                                                          | 42 | 
|APPENDIX A AUDIT COMMITTEE INFORMATION                        |  |                                                            | 43 |                                                         
|SCHEDULE I AUDIT COMMITTEE CHARTER OF NOVADAQ TECHNOLOGIES INC. |  |                                                            | 45 |                                                         



1



---

Special Note Regarding Forward Looking Statements

This Annual Information Form for NOVADAQ Technologies Inc. (NOVADAQ or the Company) 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 we refer 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, including SPY, SPY Elite Imaging System, PINPOINT Endoscopic Fluorescence Imaging System, LUNA Fluorescence Angiography System,Firefly System (collectively, the SPY Imaging Systems) and CO2 Heart Laser System, Easy LDI Imaging System 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), the license and supply agreements with Intuitive Surgical®, Inc. (Intuitive), the partnership agreement with Serena Group, the distribution agreements with
MAQUET Cardiovascular (MAQUET), Swissray Asia, CHC Healthcare Group, Kirloskar Technologies Pvt., Ltd. (KTPL), Mizuho Medical Corporation (Mizuho Medical) 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, 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.

Forward-looking information is subject to certain factors, including risks and uncertainties, which 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 Products; the risk that changes to current healthcare reimbursement
codes or healthcare spending will negatively affect the acceptance or usage of the Products; 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 related to medical or scientific advances that could render the Products obsolete; dependence on key suppliers for components of certain Products; regulatory and clinical risks; risks relating to the protection of its
intellectual property (IP) and third party 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 U.S. and the Canadian dollar.

Certain of the risks and uncertainties affecting the Company are included in greater detail in the Risk Factors section within this Annual
Information Form. Forward-looking information is provided in this Annual Information Form for the purpose of giving information about managements current



2



---

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 these risk factors and other uncertainties discussed herein. 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 Annual Information
Form.

Unless specified otherwise, all dollar amounts refer to Canadian dollars.



3



---

|ITEM 1. | CORPORATE STRUCTURE
|------- | -------------------



|1.1 | Name, Address and Incorporation
|--- | -------------------------------

NOVADAQ was incorporated under the Canada Business Corporations
Act on April 14, 2000. The registered and principal office of the Company is located at 5090 Explorer Drive, Suite 202, Mississauga, Ontario, L4W 4T9.



|1.2 | Inter-Corporate Relationships
|--- | -----------------------------

The Company has three wholly owned subsidiaries: (1) NOVADAQ Corp.,
incorporated under the laws of the State of Delaware in July of 2005, which is involved in the Companys commercial activities in the United States (U.S.), (2) NOVADAQ GmbH, incorporated under the laws of Germany, which is
involved in the Companys commercial activities in Europe, and (3) Aïmago SA, incorporated under the laws of Switzerland, which the Company recently acquired to further develop Aïmagos specialized perfusion imaging
technology for commercial use.



|ITEM 2. | GENERAL DEVELOPMENT OF THE BUSINESS
|------- | -----------------------------------



|2.1 | 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 its 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 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. NOVADAQs direct sales team will also sell and market the SPY Elite Imaging System in 2015, which was previously distributed and marketed in North America by LifeCell
Corporation (LifeCell). 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 platform and direct sales offerings. As of the end of 2014, more than 100,000 procedures utilized the SPY Imaging Systems and more than 1,725 SPY Imaging Systems are in use in hospitals throughout the
U.S.

The SPY fluorescence imaging technology platform (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 outpatient surgery centers. 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 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 and wound care specialists 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. Over 130 peer-reviewed
publications report positive clinical experiences using SPY Imaging Systems in open, robotic and endoscopic surgeries and wound care. This 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 complications,



4



---

which if not addressed during the surgical procedure can negatively impact patient quality of life and significantly increase overall treatment costs.

A portion of NOVADAQs current revenues come from alliances formed with leading distributors in relevant markets outside North America. NOVADAQ projects
that direct sales revenues from the sale of SPY Imaging Systems in North America will grow at a rate that outpaces the growth of revenues from the Companys international or alliance partnerships. Additionally, NOVADAQ projects that a portion
of its future revenues will be derived from the sale of LifeNet Healths DermACELL, which will be offered to clinicians alongside of SPY Imaging Systems.

NOVADAQs direct sales and marketing efforts are currently focused on the following market development activities: (1) expansion, training and
development of the existing sales and marketing teams to support the continued and direct distribution of SPY Elite Imaging System, which was previously distributed and marketed by LifeCell; (2) commercialization activities required to
support the continued growth and distribution of PINPOINT and LUNA Imaging Systems, such as post-market research, clinical studies, key opinion leader development, educational support, material development and reimbursement validation;
(3) development and implementation of commercialization and marketing strategies to leverage the newly acquired, exclusive distribution rights to LifeNet Healths DermACELL tissue products for wound care and breast reconstruction surgery;
(4) clinical, sales and marketing activities required to support our alliance partners; (5) marketing activities required to continue to develop new clinically relevant applications for SPY Imaging Systems; and (6) commercialization
activities required to support the growth, marketing and sale of SPY Imaging Systems globally in conjunction with our international distribution partners.



|2.2 | Three-Year History
|--- | ------------------

Fiscal 2014 Highlights

On December 22, 2014, the Company announced various changes to its management team and structure to further position the Company for continued direct
sales success and global growth. Roger Deck was appointed Chief Financial Officer, with overall responsibility for financial reporting, financial and strategic planning, human resources, as well as management over the Companys relationships
and interactions with the investment community. Mr. Deck most recently served as NOVADAQs Vice President of Operations, a position he held since 2008. Before transitioning to that role, he was NOVADAQs Chief Financial Officer from
2004 to 2008 and also served as the Companys Assistant Secretary. Mr. Deck succeeded Stephen Purcell, the former Chief Financial Officer. Other organizational changes included the consolidation of global sales and marketing responsibility
under the leadership of Dr. Rick Mangat, as Senior Vice President and General Manager. Lori Swalm, who was previously NOVADAQs Vice President of Regulatory Affairs and Health Policy, assumed the position of Vice President of Marketing.
Finally, Douglas Carroll assumed additional responsibilities as Vice President of Global Business Development, including the development of commercialization strategies to leverage the newly acquired distribution rights to LifeNets DermACELL
tissue products for wound and breast reconstruction surgery.

On December 9, 2014, NOVADAQ announced the signing of a multi-year agreement pursuant
to which, NOVADAQ was appointed the exclusive worldwide distributor of LifeNets DermACELL tissue products for wound and breast reconstruction surgery. DermACELL is a technologically advanced Acellular Dermal Matrix (ADM) that can
be used in breast reconstruction surgeries, as well as in the treatment of diabetic foot 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 at the time of allograft implant. As a result,
NOVADAQs ability to pair the use of SPY Imaging Systems and DermACELL will provide



5



---

clinicians with a comprehensive solution that may lead to reduced rates of post-operative complications, improved patient outcomes and lower costs to hospitals.

On November 30, 2014, LifeCell transferred all marketing and distribution rights to the SPY Elite Imaging System to NOVADAQ. LifeCell provided
certain services during a transition period from December 1, 2014 to December 31, 2014 for a service fee equal to approximately the revenue share pursuant to the distribution agreements. The parties terminated the distribution agreement,
signed in September 2010, related to the marketing and distribution of the SPY Elite Imaging System in the fields of open plastic reconstructive, gastrointestinal, head and neck, and other surgery and also terminated agreements that were
signed in November 2011 related to the marketing and distribution of the SPY Elite Imaging System in the interventional and vascular fields. The original expiry dates of these agreements were September 2015 and November 2017, respectively.
The termination agreement provided for, along with other customary terms, a one-time payment of US$4.5 million to LifeCell at the time of termination. The two parties also agreed to settle any and all legal disputes.

On October 21, 2014, NOVADAQ entered into an exclusive 5-year agreement with Mizuho Medical for distribution of the PINPOINT Imaging System in Japan.
NOVADAQ and Mizuho Medical have applied for appropriate regulatory approvals in Japan for PINPOINT. Subject to all requisite approvals being obtained during the first half of 2015, commercialization is expected to begin in the second half of 2015.
Mizuho Medical has extensive experience in the medical market and is a leading manufacturer and distributor of surgical products including operating room tables, orthopedic implants, neurosurgical products, surgical instruments, imaging systems and
other products. Mizuho has strong relationships with hospitals and physicians in the Japanese surgical market with seven sales branch offices throughout Japan and two manufacturing facilities.

On October 16, 2014, NOVADAQ appointed KTPL as the exclusive distributor for the Companys family of fluorescence imaging technologies in India.
KTPL has been a successful healthcare enterprise for more than two decades and is a part of the 100-year-old, US$1.2 billion Kirloskar Group conglomerate. KTPL exclusively markets various kinds of India specific, high tech medical equipment
manufactured by leading global companies and has a wide network of coverage throughout India. More than 175 major government hospitals, medical colleges and private hospitals and more than 100 catheterization laboratories are using KTPL represented
products.

On September 30, 2014, NOVADAQ announced that the Company has entered into a partnership agreement for multiple LUNA Imaging Systems with
Serena Group (Serena Group), in Cambridge, Massachusetts, which operates wound and hyperbaric centers throughout the United States. Serena Group is a global healthcare company and recognized leader in the delivery of wound care and
hyperbaric medicine with a mission of developing the most advanced wound care Centers of Excellence. It is anticipated that Serena Group will integrate LUNA Imaging Systems into 30 of its advanced centers by the end of 2015.

On September 28, 2014, NOVADAQs PILLAR II study, Perfusion Assessment in Laparoscopic Left Sided/Anterior Resection, was published online ahead of
print in the Journal of American College of Surgeons (JACS). In addition, results of a trial conducted in patients undergoing esophagectomy with a gastric pull up reconstruction conducted at the University of Southern California,
was published ahead of print online by the Annals of Surgery.

The JACS study evaluated the clinical impact of PINPOINT real-time visual perfusion
assessment on the surgical decision-making process and on surgical outcomes of laparoscopic colon resection surgery. Dr. Michael Stamos, PILLAR II principal investigator and Professor and Chair of the Department of Surgery at the University of
California, Irvine, found that PINPOINT Endoscopic Fluorescence Imaging provided surgeons the versatility to assess tissue perfusion prior to transection of the proximal colon as well as view the mucosal perfusion post-anastomoses. The study found
that among the 139 patients



6



---

included in the final data analysis, as a result of PINPOINT images, investigators encountered a 1.4% anastomotic leak rate and made operative plan revisions in 8% of patients, with a 0%
anastomotic leak rate among those patients after PINPOINT guided the surgeon to a change in the operative plan. Without the use of PINPOINT imaging, complications related to post-operative anastomotic leaks occur in 12.6% of Low Anterior Resections
despite adherence to the surgical principles of good blood supply, tension-free repair and accurate tissue approximation. Based on these results, the investigators concluded that PINPOINT is a safe and effective tool for intraoperative assessment of
tissue perfusion during colorectal resection, and may decrease the rates of anastomotic leaks and thereby improve patient outcomes while lowering the cost of care.

The Annals of Surgery published the results of a study of 150 patients undergoing esophagectomy with a gastric pull up reconstruction conducted at USC
on October 2014. DeMeester et al., reported that esophogastric anastomosis was performed in 144 patients, and of those, anastomotic leak was found in 24 patients (16.7%) and was significantly less likely to occur when the anastomosis was placed
in an area of good perfusion compared to less robust perfusion as demonstrated by SPY imaging (2% versus 45% <0.0001). The authors concluded by multivariate analysis that less robust perfusion at the site of the anastomosis was the only
significant factor associated with a leak and that the use of SPY fluorescence may contribute to reduced anastomotic morbidity. In late 2014, NOVADAQ initiated the development of a multi-center trial aimed at generating additional evidence of the
value of fluorescence imaging in improving the outcomes of esophagectomy surgery.

Following up on the PILLAR II study, NOVADAQ commenced a randomized,
controlled, parallel multicenter study, called PILLAR III, to further evaluate the use of PINPOINT Endoscopic Fluorescence Imaging in lower anterior colon resection. The study is expected to enroll up to 1000 patients in 15 to 20 U.S. centers.
PILLAR IIIs primary endpoint will be an improvement in post-operative anastomotic leak rate in low anterior resection procedures using PINPOINT imaging as an adjunct to standard surgical practice compared to surgical procedures performed
according to standard surgical practice alone. Michael Stamos, M.D., from the University of California, Irvine is serving as the principal investigator. Details of the trial can be viewed at the website www.clinicalstrials.gov.

NOVADAQ also initiated a prospective open label, multi-center study assessing the safety and utility of PINPOINT Fluorescence Imaging in the identification of
lymph nodes in patients with uterine and cervical malignancies who are undergoing lymph node mapping called the FILM Study. Enrollment is estimated to be 150 patients. The primary end point will be identification of the lymph node and the
secondary end point will be the safety of the interstitial injection of ICG. Nadeem Abu-Rustum, M.D., from the Memorial Sloan Kettering Cancer Center will serve as the principal investigator and patient recruitment is expected to begin in the first
half of 2015. Details of the study can be viewed at the website www.clinicaltrials.gov.

On May 12, 2014, the Company completed the acquisition of
Aïmago SA (Aïmago), a privately held medical imaging company, founded in 2008 as a spin-off from Ecole Polytechnique Fédérale de Lausanne, a Switzerland based academic and research institution. The Company paid
Aïmago shareholders, consideration of US$10,000,000, which included US$6,500,000 in cash, plus US$3,500,000 in Novadaq common shares. The Company issued 201,845 common shares from treasury. If certain regulatory and commercial milestones are
achieved in the future, NOVADAQ may also pay contingent consideration totaling an additional US$2,400,000 which may be satisfied in cash or in NOVADAQ common shares at NOVADAQs option. Of the initial consideration of US$10,000,000,
approximately US$357,000 was allocated to inventory, with the remainder allocated to the patents. As part of the transaction, the Company incurred US$225,000 of legal and other incremental costs which have been included as part of the cost of the
patents. The Company will record the additional contingent consideration of up to US$2,400,000 upon achievement of the specific milestones. The purpose of the acquisition was to obtain access to Aïmagos specialized perfusion imaging
technology and to further develop the technology for commercial use. Aïmagos lead product, the EasyLDI



7



---

Perfusion Camera is 510(k) cleared by the FDA and CE Marked for sale in Europe, The design of the device is tablet inspired, and is capable of point-and-shoot perfusion imaging
at the surface of the skin, without the need to administer any imaging agent to patients. EasyLDIs ability to rapidly visualize surface perfusion is expected to be optimal for screening and pre-diagnostic uses in multiple settings
including doctors offices where patients are assessed for wounds, burns and limb ischemia.

On April 14, 2014, the board of directors of the
Company (the Board of Directors) adopted an amended and restated majority voting policy. Pursuant to that policy, in an uncontested election of directors of the Company, if any nominee for director receives a greater number of votes
withheld from his or her election than votes for such election, that director shall immediately tender his or her resignation to the Chairman of the Board following the meeting. The Corporate Governance Committee will then
consider any such offer of resignation and recommend to the Board whether or not to accept the resignation.

Fiscal 2013 Highlights

On November 7, 2013, NOVADAQ signed an international distribution agreement with Swissray Asia, a leading distributor for radiation oncology and medical
imaging equipment in Southeast Asia, pursuant to which Swissray Asia became the exclusive distributor of NOVADAQ imaging systems for the regions of Australia, Indonesia, New Zealand and certain Southeast Asian countries. Subsequently, NOVADAQ
entered into an expanded distribution agreement with Swissray Asias parent company, CHC Healthcare Group, for the region of Greater China (including China, Hong Kong and Taiwan).

On October 29, 2013, NOVADAQ closed a public offering of 6,250,000 common shares of the Company, on a bought deal basis, at a price to the public of
US$16.75 per common share, pursuant to a base shelf prospectus and an underwriting agreement. Gross proceeds from the offering were approximately US$104,700,000. After the underwriting commissions and other offering expenses, the Company received
net proceeds of approximately US$99,600,000. The common shares described above were sold by the Company in the U.S. pursuant to the Companys effective shelf registration statement filed with the U.S. Securities and Exchange Commission
(SEC) and were not offered for sale or distributed in any province or territory in Canada.

In August 2013, NOVADAQ acquired surgical
scintigraphy imaging technology that is being developed for perioperative imaging of sentinel lymph nodes and tumor margins. The Company acquired inventory and patents from Digirad Corporation (Digirad) related to the Trapper
Surgical Imaging System for consideration of US$2,000,000 and up to an additional US$1,000,000 upon the achievement of specific regulatory and commercial milestones. In addition, a royalty on sales will be paid for a period of five years from the
date of the first commercial sale. Of the initial consideration, approximately US$147,000 was allocated to inventory, with the remainder allocated to the patents. During 2015, the Company expects to invest in clinical and product development of this
technology and it is not expected to generate profits during 2015. In addition, three other patents were acquired for US$664,853, resulting in total additions of US$2,517,267. All patents acquired are considered to have finite useful lives varying
from 13  21 years are being amortized using the straight-line method.

On May 7, 2013, NOVADAQ announced the closing of its public offering of
4,485,000 common shares, on a bought deal basis, at a price to the public of US$12.90 per common share. Gross proceeds from the offering were approximately US$57,857,000, resulting in cash proceeds of US$54,675,000, net of transaction costs.

On March 26, 2013, Fairfax Financial Holdings Limited exercised its right to convert its debentures with principal value of US$5,149,009 in exchange for
2,772,151 common shares in accordance with the terms of the debentures.



8



---

On March 15, 2013, NOVADAQ terminated its Marketing and Sales Distribution Alliance Agreements with KCI USA
Inc. and KCI Medical Resources Limited (KCI). NOVADAQ also amended and restated its distribution agreements with LifeCell and LifeCell Medical Resources Limited, subsidiaries of KCI, to reflect the termination of the KCI agreements,
without material modifications. The KCI distribution agreements had granted KCI exclusive rights to market and distribute the LUNA Imaging System for use in surgical and wound care procedures.

In January 2013, the Company hired Tom Tamberrino as Vice President of Sales as part of the Companys objective to build a direct sales team to sell both
the PINPOINT and LUNA Imaging Systems.

Fiscal 2012 Highlights

On December 5, 2012, NOVADAQ announced that Maimonides Medical Center (Maimonides) in Brooklyn, New York, became the first U.S. hospital
to purchase a PINPOINT Endoscopic Fluorescence Imaging System. Maimonides also purchased a set of endoscopes and signed long term contracts for service and supply of disposable kits, which are required for each PINPOINT procedure.

On April 9, 2012, NOVADAQ closed a public offering of 6,100,000 common shares at a public offering price of US$5.75 per share. Prior to the closing, the
underwriters exercised in full the option to purchase an additional 915,000 common shares at a price of US$5.75 per share solely to cover over-allotments. Gross proceeds from the offering were approximately US$40,300,000. After the underwriting
commissions and other offering expenses, NOVADAQ received net proceeds of approximately US$36,900,000. The common shares described above were sold by NOVADAQ in the U.S. pursuant to the Companys effective shelf registration statement filed
with the SEC and in Canada pursuant to a final short form base shelf prospectus and prospectus supplement filed with the securities regulatory authorities in each of the provinces of Canada, except Quebec.

On March 7, 2012, NOVADAQ announced that the Centers for Medicare & Medicaid Services (CMS) established SPY Vascular
Angiography as a new reimbursable service under the Hospital Outpatient Prospective Payment System. Effective April 1, 2012, SPY was assigned to Ambulatory Payment Classification 0397 Vascular Imaging.

On March 1, 2012, NOVADAQs common shares were approved for listing and began trading on the NASDAQ under the ticker symbol NVDQ.
NOVADAQ retained its listing on the TSX under the ticker symbol NDQ.

On January 3, 2012, NOVADAQ signed an agreement naming MAQUET as
the exclusive distributor of NOVADAQs CO2 Heart Laser Systems and procedure kits in the U.S. The CO2 Heart Laser System for
Transmyocardial Revascularization (TMR) is indicated for use in patients suffering from severe angina that is not amenable to traditional medical or coronary revascularization therapies. During the TMR procedure, the CO2 Heart Laser creates small channels in the heart tissue that stimulate improvements in blood flow to regions of the heart.



|ITEM 3. | NARRATIVE DESCRIPTION OF THE BUSINESS
|------- | -------------------------------------



|3.1 | General
|--- | -------

NOVADAQ primarily develops, manufactures and markets real-time fluorescence imaging technology
products that are designed for use by surgeons in the operating room and other clinical settings where open, minimally invasive or interventional surgical or diagnostic procedures are performed. The Companys SPY Fluorescence Imaging provides
clinically relevant anatomic and physiologic images during a wide variety of complex surgical procedures without exposing the patient to radiation.



9



---

NOVADAQs SPY Imaging Systems are primarily sold on the basis of providing clinical value, both to healthcare providers and practitioners. Use of the SPY Imaging Systems have been shown in
clinical studies to improve clinical outcomes, which creates economic value to healthcare providers in the form of reduced costs and improved patient outcomes. SPY Fluorescence Imaging enables physicians in multiple specialties to make more informed
decisions during both the diagnosis and treatment of complex diseases and conditions. In the operating room, the ability to visualize real-time natural or physiologic blood flow in vessels, micro-vessels and tissue, enables surgeons to make
image-driven adjustments to operative plans while procedures are in progress. As demonstrated by the PILLAR II study results, which were published in The Journal of American College of Surgeons, post-operative complications occur less
frequently than historically reported, patient outcomes are improved and the need for repeat procedures can be reduced.

The World Health
Organization (WHO) estimates that more than 230,000,000 operations are performed worldwide each year including 48,000,000 inpatient surgeries in the U.S. alone. The National Surgical Quality Improvement Program estimates that, on
average, 6.5% of patients suffer complications following surgery, although rates are higher than 20% for some complex surgeries such as esophagectomy and certain breast reconstruction procedures. The mean additional cost for minor complications was
calculated at US$9,600 per patient, and for major complications at US$23,870. Van Den Bos et al., (Health Affairs 2011) estimate that costs associated with post-operative adverse events and medical errors total approximately
US$20 billion annually in the U.S. The WHO projects that 50% of post-surgical complications are likely preventable.

Perfusion of blood into
tissue is essential for survival of the tissue. Unfortunately, many complex surgeries result in damage to the vasculature that provides the perfusion. Prior to the introduction of SPY Fluorescence Imaging by NOVADAQ, prediction of future tissue
viability was largely based on clinical judgment, and clinical judgment often proved inaccurate, with rates of complications associated with tissue necrosis approaching 40% in some procedures including breast reconstruction, head and neck
reconstruction, colorectal resection and abdominal wall repair surgeries.

Numerous reports have quantified costs of complications associated with
specific surgeries. For example, Vonlanthen et al., (Ann. Surg. 2011) reported a US$40,509 increase in average patient care cost due to complications among patients undergoing colorectal surgery, although costs can exceed US$100,000 in
specific cases of serious complications such as anastomotic leak.

Based on managements interpretation of available statistics and surgeon feedback,
we estimate that there are more than 800,000 surgeries performed in the U.S. each year in which impaired tissue perfusion is a frequent cause of post-operative complications. Complications associated with tissue necrosis arise in 5% to 30% of
patients undergoing surgeries in our target markets which include breast, head and neck and abdominal wall reconstructions, as well as colorectal and esophageal surgeries. Post-operative complications can range from increased length of intensive
care and hospital stay, reoperation, systemic infection, loss of limb, delay of other therapies and death. Weiss et al., (AHRQ Pub. No. 10 (11) - EHC009-2-EF) estimated the cost of Medicare readmissions to exceed US$1.7 billion in 2013. NOVADAQ
estimates that the total costs associated with necrosis-related complications, in our lead markets in the U.S., is approximately US$1.3 billion each year. In addition to post-surgical complications, poor perfusion is a contributing factor in
non-healing extremity ulcers which afflict more than 3,500,000 diabetics in the U.S., with an annual cost for treatment of peripheral arterial disease in these patients exceeding US$4 billion, according to a report entitled, Diabetic Foot Ulcers
Peripheral Artery Disease And Critical Limb Ischemia, published in 2010 by the SAGE Consulting Group, LLC, Atlanta, GA. Additionally, NOVADAQ estimates that there are more than 500,000 surgeries performed in the U.S. each year in which the imaging
of critical structures such as bile ducts, sentinel lymph nodes and lesions associated with endometriosis may be beneficial.



10



---

The industry in which the Company operates in is highly competitive and subject to rapid and significant
technological change. Potential competitors may have greater financial, technical and human resources and may have significantly more experience in the discovery, development and regulatory approvals of products, and the commercialization of those
products than the Company. Accordingly, the Companys competitors may be more successful in obtaining regulatory approvals and achieving widespread market acceptance of their products.

NOVADAQ is aware of emerging competitors in the medical device industry that are distributing, or attempting to develop, devices which employ visual
assessment technology similar to the Imaging Systems. Market competition will increase significantly as fluorescence imaging devices, and the use of these devices to assess blood tissue perfusion during the course of complex surgery, become
routinely adopted and accepted by surgeons. In a marketplace where NOVADAQ is the dominant and leading player, management believes that the recent competitive activity is a strong indicator of clinical significance, market value and product
acceptance of fluorescence imaging technology. NOVADAQ believes that the breadth of its experience with visual assessment technology, the ongoing advancement of the SPY Imaging Systems, its clinical research and development initiatives and the
quality of its direct sales and marketing infrastructure will enable it to maintain the market leading position of the SPY EliteImaging System for use in open surgery, the PINPOINT Imaging System for minimally invasive surgery and the
LUNA Imaging System for wound care.

NOVADAQ reasonably believes that emerging fluorescent imaging devices by competitors have not yet been maturely
developed and designed. Therefore, emerging fluorescent imaging products are likely to be of an inferior quality in comparison to the SPY Imaging Systems, and may not produce images that can be objectively analyzed or quantified to the same degree
or extent as those images produced by the Imaging Systems.

Devices that do not utilize fluorescence imaging, such CT imaging, can be used pre-operatively
to locate perforator vessels that supply blood to tissue flaps, but unlike SPY Fluorescence Imaging, CT imaging does not supply information related to blood flow intensity, which is more relevant to the selection of perforators for flap procedures.
Surgeons have also reported that SPY Fluorescence Imaging may be more reliable in locating perforator vessels in the operating room because registration marks made during the CT scan may not be accurate when patients are in certain positions on the
operating room table or under the influence of anesthesia. Software analysis tools that are integral to the SPY Imaging Systems can be used to further enhance SPY images, which can allow surgeons to quickly identify the best perforators available.

Surgeons may place electromagnetic flow measuring devices in the target area of concern to give some auditory impression of blood flow to the tissue.
These devices generally remain in place for a few days following surgery and are checked at routine intervals during the immediate post-operative recovery period. However, there are reported limitations to the information provided by flow
measurements in that the flow signal is only related to the vasculature that is in direct contact with the probe, there is no visual confirmation of complete tissue perfusion and interpretation of the audio signal can be very subjective. Probes may
also become dislodged in the routine course of delivering post-operative care to patients.

NOVADAQ believes that the market leading position of its
Products will allow it to operate profitably in the future; however, there is no guarantee that it will be able to maintain its leading market position, advance its technology or successfully partner or directly sell its Products. It is also
possible that its competitors may develop competing technologies that are superior to NOVADAQs, making its current Products obsolete. The Company intends to vigorously defend its patent estate if infringement was deemed to occur; however,
there is no assurance that it will be successful in any such defense.



11



---

|3.2 | Business Strategy
|--- | -----------------

Historically, medical imaging has been associated with diagnosis and the underlying
concept that more accurate diagnosis leads to better patient treatment. Radiologists have used MRI, CT and other imaging modalities to diagnose and detect disease more accurately. NOVADAQ is taking the same concept to the next level by providing the
SPY Fluorescence Imaging modality to surgeons for use during the surgical procedure, enabling better treatment. Just as diagnostic-imaging modalities can be used for many different types of diagnosis, NOVADAQs SPY Imaging Systems can be used
by multiple physician specialties in a number of different types of interventions including open and minimally invasive surgeries in the operating room or interventional procedures that are typically performed in a clinic.

Since there are multiple surgical procedures that can be advanced by SPY Fluorescence Imaging, NOVADAQ has applied a multi-product strategy that tailors the
needs of the specific procedure or specialty in the embodiment of the product. NOVADAQs product commercialization strategies are based upon first directly developing the evidence of clinical value for our products through work with key opinion
leading surgeons and institutions and following that with the building of appropriate sales and marketing strategies directly through early adopters to establish the potential of the business. For example, NOVADAQ is currently conducting a study
assessing the use of PINPOINT Imaging System for lymph node mapping in patients with uterine and cervical cancer (FILM). The FILM study is designed to enable NOVADAQ to potentially expand the FDA cleared label for PINPOINT Imaging System
to include the fluorescence mapping of lymph nodes.

Once the commercial potential of a product is established, NOVADAQ evaluates different approaches to
achieving full adoption either through an alliance with a market leading company of the specific specialty or through the Companys direct sales team. NOVADAQ began its commercial strategies with products that were best suited for alliances.
Thus, NOVADAQ is currently partnered with Intuitive to supply the fluorescence imaging componentFirefly for integration into the da Vinci robot and the associated disposable supplies, MAQUET for the CO2 Heart Laser product, and DermACELL tissue products for wound care and breast reconstruction surgery in order to offer comprehensive clinical solutions for health care providers and practitioners.

NOVADAQ has established its own direct sales team and commercialization strategies. In 2013, NOVADAQ established direct sales and marketing for both the
PINPOINT Imaging System for minimally invasive surgery and interventional procedures, and the LUNA Imaging System for outpatient diagnostic imaging in wound care clinics. NOVADAQs direct sales team will also sell and market the SPY
Elite Imaging System in 2015, which was previously distributed and marketed in North America by LifeCell. The direct sales strategies for the SPY Elite Imaging System include leveraging existing published studies in which SPY
Fluorescence Imaging has been demonstrated to enhance minimally invasive surgeries and wound care, market awareness for SPY Fluorescence Imaging that has already been built through our alliances and providing support for new studies aimed at
generating additional clinical and economic value.

In December 2014, NOVADAQ was appointed the exclusive worldwide distributer of DermACELL tissue
products. DermACELL is a technologically advanced ADM that can be used in breast reconstruction surgeries, as well as in the treatment of diabetic foot ulcers and chronic non-healing wounds. Adequate blood supply is critical for successful use of
regenerative human tissue matrix allografts such as DermACELL. The use of NOVADAQs SPY Fluorescence Imaging technology 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 at the time of allograft implant. NOVADAQs ability to pair the use of SPY Imaging technology and DermACELL provides clinicians with a comprehensive solution that may lead to reduced rates of post-operative
complications, improved patient outcomes and lower costs to hospitals. The Company has trained and developed its existing sales



12



---

force on the use of DermACELL to facilitate the sale of such tissue products alongside NOVADAQs family of SPY Imaging systems.

NOVADAQ believes that the partnership between LifeNet Health and NOVADAQ, although still in its early stage, uniquely positions NOVADAQ is the only company to
offer a combined solution of fluorescence imaging and tissue perfusion assessment with a high performance, proprietary human ADM like DermACELL tissue products. LifeCells ADM have been the leading products in the ADM market for several years,
followed by other smaller offerings such as those from Allergan and Bard. The recent patent lawsuit won by LifeNet Health against LifeCell which cited infringement against LifeCells ready to use and room temperature stored products, may
negatively influence customer purchasing behaviors.

As the Company enters into the fifth year of its commercialization through alliance partners, and the
third year of direct sales, the installed base of the technology continues to grow at a rapid pace. More than 1,725 SPY Imaging Systems are in use in hospitals throughout the U.S. NOVADAQs long-term strategy includes continuing to grow SPY
Imaging technology installed base, and to leverage the installed base by developing and commercializing new fluorescing molecules that will further enable the improvement of clinical outcomes in patients suffering from life-threatening diseases.
During the course of 2015, the Company will develop its commercialization strategies in order to fully leverage the direct sale of the SPY Elite Imaging System and the sale of DermACELL alongside the Companys family of SPY Imaging
Systems. The Company plans to continue to work with its alliance distribution partners to increase placements and utilization of SPY Fluorescence Imaging in Europe, Brazil, India, China and Japan. NOVADAQs product development team will also
continue to support the alliances and the Companys direct businesses by developing new and enhanced SPY Fluorescence Imaging device(s), companion software systems and value-added accessories for new applications in clinical settings. NOVADAQ
will also continue its focus on further demonstrating the clinical and economic value of the technology and anticipates supporting new clinical studies and expects that additional publications will be released throughout 2015.

One specific molecule for which NOVADAQ owns significant IP enables the visualization of nerves throughout a surgical procedure. NOVADAQ also intends to
provide fluorescence imaging with molecules that target specific types of cancer cells such as those in breast, ovarian or pancreatic cancer.



|3.3 | Business Operations
|--- | -------------------



|3.3.1 | Open Surgery
|----- | ------------

The SPY Elite Imaging System has been 510(k) cleared by the U.S. Food and
Drug Administration (FDA) for use in the following applications by the FDA: (i) coronary artery bypass graft surgery, (ii) cardiovascular surgery, (iii) plastic surgery, (iv) reconstructive surgery,
(v) microsurgery, (vi) organ transplant, and (vii) gastrointestinal surgery.

Plastic and Reconstructive Surgery:

In plastic and reconstructive surgery, if perfusion to tissue is compromised during complex procedures, such as breast and other flap surgeries, the
consequences range from tissue necrosis requiring tissue debridement to loss of the newly constructed body part. Such complications often result in the costly need for repeat surgery, additional intensive care and extended lengths of hospital stay.
Two textbook chapters written by the editors of Bostwicks Plastic and Reconstructive Breast Surgery and Clinics in Plastic Surgery recommend the use of SPY Elite Imaging during breast reconstruction surgery in order to
potentially reduce tissue necrosis and other major complications. More than 36 additional publications in the medical literature also support the clinical and cost savings benefits of SPY Fluorescence Imaging in reconstructive surgeries including
breast, head and neck and abdominal wall reconstructions. In May 2012, the journal Plastic and Reconstructive Surgery published a Level 1 comparative study in which



13



---

investigators demonstrated that use of the SPY EliteImaging System in breast reconstruction surgeries was superior to clinical judgment. In the January 2014, issue of
the Aesthetic Surgery Journal, a paper was published that compared the necrosis complication rates, as well as the rates and costs associated with unexpected perfusion-related reoperations for 184 patients who underwent breast
reconstruction surgery with SPY Fluorescence Imaging, versus 184 patients who were reconstructed without SPY imaging. Mastectomy skin necrosis rates were lower with SPY, with the biggest reduction being severe necrotic complications. As a
result, reoperation rates were lower, and the calculated cost savings due to the lower reoperation rate averaged a little more than US$610 per patient. The American Society of Plastic Surgeons (ASPS) estimates that in our lead
market, approximately 95,589 breast reconstruction surgeries were performed in the U.S. in 2013. NOVADAQ believes that our market opportunity in reconstructive surgery could potentially extend to approximately 450,000 additional complex
reconstructive surgeries, within the more than 5,700,000 reconstructive procedures reported annually by ASPS.

Colorectal Surgery:

High-risk colon resection surgeries, including low and left side resections and stoma creation or reduction, which combined represent about 125,000 open
surgeries per year, are associated with high rates of complications including an average 12.5% anastomotic leaks. Colorectal surgeons agree that anastomotic leaks occur for a number of reasons including tension, techniques and poor perfusion.
Enhanced visualization of perfusion in the colon may assist surgeons in determining where to make their transection based on the quality of perfusion, which may be of significant clinical benefit. Currently, 60% to 70% of colon resections are
performed as open surgeries although this is expected to decrease in future years as minimally invasive surgery becomes more prevalent.

Head and Neck
Reconstruction Surgery:

Head and neck surgery involves the harvest, transfer and attachment of soft and sometimes bony tissues to areas of the head
and neck that have been either affected by cancer, damaged by traumatic injury or were deformed at birth. If perfusion to tissue is compromised following complex head and neck reconstructive procedures, the consequences range from tissue necrosis
requiring tissue debridement, to loss of the newly constructed body part, which can result in the costly need for repeat surgery, additional intensive care and extended lengths of hospital stay. In published reports, SPY Fluorescence Imaging has
been used to assess perfusion following head and neck flap tissue transfer, and has enabled surgeons to take corrective actions to ensure that transferred tissue flaps heal without necrotic loss. According to 2013 Plastic Surgery Statistics Report
by the ASPS, reconstructive surgeons in the U.S. performed more than 199,000 head and neck (maxillofacial) surgeries. NOVADAQ believes that more 60% of these procedures involved use of tissue flaps, and that this is the main market for SPY EliteImaging System in head and neck surgery.



|3.3.2 | Minimally Invasive Surgery
|----- | --------------------------

NOVADAQs PINPOINT Endoscopic Fluorescence Imaging System
combines the fluorescence imaging capabilities of SPY technology with the High-Definitions visible light imaging capabilities of a traditional endoscopic imaging system. PINPOINT Imaging System can be used as a traditional endoscope and to obtain
fluorescence images either on demand or in a simultaneous imaging mode during minimally invasive surgery. The demand for minimally invasive procedures is rapidly growing, as smaller incisions lead to faster recovery, thus further leading to reduced
length of hospital stay and lower costs. However, small incisions result in reduced visibility for surgeons, and therefore increase the complexity of procedures and the potential for complications.

The first application for PINPOINT is high-risk colon resection surgeries, including low and left side resections and stoma creation or reduction. Combined,
these groups represent about 50% of the 250,000



14



---

colon resections performed each year in the U.S. Based on the results of PILLAR II, it has been shown that enhanced visualization and PINPOINTs ability to provide for the assessment of the
viability of the anastomosis quality with respect to perfusion may be of significant clinical benefit.

In January 2015, final results of NOVADAQs
PILLAR II study, Perfusion Assessment in Laparoscopic Left Sided/Anterior Resection, was published in the Journal of American College of Surgeons. The study evaluated the clinical impact of PINPOINT real-time visual perfusion assessment on
the surgical decision-making process and on surgical outcomes of laparoscopic colon resection surgery. Michael Stamos, M.D., PILLAR II Principal Investigator and Professor and Chair of the Department of Surgery at the University of California,
Irvine, found that PINPOINT fluorescence imaging provided surgeons the versatility to assess tissue perfusion prior to transection of the proximal colon as well as view the mucosal perfusion post-anastomoses. The study found that among the 139
patients included in the final data analysis, as a result of PINPOINT images, investigators encountered a 1.4% anastomotic leak rate and made operative plan revisions in 8% of patients, with a 0% anastomotic leak rate among those patients after
PINPOINT guided the surgeon to a change in the operative plan. Without the use of PINPOINT fluorescence imaging complications related to anastomotic leaks occur in 12.6% of Low Anterior Resections despite adherence to the surgical principles of good
blood supply, tension-free repair and accurate tissue approximation. Based on these results, the investigators concluded that PINPOINT is a safe and effective tool for intraoperative assessment of tissue perfusion during colorectal resection, and
may decrease the rates of anastomotic leaks and thereby improve patient outcomes while lowering the cost of care.

The Annals of Surgery also
published the results of a study of 150 patients undergoing esophagectomy with a gastric pull up reconstruction conducted at USC on October 2014. DeMeester et al., reported that esophogastric anastomosis was performed in 144 patients, and of those,
anastomotic leak was found in 24 patients (16.7%) and was significantly less likely to occur when the anastomosis was placed in an area of good perfusion compared to less robust perfusion as demonstrated by SPY imaging (2% versus 45%
<0.0001). The authors concluded by multivariate analysis that less robust perfusion at the site of the anastomosis was the only significant factor associated with a leak and that the use of SPY fluorescence may contribute to reduced anastomotic
morbidity. In late 2014, NOVADAQ initiated the development of a multi-center trial aimed at generating additional evidence of the value of fluorescence imaging in improving the outcomes of esophagectomy surgery.

Furthermore, PINPOINT Imaging allows gastrointestinal surgeons to visualize and objectively analyze perfusion versus non-perfusion in the upper and lower
gastrointestinal (GI) tract in order to make informed decisions such as where to resect a section of colon. Perfusion to tissue can be compromised in gastrointestinal surgeries, which if not detected during the surgery, can lead to
tissue necrosis and leakage, the need for repeat surgery, severe infection and high rates of mortality.

In November 2014, NOVADAQ commenced PILLAR III, a
multi-center randomized study of patients undergoing laparoscopic left colectomy. Additionally, NOVADAQ has initiated early studies in applications including cholecystectomy and sentinel lymph node localization.

Based on the results of PILLAR II, and clinical studies in general, gynecological and thoracic procedures and experiences with SPY Fluorescence Imaging in
open surgery, PINPOINT is expected to provide minimally invasive surgeons with better visualization of important anatomic structures during these complex procedures. Improved visualization and enhanced functional imaging information result in
reduced incidences of post-operative complications and lower costs of care. The Company continues to support post-market clinical studies using PINPOINT in minimally invasive gastrointestinal, gynecological oncology, thoracic and general surgery.
The Company intends to use the existing clinical data and user feedback to determine the markets where the value proposition for PINPOINT Endoscopic Fluorescence Imaging would be the strongest.



15



---

|3.3.3 | Cardiovascular and Wound Care
|----- | -----------------------------

SPY Imaging technology enables surgeons performing cardiovascular
interventions, such as peripheral bypass and stenting, to accurately visualize adequately perfused versus non-perfused tissue while performing the procedure. Surgeons have reported using SPY as a tool to intra-procedurally assess the effectiveness
of peripheral vascular interventions, using the information to guide debridement, to make more accurate decisions related to limb salvage and if required, the need and level of digit or lower limb amputations. According to the American Diabetes
Association, in 2012, 60% of the 150,000 lower limb amputations performed each year in the U.S. occur in diabetic patients. NOVADAQ believes that SPY Imaging will enable surgeons to provide these patients with better clinical outcomes.

The LUNA Imaging System, which is based on NOVADAQs core SPY Fluorescence Imaging technology, enables physicians treating chronic wounds to more
reliably distinguish between perfused and non-perfused tissue during treatment of diabetic foot ulcers, pressure sores and of other serious chronic non-healing wounds. Since complete removal of non-perfused tissue is critical to healing, the use of
LUNA by wound care specialists can lead to better informed treatment decisions, and thereby may improve healing with the potential to reduce the number of visits to treatment centers for patients. Wound care specialists have reported that viewing
images as they are being captured may encourage patients to better comply with their prescribed treatments. The SAGE Consulting Group estimates that more than 3,500,000 diabetic patients suffer from poorly- or non-healing ischemic and neuro-ischemic
foot ulcers in the U.S., and that between 600,000 and 1,600,000 new ulcers occur each year. NOVADAQ believes that LUNA Imaging can improve the clinical outcomes and reduce the cost of care for these wounds by providing information that leads to more
effective treatment.



|3.3.4 | Tissue Products
|----- | ---------------

Breast reconstruction surgeries following a mastectomy often involves the
placement of an ADM to supplement a patients own tissues. The use of ADMs in such surgeries have been occurring with increasing frequency because surgeons utilize ADMs, such as DermACELL to: (1) help to define the shape of the new breast;
(2) create a biologic interface between mastectomy skin flaps potentially reducing the risk of infection or necrosis; and (3) provide structural reinforcement to the soft tissue of the breast. The ability of ADMs to promote significant
revascularization and cellular infiltration make them an encouraging option for an array of tissue regeneration applications, including wound healing, soft tissue reconstruction, and augmentation (Bullocks, 2014). Additionally, the use of DermACELL
in chronic wounds has been shown to increase cell infiltration, host tissue integration and promote vascularization, which as a result, can improve healing rates (Yonehiro, et al 2013).

DermACELL tissue products for wound and breast reconstruction surgery are technologically advanced ADM that can be used in breast reconstruction surgeries, as
well as in the treatment of diabetic foot ulcers and chronic non-healing wounds. These allograft bio-implants are processed utilizing MATRACELL® and PRESERVON®, two of LifeNet Healths patented and proprietary
technologies. MATRACELL renders these implants acellular, without compromising the biomechanical or biochemical properties while PRESERVON allows them to be stored at room temperature and ready to use out of the packaging.

Adequate blood supply is critical for successful use of regenerative human tissue matrix allografts. The use of NOVADAQs SPY Imaging technology
alongside DermACELL allows clinicians to visually assess the quality of blood flow in tissue in real time allowing for the validation of adequate perfusion at the time of allograft implant. NOVADAQs ability to pair the use of SPY Imaging
technology and DermACELL provides clinicians with a comprehensive solution that may lead to reduced rates of post-operative complications, improved patient outcomes and lower costs to hospitals.



16



---

|3.3.5 | Robotics
|----- | --------

NOVADAQ integrated 3-D HD SPY Imaging into the da Vinci® Surgical Robotic
System Intuitive, which is a global technology leader in robotic-assisted minimally invasive surgery. The integrated system, referred to as FireFly, was cleared for use in robotic surgery by the FDA 510(k) in February 2011. The FireFly
system enables surgeons performing robotic surgery to benefit from fluorescence imaging, with initial use in applications ranging from urology to gynecology.



|3.4 | Manufacturing Operations
|--- | ------------------------

The Company operates from leased premises in three different locations:



|                |  |        |  |                                         |  |                   
|--------------- |  | ------ |  | --------------------------------------- |  | ------------------
|Location        |  | Area   |  | Premise Use                             |  | Expiry Date       
|Richmond, BC    |  | 17,330 |  | Manufacturing, research and development |  | June 30, 2015(1)  
|Mississauga, ON |  | 7,260  |  | Corporate office and administration     |  | September 30, 2017
|Taunton, MA     |  | 6,750  |  | Service and repairs                     |  | February 28, 2017 



|(1) | The Company will be occupying new premises in Burnaby, BC beginning on October 1, 2015.
|--- | ---------------------------------------------------------------------------------------

NOVADAQ
manufactures SPY Elite, PINPOINT, LUNA Imaging Systems and Firefly hardware components at its manufacturing facility located in Richmond, British Columbia which could produce new lasers or alternatively, can be outsourced to several
qualified original equipment manufacturer (OEM) resources. The manufacturing operation is ISO13485: 2003 and Current Good Manufacturing Practices (cGMP) compliant and, as currently configured, has the capacity to manufacture up to 1000
units each year.

A third party currently assembles the consumable supply kits that NOVADAQ sells for use with its imaging devices. NOVADAQ has supply
agreements with manufacturers of key sub-assemblies including the imaging agent, and alternate sources of supply have been qualified. NOVADAQ and its service partner handle equipment installation and field service jointly.



|3.5 | Alliances and Partnerships
|--- | --------------------------

(a) Existing Alliances and Partnerships

Intuitive Surgical Alliance  In January 2009, Intuitive named NOVADAQ as the exclusive supplier of certain hardware
components of the Firefly System and the fluorescence agent required to perform imaging procedures. Intuitive commenced full launch of the Firefly system in July 2011. NOVADAQ earns revenues principally from sales of hardware
components to Intuitive and royalties generated from sales of Firefly Imaging Systems by Intuitive to end-users.

MAQUET
Alliance- In January 2012, NOVADAQ named MAQUET the exclusive U.S. distributor of the CO2 Heart Laser System and the associated disposable products. Under the agreement, the parties share the revenues generated from sale of CO2 Heart
Laser Systems and associated disposable products, subject to minimum values on the products sold.

Swissray Asia and CHC
Alliances - In November 2013, NOVADAQ signed an international distribution agreement with Swissray Asia, a leading distributor of radiation oncology and medical imaging equipment in Southeast Asia, pursuant to which Swissray Asia became the
exclusive distributor of NOVADAQ imaging systems in Australia, Indonesia, New Zealand and



17



---

certain southeast Asian countries. NOVADAQ subsequently entered into an expanded distribution agreement with Swissray Asias parent company, CHC Healthcare Group, for the regions of Greater
China (including China, Hong Kong and Taiwan).

Serena Group Partnership On September 30, 2014, NOVADAQ
announced that the Company has entered into a partnership agreement for multiple LUNA Imaging Systems with Serena Group, in Cambridge, Massachusetts, which operates wound and hyperbaric centers throughout the United States.

Kirloskar Technologies Alliance - On October 16, 2014, NOVADAQ appointed KTPL, as the exclusive distributor for the
Companys SPY Imaging Systems in India. KTPL has been a successful healthcare enterprise for more than two decades and is a part of the 100-year-old, U.S.$1.2 billion Kirloskar Group conglomerate. KTPL exclusively markets various kinds of India
specific, high tech medical equipment manufactured by leading global companies and has a wide network of coverage throughout India. More than 175 major Government hospitals, Medical Colleges and Private Hospitals and more than 100 Catheterization
Laboratories are using KTPL represented products.

LifeNet Health Alliance  On December 9, 2014, NOVADAQ signed a
multi-year agreement pursuant to which, NOVADAQ was appointed exclusive worldwide distributor of LifeNet Healths DermACELL tissue products for wound and breast reconstruction surgery. NOVADAQs ability to sell DermACELL alongside
NOVADAQs SPY Imaging technology enables the Company to offer comprehensive clinical solutions for health care providers and practitioners. Subject to certain conditions and NOVADAQ fulfilling certain sales performance metrics, the Agreement
will automatically renew for successive five-year periods.

(b) Terminated Alliances and Partnerships

KCI Alliance Termination- On March 15, 2013, NOVADAQ terminated its marketing and sales distribution alliance agreements
with KCI USA Inc. and KCI. NOVADAQ also amended and restated its distribution agreements with LifeCell and LifeCell Medical Resources Limited, subsidiaries of KCI, to reflect the termination of the KCI agreements, without material modifications.

LifeCell Alliance Termination- On November 30, 2014, NOVADAQ terminated the exclusive North American sales and
marketing agreement with LifeCell with respect to the distribution of the SPY Elite Imaging System. In connection with the termination of this agreement, LifeCELL transferred all marketing and distribution rights to the SPY Elite
System to NOVADAQ. NOVADAQ and LifeCell also agreed to terminate agreements that were signed in November 2011 relating to the marketing and distribution of the SPY Elite in the interventional and vascular fields, and NOVADAQ received
non-exclusive rights to distribute the SPY Elite in those fields. The original expiry dates of these agreements were September 2015 and November 2017, respectively. The termination agreement provided for a one-time payment of U.S. $4.5
million to LifeCell and the parties agreed to settle any and all legal disputes between the parties.



|3.6 | Major Customers and Segment Revenues
|--- | ------------------------------------

The Company manages its business and evaluates performance based
on two operating segments: SPY Fluorescence Imaging technologies and the CO2 Heart Laser System for TMR. Below is comparative information for revenues paid to NOVADAQ by its partners, as well as direct sales to customers, in each segment. There were
no sales to joint ventures, controlling shareholders or related parties during the financial years disclosed below.



18



---

|                            |   |      |            |   |      |  |            | 
|--------------------------- | - | ---- | ---------- | - | ---- |  | ---------- | 
|(expressed in U.S. dollars) |   | 2014 |            |   | 2013 | 
|                            | $ |      |            | $ |     
|Revenue                     |   |      |            |   |      |  |            | 
|SPY Imaging Systems         |   |      |            |   |      |  |            | 
|Product Revenue             |   |      | 38,922,000 |   |      |  | 28,423,000 | 
|Royalty Revenue             |   |      | 1,909,000  |   |      |  | 1,889,000  | 
|Deferred Partnership Fee    |   |      |            |   |      |  |            | 
|Revenue                     |   |      | 3,292,000  |   |      |  | 1,300,000  | 
|CO2 Laser System            |   |      |            |   |      |  |            | 
|Product Revenue             |   |      | 1,773,000  |   |      |  | 2,597,000  | 
|Service Revenue             |   |      | 704,000    |   |      |  | 812,000    | 
|                            |   |      |            |   |      |  |            | 
|                            |   |     
|Total Revenue               |   |      | 46,600,000 |   |      |  | 35,021,000 | 
|                            |   |      |            |   |      |  |            | 

For the year ended December 31, 2014, sales to major customers included LifeCell in the amount of US$16,117,000 (2013 -
US$17,299,000) and Intuitive in the amount of US$5,498,000 (2013 - US$6,454,000).



|3.6.1 | Reimbursement
|----- | -------------

The Companys ability to successfully commercialize the Products may depend
in part on the extent to which reimbursement for the cost of certain Products and related treatments will be available from government health administration authorities, private health coverage insurers and other organizations.

On March 7, 2012, NOVADAQ announced the Centers for Medicare & Medicaid Services (CMS) established SPY Vascular
Angiography as a new reimbursable service under the Hospital Outpatient Prospective Payment System. CMS use the Ambulatory Payment Classification (APC) system to set the payment rates at which health care providers are reimbursed for
approved outpatient services under the Medicare and Medicaid program in the United States. Surgeons performing SPY, PINPOINT and LUNA Imaging continue to be professionally reimbursed for performing the procedure by using existing APC codes or the
current procedural terminology codes established by the American Medical Association for the performance of certain procedures.

Below is a chronological
history of the establishment of coding, reimbursement and payment:



| |  |  | October 2007: CMS established ICD-9-CM code 88.59 - Intra-operative Fluorescence Vascular Angiography, to describe SPY Imaging use during coronary artery bypass graft surgery.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | October 2010: CMS made ICD-9-CM code 17.71 effective as a billable code for documenting all hospital charges associated with non-cardiac SPY Intra-operative Fluorescence Vascular Angiography procedures. ICD-9-CM
procedure code is used by hospitals to describe medical procedures, but does not necessarily result in any direct incremental reimbursement to these facilities.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | March 2012: CMS assigned SPY (SPY Elite, PINPOINT or Firefly) fluorescence vascular angiography for payment to APC 0397 (Vascular Imaging) under OPPS, effective April 1, 2012. In October 2012, CMS published
the final rule for OPPS 2013. Effective January 1, 2013, CMS increased the national average payment for APC 0397 to US$330.97 from the previous national average of US$154.87.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19



---

| |  |  | January 2014: CMS reassigned all procedures in APC 0397 to APC 0263 resulting in an assignment of fluorescence angiography to Level 1 Radiological Procedures. The national average payment for APC 0263 is US$317.98.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | January 2015: CMS increased the national average payment for fluorescence angiography (APC 0263) from US$317.98 to US $337.00.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



|3.6.2 | Regulatory Matters
|----- | ------------------

The SPY Elite, PINPOINT, LUNA and FireFly Imaging Systems and
the CO2 Heart Laser are classified as medical devices for regulatory purposes, and the fluorescence agent may be regulated as both a medical device when sold in concert with the SPY Imaging
System and as a drug when sold separately. Accordingly, the Company is subject to extensive regulations governing the research, development, manufacture, promotion, distribution and marketing of these systems.

DermACELL tissue products are manufactured and developed by LifeNet Health and regulatory compliance with regards to DermACELL is the responsibility of
LifeNet Health. LifeNet Health holds a valid tissue establishment registration from the FDA and Cell, Tissue and Organ registration from Health Canada.

U.S.

The testing, production and sale of the
Products are subject to regulation by numerous state and federal government authorities, principally the FDA, which regulates the pre-clinical, clinical testing, manufacture, labeling, distribution and promotion of medical devices.

The original SPY system received 510(k) clearance from the FDA in 2005. Since that time, the Company has received 510(k) clearances from the FDA for labeling
revisions for the SPY Imaging Systems which have allowed for greater flexibility in the administration of the fluorescence agent, for use of a fluorescence agent manufactured by an alternate supplier and for use of the SPY fluorescence imaging in
cardiovascular (including LUNA for the assessment of blood flow in vessels and micro-vessels in extremities), plastic, reconstructive, micro, organ transplant and gastrointestinal surgery. In 2009, the Company received 510(k) clearance for use of
the endoscopic version of the SPY Imaging system in minimally invasive procedures. The TMR Laser System is a FDA Premarket Approval (PMA) approved product. The Easy LDI Perfusion Camera, acquired from Aïmago in May 2014, has
previously been 510(k) cleared by the FDA.

European Union

The Conformité Européenne Mark (CE Mark) was achieved for the original SPY imaging system in September of 2001 for use in
cardiovascular surgery. CE Mark for use of SPY fluorescence imaging in plastic reconstruction, micro, gastrointestinal surgery and lymphatic mapping was achieved in the first half of 2012. CE Mark for PINPOINT Imaging System was also achieved in
2013. The Easy LDI Perfusion Camera, acquired from Aïmago in May 2014, has previously been issued a CE Mark.

Canada

Health Canada sets out the requirements governing the sale, importation and advertisement of medical devices in Canada. These regulations are intended to
ensure that medical devices distributions in Canada are both safe and effective.

The Company obtained a Class III device license for the original SPY
system in cardiac surgery in September 2001. In December 2006, Health Canada issued a Class III device license for the original



20



---

SPY system in urological applications and, in 2011, a Class II device license for the SPY Elite Imaging System.

Japan

SPY Fluorescence Imaging obtained a shonin
in August 2003. NOVADAQ is in the process of obtaining a shonin for the PINPOINT Imaging System in Japan.



|ITEM 4. | BUSINESS RISK FACTORS
|------- | ---------------------

Risks Related to NOVADAQs Business

The Company is subject to certain risks and uncertainties inherent in the operation of its business. These risks are many and varied, and are influenced by
factors both internal and external to the operation of the business. The risks and uncertainties described below are ordered in accordance with the extent to which they would be expected to impact the Companys business on an ongoing basis and,
accordingly, would require more oversight and active management. It should be noted, however, that lower rank risks may still represent serious threats notwithstanding the expectation that they may be less likely to be realized or may be of a lesser
magnitude.

The Company Has Incurred and Continues to Incur Losses

The Company has incurred substantial losses since its inception in 2000 and continues to incur losses and experience negative cash flows. The Company cannot
predict if or when it will operate profitably, generate positive cash flows or if it will be able to implement its business strategy successfully. Pursuing its strategy requires the Company to incur significant expenditures for research and product
development, marketing and general administrative activities. As a result, the Company needs to continue to grow its revenues and gross margins to achieve and sustain profitability and positive operating cash flows, and it may need to raise
additional capital.

Successful Commercialization of the Companys Products

The Companys future success will depend in large part on its own ability to directly commercialize SPY Elite, PINPOINT, LUNA Imaging Systems and
DermACELL and the ability of its partners to market Firefly and CO2 Laser System. Successful commercialization of the Products will depend on a number of factors, including achieving
widespread adoption of the Products among the targeted surgeons and hospitals, maintaining the Companys relationships with its suppliers and partners, obtaining sufficient quantities of components for the Products, including the fluorescence
agent, the performance of NOVADAQs partnering sales organization, the ability of the Company and its partners to successfully market the Products at projected selling prices, and the ability of the Company and its partners to commercially
launch Products that are currently in development phase, in a timely manner. In addition, the Companys success will depend on its ability to supply the key Firefly components of da Vinci Surgical Robotic System, its ability to sell and
market DermACELL, and the successful commercialization of the Other Products. There can be no assurance that the Company will be successful in these endeavors. Successful commercialization will also depend on whether any unanticipated adverse
effects result from use of the Companys Products, whether unfavorable publicity develops in respect of the Products, or whether the emergence of new or existing products that directly compete with the Products are proven to be more clinically
effective or cost-effective.

Shift from Research and Development to Commercialization

Having been founded in 2000, the Company has a limited operating history. Historically, the focus of its operations had been on research and development.
However, in mid-2005, the Company shifted its



21



---

focus towards commercialization with the commercial launch of its system for use during cardiac surgery. In 2009 through 2013, the Company formed certain alliances with four market leading
companies for the broad commercialization of NOVADAQs leading Products. In 2013, NOVADAQ established a direct sales organization in the U.S. to sell PINPOINT and LUNA Imaging Systems to end-user hospitals and clinics. During the course of
2015, NOVADAQ will further expand and train its existing sales team in order to continue the commercialization of the SPY Elite Imaging System. 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, some of which will be out of the Companys control. The Company has incurred losses to date and expects to incur losses
in the future. 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 its imaging platform, and
these activities may require significant cash commitments which may affect the profitability of the Company. There can be no assurance that the Company will be able to achieve or sustain profitability in the future.

2015 Growth May Be Impacted by Sales Transition

In
connection with the transfer of the distribution and marketing rights of the SPY Elite Imaging System from LifeCell to NOVADAQ, the Company is now responsible for the marketing and distribution of the SPY Elite Imaging System. The
Companys ability to achieve sales growth in 2015 will be dependent, in part, on its ability to successfully commercialize the SPY Elite Imaging System, along with the rest of the Products. The ability of the Company to continue the
successful commercialization of the SPY Elite System will depend on a number of factors, including but not limited to, achieving widespread adoption of the product among the targeted surgeons and hospitals, maintaining relationships with
surgeons and hospitals that were previously managed by LifeCell and development and maintenance of the Companys relationships with surgeons and hospitals by the Companys sales and marketing teams. The successful distribution of SPY
Elite Imaging System will depend on a number of financial, logistical, technical, competitive, economic and other factors, some of which will be out of the Companys control, and there can be no assurance that the Company will be able to
continue the successful marketing and distribution of the SPY Elite System during the course of 2015.

Successful Commercialization of DermACELL

In connection with the signing of a multi-year distribution agreement with LifeNet Health in December 2014, NOVADAQ is now the exclusive worldwide
distributer of LifeNet Healths DermACELL tissue products for wound and breast reconstruction surgery. The Companys ability to achieve sales targets in 2015 will be dependent, in part, on its ability to successfully market and distribute
DermACELL, along with the Companys other Products. The ability of the Company to successfully distribute DermACELL tissue products will depend on a number of factors, including but not limited to, market penetration and acceptance among the
targeted surgeons and hospitals, maintaining accounts and relationships with surgeons and hospitals that were previously managed by LifeNet Health, the effect of reimbursement codes for procedures involving DermACELL, and the clinical results from
the use of DermACELL. There can be no assurance that the Company will be able to continue the successful marketing and distribution of DermACELL, and continued successful distribution of DermACELL will depend on a number of financial, logistical,
technical, competitive, economic and other factors, some of which will be out of the Companys control.

Ability to Obtain Sufficient Funding

The Company does not yet generate sufficient operational cash flows to meet the Companys planned growth and to fund development activities. The
Company has forecasted cash requirements for 2015, and funding from sources currently in place will permit the Company to meet its 2015 operating requirements. However, in the long-term, the Company will
require funding from outside sources to



22



---

complete its business development plans; therefore, the Company is dependent on the willingness of investors or strategic partners to continue to invest in the Company or enter into strategic
relationships to continue further development of certain Products. There is no assurance that the Company will secure additional funding sources or partnerships. Currently, the Company has no committed sources of capital other than a revolving
credit agreement, dated August 26, 2011, with a Canadian chartered bank. As at December 31, 2014, the maximum amount that can be borrowed under the revolver loan was $1,837,000. Since its inception, the Company has not utilized its credit
facility

Patent Protection and Trade Secrets

The
Companys success depends, in part, on its ability to secure and protect its patents, trade secrets, trademarks and other IP rights and to operate without infringing on the proprietary rights of others or having third parties circumvent the
rights that it owns or licenses. In particular, Company-owned and licensed patents may not be valid, and the Company may not be able to successfully obtain and enforce patents and maintain trade secret protection for its technology. The extent to
which it is unable to do so could materially harm its business.

NOVADAQ has applied for, is actively pursuing, or has been issued patents relating to the
technology used in its proprietary imaging platform in jurisdictions including the U.S., Europe, Japan, Canada, Russia, China, Brazil and India. Applications may not result in the issuance of any patents, and any patents now held or that may be
issued, may not provide the Company with adequate protection from competition. Furthermore, it is possible that third parties in patent litigation may successfully challenge patents issued or licensed to NOVADAQ. It is also possible for others to
develop products, which have the same effect as the Companys Products on an independent basis, or to design around products that it has patented. In either event, if NOVADAQ is unable to secure or to continue to maintain a preferred position,
any of the SPY Imaging Systems could become subject to competition from the sale of generic or equivalent products.

The Companys Products or
processes of others may infringe patents issued or licensed to the Company. The cost of enforcing patent rights against infringers, if such enforcement is required, could be significant, and the time demands could interfere with the Companys
normal operations. There has been substantial litigation and other proceedings regarding patent and other IP rights in the pharmaceutical, biotechnology and medical technology industries. The Company may become a party to patent litigation and other
proceedings. The cost to the Company of any patent litigation, even if resolved in its favor, could be substantial. Some of the Companys competitors may be able to sustain the costs of such litigation more effectively than NOVADAQ because of
their substantially greater financial resources. Litigation may also absorb significant management time.

Unpatented trade secrets, technological
innovation and confidential know-how are important to NOVADAQs commercial success. Although the Company seeks to protect its proprietary information through confidentiality agreements and other
appropriate means, these measures may not effectively prevent disclosure of the Companys proprietary information, and, in any event, the Company cannot provide assurances that others will not independently develop or gain access to the same or
similar information.

Third-Party Intellectual Property Infringement Claims

Other health care, medical device, biopharmaceutical companies and universities may have filed patent applications that may relate or affect the Companys
business. Such patent applications or patents may conflict with the Companys technologies or patent applications, and such conflict could reduce the scope of patent protection, which the Company could otherwise obtain or lead to a refusal of a
patent application of the Company. NOVADAQ could also become involved in interference proceedings in connection with one or more of its patents or patent applications to determine priority of invention.



23



---

It is not possible for the Company to be certain that it is the creator of inventions covered by pending patent
applications or that it was the first to file patent applications for any such inventions. No assurance can be given that the Companys patents, once issued, would not be declared by a court to be valid or enforceable, or that a
competitors technology or product would not be found to infringe the Products. In the event that a court was to find the Company to be infringing upon a valid patent of a third party, the Company might be required to pay license fees and/or
damages and might be enjoined from conducting certain activities.

There is no assurance that the Company could enter into licensing arrangements at a
reasonable cost, or develop or obtain alternative technology in respect of patents issued to third parties that incidentally cover the Companys Products. Any inability to secure licenses or alternative technology could result in delays in the
introduction of some of the Companys Products or even lead to prohibition of the development, manufacture or sale of certain Products.

Status of
Healthcare Reimbursement

NOVADAQ cannot predict changes in either the facility or professional coding reimbursement or payment for the use of its
Products. The Company continues to work closely with CMS and private payer organizations to maximize the opportunity for the establishment of codes, reimbursement and payment. The prices of medical products and services are increasingly being
challenged and significant uncertainty exists with respect to the reimbursement status of newly approved health care devices and products. The future revenues and profitability of medical device companies, as well as the availability of capital, may
be affected by the continuing efforts of government and third party payers to contain or reduce costs of health care through various means. There is no assurance that adequate third party coverage will be available to patients that will allow the
Company to maintain price levels that are sufficient for the realization of profits.

Health Care Reform

Health care reform and controls on health care spending may limit the price the Company charges for certain Products and the amounts of such Products that it
can sell. In particular, in the U.S., the federal government and private insurers have considered ways to change, and have changed, the manner in which health care services are provided. Potential approaches and changes in recent years include
controls on health care spending and the creation of large purchasing groups. In the future, the U.S. government may institute further controls and limits on Medicare and Medicaid spending. These controls and limits might affect the payments the
Company could collect from sales of certain Products in the U.S. Uncertainties regarding future health care reform and private market practices could adversely affect the Companys ability to sell certain Products profitably in the U.S.

Clinical Trials May be Unsuccessful and New Regulatory Approvals May Not be Obtained

The Company continues to explore the use of the Products in new applications and clinical trials and to develop new products. The outcome of any clinical trial
is uncertain and subject to various risks, including the rate of patient enrolment, trial costs, time to trial completion, quality of clinical data, regulatory issues, efficacy and safety concerns. The Companys PILLAR III study and the
FILM study carry similar risks, including the possibility of clinical failure to show efficacy or safety or the potential requirement to increase the number of patients enrolled in the trial. There is no assurance that the Company will receive
additional regulatory approvals for the Products in new applications or for any new products, which would limit the Companys future sales and marketing opportunities in other markets.



24



---

Market Competition and Technological Advancements

Industrial technology in medical diagnostics and therapeutics is evolving rapidly and competition is intense. In addition to products currently in the market,
additional products may be introduced to compete with those of the Company. Some of these products may use entirely different approaches or means to obtain diagnostic information or achieve therapeutic results and could be found to be more
clinically effective or less expensive than those products being developed and/or commercialized by NOVADAQ. Moreover, many competitors, both current and potential, may have considerably greater resources at their disposal than NOVADAQ in terms of
technology, manufacturing, product development, marketing, distribution, sales, capital and human resources. Many competitors may also have more experience in conducting clinical trials and in obtaining domestic and foreign regulatory approvals.
Therefore, there can be no assurance that the Company can successfully compete with present or potential competitors or that such intense competition will not have a materially adverse effect on NOVADAQs business and financial condition.

Additionally, since the Products are designed to diagnose and treat specific medical conditions, it is possible that medical or scientific advances with
respect to the treatment of these conditions could render the Companys Products obsolete.

Implementation of Business Models

The Companys current business plan is predicated upon the successful implementation of a placement, rental or capital sales model for the SPY Imaging
Systems. The hospitals and clinics that are expected to be the end-users of the SPY Imaging Systems may resist such models or request alternate cost models that may not maximize returns on the Companys
investment. A failure to implement these models or to achieve the anticipated pricing for procedures could adversely affect the Companys business and financial condition.

Dependence on Relationships with Strategic Partners

Execution of the Companys current strategy is partly dependent on cooperation with strategic partners. The Company can offer no guarantee that existing
partnership agreements will be renewed or that its strategic partners will not seek to renegotiate or amend those agreements before or after a product has been commercialized. In addition, there can be no assurance of the commercial success of any
joint ventures in which the Company is, or will become, involved.

Any change in the Companys relationships with its strategic partners, whether as
a result of economic or competitive pressures or otherwise, including any decision by its strategic partners to reduce their commitment to certain Products and technology in favor of competing products or technologies, to change or seek to change
the terms of the Companys contractual relationships with them or to bring to an end the various alliances, could have a material adverse effect on the Companys business and financial results.

In addition, disputes regarding the rights and obligations of the parties may arise under the Companys agreements with its strategic partners. These and
other possible disagreements may lead to the renegotiation or modification of such agreements, or could lead to the termination of such agreements or delays in collaborative research, development, supply or commercialization of certain Products or
could require or result in litigation or arbitration. Moreover, disagreements may arise with the Companys strategic partners over rights to intellectual property. These kinds of disagreements could result in costly and time-consuming
litigation. Any such conflicts with the Companys strategic partners could reduce its ability to obtain future collaboration agreements and could have a negative impact on the Companys relationship with existing strategic partners.



25



---

Potential Future Corporate Developments

Management of NOVADAQ, in the ordinary course of NOVADAQs business, regularly explores potential strategic opportunities and transactions. These
opportunities and transactions may include strategic joint venture relationships, significant debt or equity investments in NOVADAQ by third parties, the acquisition or disposition of material assets, the licensing, acquisition or disposition of
material IP, the development of new product lines or new applications for its existing devices, significant distribution arrangements, the sale of all of the shares of NOVADAQ and other similar opportunities and transactions. NOVADAQs policy
is to not publicly disclose the pursuit of a potential strategic opportunity or transaction unless it is required to do so by applicable law, including applicable securities laws relating to continuous disclosure obligations. There can be no
assurance that investors of NOVADAQ are buying or selling securities of NOVADAQ at a time when NOVADAQ is not pursuing a particular strategic opportunity or transaction that, when announced, would have a significant effect on the price of
NOVADAQs common shares.

In addition, any such future corporate development may be accompanied by certain risks, including exposure to unknown
liabilities of the strategic opportunities and transactions, higher than anticipated transaction costs and expenses, the difficulty and expense of integrating operations and personnel of any acquired companies, disruption of the Companys
ongoing business, diversion of managements time and attention and possible dilution to shareholders. The Company may not be able to successfully overcome these risks and other problems associated with any future acquisitions and this may
adversely affect the Companys business and financial condition.

Concentration of Accounts Receivable

As at December 31, 2014, $12,899,782 or 80% of the total accounts receivable are due from six customers. As at December 31, 2014, two customers had
accounts receivable balances exceeding 10% of total accounts receivable. Concentration of these two customers as at December 31, 2014 comprised 34% and 19% of total accounts receivable as at December 31, 2014 as compared to 3%
and 35%, respectively as at December 31, 2013.

For the year ended December 31, 2014, sales to three customers exceeded 10% of total
revenue. Concentration of these three customers comprised 23%, 20% and 12% of total revenue for the year ended December 31, 2014 as compared to 44%, 1% and 18%, respectively, for the year ended December 31, 2013.

Potential Fluctuations in the Companys Financial Results Make Financial Forecasting Difficult

The Company expects its revenues and results of operation to continue to vary significantly from quarter to quarter. Revenues and gross margins may be lower
than anticipated due to timing of orders and deliveries, unexpected delays in the Companys supply chain, general economic and market-related factors, product quality, and the rate of acceptance of the Products, performance and competitive
factors. The current economic environment also makes projecting financial results more difficult. In addition, due to the Companys early stage of commercialization on certain Products, it cannot accurately predict its future revenues or
results of operations or the timing of its current research and development programs. The Company is also subject to normal operating risks such as credit risks, foreign currency risks and global and regional economic conditions. As a result, quarter-to-quarter comparisons of the Companys revenues and results of operations may not be meaningful. It is likely that in one or more future quarters, the
Companys results of operation will fall below the expectations of securities analysts and investors. If this happens, the trading price of the Companys common shares might be materially and adversely affected.



26



---

Dependence on Suppliers

The Company is dependent on its suppliers to manufacture SPY Imaging Systems, including components such as the fluorescence agent used with the SPY Imaging
Systems, in accordance with the FDA and other regulatory requirements. The Company does not control the manufacturing processes of its suppliers. If current manufacturing processes are modified, or the source or location of its product supply is
changed, voluntarily or involuntarily, the U.S. FDA, Health Canada and other regulatory bodies will require the Company to demonstrate that the products produced from the modified or new process or facility are equivalent to the products previously
cleared or approved. Any such modifications to the manufacturing process or supply may not achieve or maintain compliance with the applicable regulatory requirements. In many cases, approval or clearance by regulatory authorities may be required
prior to any changes being made, which may adversely affect the Companys business.

Regulatory Matters

Products intended for diagnostic and therapeutic use for humans are governed by a wide array of regulatory agencies. For most of these products, applicable
regulations require testing and government review and approval prior to marketing the product. This procedure can take a number of years and involves the expenditure of substantial resources. Any failure or delay by the Company to obtain regulatory
approvals or clearances could adversely affect the marketing of certain Products it developed and its ability to generate product revenue. There can be no assurance that any of the Companys planned products will be approved by any regulatory
agency on a timely basis, or at all.

In the event that a regulatory authority revokes any clearances or approvals granted in respect of the
Companys Products, the Companys business and financial condition could be adversely affected. Numerous statutes and regulations govern the manufacture and sale of medical device and pharmaceutical products in Canada, the U.S. and other
countries where the Company markets or intends to market its products. Such laws and regulations govern, among other things, the approval of manufacturing facilities, testing procedures and controlled research, non-clinical and clinical data
required prior to and after marketing approval, compliance with cGMP affecting production and storage, the advertising and labeling of products, the reporting of adverse events, and special issues associated with the manufacture and use of laser
products. Failure to comply with statutes and regulations could result in warning letters, fines and other civil penalties, unanticipated expenditures, withdrawal of regulatory approval, delays in approving or refusing to approve a product, product
recall or seizure, interruption of production, operating restrictions, injunctions or criminal sanctions. The Company and its manufacturers and suppliers are also subject to numerous federal, state, provincial and local laws relating to such matters
as safe working conditions, manufacturing practices, environmental protection, fire hazard control and disposal of hazardous or potentially hazardous substances. In addition, advertising and promotional materials relating to medical devices are, in
certain instances, subject to regulation by the Federal Trade Commission in the U.S. and equivalent regulators in other jurisdictions. NOVADAQ and its manufacturers and suppliers may be required to incur significant costs to comply with such laws
and regulations in the future, and such laws and regulations may have an adverse effect on the Companys business. The failure of NOVADAQ or its manufacturers and suppliers to comply with current or unanticipated changes in existing regulatory
requirements could materially harm the Companys business. Furthermore, there can be no assurance that NOVADAQs manufacturers and suppliers will continue to comply with regulatory requirements, including GMP. In such circumstances, the
Companys business or financial condition may be adversely affected.

The global regulatory environment is ever evolving which can result in changes
to regulations, standards and guidelines and the establishment of new health authorities and/or mergers of divisions within them. NOVADAQs current or future regulatory clearances or approvals may be affected as a result of such changes or
reorganization.



27



---

The Onco-Life System and the CO2 Heart Laser System are FDA PMA products in the U.S. and are subject to a higher
standard of regulatory reporting to the FDA. NOVADAQs facilities and quality systems are audited annually with respect to ISO 13485 certification and Health Canada licensure. In 2011 and 2014, NOVADAQ successfully completed FDA inspection
on its Richmond, British Columbia facility. Future successful review by a health authority inspector is not guaranteed. A negative inspection can hinder the Companys ability to carry on business. In such circumstances, the Companys
business or financial condition may be adversely affected.

In addition, the Company must comply with federal and state health care anti-kickback laws and
other health care fraud and abuse laws that affect the marketing of devices and pharmaceuticals and interaction with healthcare professionals. Recent healthcare legislation in the U.S. requires medical device manufacturers to report transfer of
value to physicians and teaching hospitals. Failure to comply with applicable laws and regulations could subject the Company to administrative or judicial enforcement actions including, but not limited to, product seizures, recalls, injunctions,
civil penalties, criminal prosecution, refusals to approve new products or withdrawal of existing approvals, as well as increased product liability exposure, any of which could have a material adverse effect on the Companys business or
financial condition.

Reliance on Key Personnel

The
Company is dependent on certain members of its management and staff, and the loss of the services of one or more of these individuals could adversely affect the Company. In addition, NOVADAQ will need to continue to expand its management and
employee base as it continues to support the commercialization of the Products. The Companys future financial performance, its ability to support commercialization of the Companys Products and to compete effectively will depend, in part,
on its ability to manage any future growth effectively. The Companys ability to manage growth will require it to continue to implement and improve its administrative, accounting and management systems, and to recruit, integrate and train new
employees, including additional management, administrative, distribution, sales and marketing and potentially manufacturing personnel. Although the Company has done so in the past and expects to be able to do so in the future, there can be no
assurance that the Company will successfully be able to attract and retain skilled and experienced personnel.

Research and Development Risk

A principal component of NOVADAQs business strategy is to expand its product offering to fully exploit its underlying imaging platform. As such,
NOVADAQs organic growth and long-term success is partially dependent on its ability to successfully develop and market new products. Accordingly, NOVADAQ will likely incur significant research and development expenditures. However, there is no
certainty that any investment in research and development will yield technically feasible or commercially viable products. Product development is subject to regulatory overview and approval at significant costs. Failure to introduce new products, or
failure or delays in obtaining regulatory approval could materially and adversely affect NOVADAQs business and financial condition.

NOVADAQs Business is Predicated on Licensed Technology

NOVADAQs business is predicated on licensed technology and IP. For example, the technology and IP rights that form the basis for the SPY System is
licensed from third parties which subjects NOVADAQ to certain risks that would not be present had NOVADAQ developed the technology and IP independently. Specifically, license agreements typically subject NOVADAQ to milestone obligations and royalty
payments. Some of these obligations may be substantial and may obligate the Company to obtain certain regulatory approvals by a specified date or exercise diligence in bringing potential products to market. The failure to meet these obligations
typically results in the termination of



28



---

the license and the loss of rights to the technology. Any such termination could adversely affect the Companys business and financial condition.

In addition, in many third party licenses, NOVADAQ has no control over the prosecution of patents and other IP rights underlying such licenses. As a result,
NOVADAQ is dependent on the licensor to diligently pursue and prosecute these IP rights. In such circumstance, the licensor may not have sufficient incentive to diligently pursue such protection. The failure of the licensor to diligently pursue such
protection could adversely affect the Companys business and financial condition.

Additionally, NOVADAQ typically only receives the benefit of IP
protection under these licenses in those jurisdictions where applications for protection are filed. As a result, the failure of the licensor to file applications for protection in all jurisdictions where the Company intends to conduct business could
undercut the ability of the Company to successfully carry on business in these jurisdictions. This could adversely affect the Companys business and financial condition.

Finally, many third party licenses of technology expire when the patents underlying the technology expire or at some period of time after expiration. As a
result, the ability of NOVADAQ to exploit and fully commercialize the technology over time may be limited. This may adversely affect the Companys business and financial condition.

Ability to Partner, Out-License, Fund Corporate Assets

The Company has multiple assets that are not in the primary focus of commercialization, such as those assets purchased from Xillix Technologies Corp.
(Xillix) for screening applications in gastrointestinal and lung cancers. The Companys ability to profit from these technologies is not guaranteed, and if NOVADAQ is unable to locate an appropriate partner, out-license or fund
these assets, the Companys business and financial condition may be adversely affected.

Potential Product Liability

Medical products involve an inherent risk of product liability claims and associated adverse publicity. NOVADAQ currently maintains liability insurance
coverage in the aggregate amount of $10,000,000. While the Company believes such insurance coverage to be adequate, there is no guarantee that future claims based on product liability will not exceed such amounts. In addition, should it prove
impossible to obtain this type of insurance at reasonable rates or to otherwise protect the Company against potential liability proceedings, NOVADAQ could be required to cease the commercialization of certain Products that it has developed or even
be prevented from beginning the commercialization of new products. The Companys obligation to pay indemnities or to withdraw a product following claims could adversely affect the Companys business and financial condition.

Foreign Exchange Fluctuations

The Company generates its
sales and reports its operations in U.S. dollars, but a portion of the Companys expenses are denominated in Canadian dollars. As such, the Company is exposed to fluctuations in the exchange rate between the U.S. dollar and the Canadian dollar
as a result of the translation into U.S. dollars of its expenses denominated in Canadian dollars.

A significant part of the Companys manufacturing
and home office operations is located in Canada, which results in purchases of approximately $19,619,000 annually. As the exchange rate between Canada and the U.S. becomes volatile, a strengthening in the Canadian currency can expose the Company to
an exchange loss while a strengthening in the U.S. currency can result in an exchange gain. For the twelve month reporting period ending December 31, 2014, the exchange rate commenced at $1.06 and closed at $1.16 favoring the U.S.
currency. The Company monitors the exchange rates and



29



---

manages its cash holdings to address the Companys Canadian currency spending requirements that are mainly period related. To minimize exchange exposure, the Company has the ability to
purchase futures contracts.

The Financial Reporting Obligations of Being a Public Company in the U.S. are Expensive and Time Consuming, and Place
Significant Additional Demands on Management

In connection with the listing of our common shares on the NASDAQ, the Company became subject to public
company reporting obligations in the U.S. The additional obligations of being a public company in the U.S. require significant additional expenditures and place additional demands on management. In accordance with the United States Jumpstart Our
Business Startup Act (JOBS Act) enacted on April 5, 2012, the Company previously qualified as an emerging growth company (EGC), which entitled the Company to take advantage of certain exemptions from various
reporting requirements that are applicable to other public companies that are not EGCs. As at June 30, 2014, the Companys market value of its common shares held by non-affiliates exceeded U.S.$700 million. As a result, the Company no
longer qualifies as an emerging growth company and is subject to the Section 404(b) of the Sarbanes-Oxley Act and requires an independent audit of the Companys internal controls over
financial reporting as of December 31, 2014.

As a Foreign Private Issuer, the Company is Subject to Different U.S. Securities Laws and Rules than
a Domestic U.S. Issuer, which may limit the Information Publicly Available to the Companys U.S. Shareholders

The Company is a foreign private
issuer under applicable U.S. federal securities laws, and therefore, it is not required to comply with all the periodic disclosure and current reporting requirements of the U.S. Exchange Act. As a result, the Company does not file the same reports
that a U.S. domestic issuer would file with the SEC, although the Company will be required to file with or furnish to the SEC the continuous disclosure documents that it is required to file in Canada under Canadian securities laws. In addition, the
Companys officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the U.S. Exchange Act. Therefore, the Companys
shareholders may not know on as timely a basis when the Companys officers, directors and principal shareholders purchase or sell common shares as the reporting periods under the corresponding Canadian insider reporting requirements are longer.
In addition, as a foreign private issuer, the Company is exempt from the proxy rules under the U.S. Exchange Act.

The Company may Lose its Foreign
Private Issuer Status in the Future, which Could Result in Significant Additional Costs and Expenses to the Company

In order to maintain its current
status as a foreign private issuer, non-residents of the U.S. must either directly or indirectly own a majority of the Companys common shares unless the Company also satisfies one of the additional requirements necessary to preserve this
status. The Company may in the future lose its foreign private issuer status if the majority of the Companys common shares are held in the U.S. and it fails to meet the additional requirements necessary to avoid loss of foreign private issuer
status. The regulatory and compliance costs to the Company under U.S. federal securities laws as a U.S. domestic issuer may be significantly more than the costs it incurs as a Canadian foreign private issuer eligible to use the multi-jurisdictional
disclosure system (MJDS). If the Company were not a foreign private issuer, it would not be eligible to use the MJDS or other foreign issuer forms and would be required to file periodic and current reports and registration statements on
U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. In addition, the Company may lose the ability to rely upon exemptions from NASDAQ corporate governance requirements
that are available to foreign private issuers.



30



---

|ITEM 5. | ACQUISITIONS
|------- | ------------

In May 2014, the Company completed the acquisition of Aïmago, a privately held
medical imaging company, founded in 2008 as a spin-off from EPFL, a Switzerland based academic and research institution. Under terms of the agreement, the Company paid to Aïmago shareholders, consideration of US$10,000,000, which included
US$6,500,000 in cash, plus US$3,500,000 in Novadaq common shares. The Company issued 201,845 common shares from treasury. If certain regulatory and commercial milestones are achieved in the future, NOVADAQ may also pay contingent consideration
totaling an additional US$2,400,000 which may be satisfied in cash or in NOVADAQ common shares at NOVADAQs option. Of the initial consideration of US$10,000,000, approximately US$357,000 was allocated to inventory, with the remainder allocated
to the patents. As part of the transaction, the Company incurred US$225,000 of legal and other incremental costs which have been included as part of the cost of the patents. The Company will record the additional contingent consideration of up to US
US$2,400,000 upon achievement of the specific milestones. The purpose of the acquisition was to obtain access to Aïmagos specialized perfusion imaging technology and to further develop the technology for commercial use. Aïmagos
lead product, the EasyLDI Perfusion Camera, is 510(k) cleared by the FDA and CE Marked for sale in Europe, The design of the device is tablet inspired, and is capable of point-and-shoot perfusion imaging at the surface of
the skin, without the need to administer any imaging agent to patients. EasyLDIs ability to rapidly visualize surface perfusion is expected to be optimal for screening and pre-diagnostic uses in multiple settings including doctors
offices where patients are assessed for wounds, burns and limb ischemia.

In August 2013, NOVADAQ acquired surgical scintigraphy imaging technology that
is being developed for perioperative imaging of sentinel lymph nodes and tumor margins. The Company acquired inventory and patents from Digirad related to the Trapper Surgical Imaging System for consideration of US$2,000,000 and up to an
additional US$1,000,000 upon the achievement of specific regulatory and commercial milestones. In addition, a royalty on sales will be paid for a period of five years from the date of the first commercial sale. Of the initial consideration,
approximately US$147,000 was allocated to inventory, with the remainder allocated to the patents. In addition, three other patents were acquired for US$664,853, resulting in total patent acquisition cost of US$2,517,267. All patents acquired are
expected to have finite useful lives varying from 13  21 are being and will be amortized using the straight-line method.

In February 2011, NOVADAQ
completed the purchases of the TMR business from PLC. The purchase consideration consisted of US$1,000,000 cash paid and the settlement of the Companys prepaid asset of US$586,740 stemming from the pre-existing relationship with PLC.



|ITEM 6. | INTELLECTUAL PROPERTY
|------- | ---------------------

NOVADAQs IP portfolio includes 56 active patent families representing 89
granted or allowed patents and 102 patent applications in various stages of prosecution. The majority of the Companys patents and patent applications relate to fluorescence imaging hardware, software and methods, and include embodiments for
both open and minimally invasive surgery. Six of the granted patents relate to TMR surgery.

The Company believes that the protection of its IP is an
essential element of its business, and the Company intends to continue its investment in the development of its IP portfolio. To broaden the Companys IP protection, further patent applications are being pursued in connection with technologies
relating to SPY imaging, other fluorescence imaging, non-fluorescence imaging, and non-imaging technologies. Examples of such applications include the imaging of blood flow and tissue perfusion for plastic and reconstructive surgery, cardiovascular
surgery, organ transplant and neurosurgery. The Company also owns intellectual property related to new fluorescence imaging agents, including a



31



---

proprietary nerve imaging agent. These new fluorescence imaging agents will be compatible with the growing installed base of NOVADAQs imaging systems.

The Company pursues a global IP strategy, securing patent protection in jurisdictions where it intends to carry on business, including the U.S., Canada,
Australia, Japan, major European markets and the emerging BRICK (Brazil, Russia, India, China and Korea) markets. The Company also relies upon trade secrets, know-how and other proprietary, confidential information for the protection of its IP.
The Company requires all employees, consultants, scientific advisors and other contractors to enter into confidentiality agreements to protect against the disclosure of such proprietary information.

In addition to developing its own IP portfolio, the Company has licensed and acquired IP rights from third parties through exclusive licenses, collaborative
research and asset purchase agreements. Under a license agreement with the National Research Council of Canada dated June 30, 2000, as amended, the Company acquired the worldwide exclusive license to technology incorporated into certain SPY
Imaging products. In 2006, the Company entered into an exclusive agreement with the University of Rochester Medical Center (URMC) to license a portfolio of patent applications in the field of intra-operative fluorescence guided imaging
in a variety of clinical applications including nerve sparing procedures and lymphatic imaging. The Company has since acquired certain of the patent rights from URMC. Under an asset purchase agreement entered into in 2007 with Xillix, the Company
acquired all of Xillixs intellectual property, which included a substantial portfolio relating to minimally invasive fluorescence imaging technology. In 2011, the Company acquired all IP assets related to equipment and methods for TMR surgery
from PLC. In 2014, pursuant to a share purchase agreement under which Aïmago became a wholly-owned subsidiary of NOVADAQ, the Company gained access to all the intellectual property of Aïmago, which relate to various laser Doppler and laser
speckle imaging technologies.



|ITEM 7. | HUMAN RESOURCES
|------- | ---------------

As of December 31, 2014, the Company employed approximately 215 employees,
including 5 members of senior management and 210 full-time employees. Approximately 116 employees are involved in sales and marketing activities, approximately 59 employees are engaged in research and development activities, approximately 23
employees are engaged in operational activities and approximately 12 employees are engaged in general and administrative activities. None of the Companys employees belong to or are represented by a labor union.



|ITEM 8. | FACILITIES
|------- | ----------

The Companys corporate head office is located in Mississauga, Ontario, Canada. The
corporate head office houses mainly administrative functions such as human resources and finance. All of the Companys research and development and manufacturing activities are carried out in its facility in Richmond, British Columbia. The
Company also leases premises in Taunton, MA to support its service operation.



|ITEM 9. | DIVIDENDS
|------- | ---------

As of the date of this Annual Information Form, the Company has not paid any dividends on its
common shares to date. The Companys current intention is to retain earnings to fund the development and growth of the Company, and therefore the Company does not anticipate declaring or paying any cash dividends in the near to medium term. The
Companys Board will determine if and when dividends should be paid in the future based on all relevant circumstances, including the desirability of financing further growth of the Company and the Companys financial position at the
relevant time.



32



---

|ITEM 10. | DESCRIPTION OF CAPITAL STRUCTURE
|-------- | --------------------------------

The authorized share capital of the Company is comprised of an
unlimited number of common shares and an unlimited number of preferred shares.

Common Shares

As at December 31, 2014, there were a total of 55,572,568 common shares issued and outstanding. The holders of the common shares are entitled to receive
notice of and to attend all annual and special meetings of the shareholders of the Company and to one vote in respect of each common share held at such meetings. The holders of the common shares will be entitled, at the discretion of the Board, to
receive out of any or all profits or surplus of the Company properly available for the payment of dividends, any dividend declared by the Board and payable by the Company on the common shares. The holders of the common shares will participate
ratably in any distribution of the assets of the Company upon the liquidation, dissolution or winding-up of the Company or other distribution of its assets among its shareholders for the purpose of winding-up its affairs.

Preferred Shares

As at December 31, 2014, there
were no preferred shares outstanding. The Company is authorized to issue an unlimited number of preferred shares, which may be issued from time to time in one or more series. The Board is authorized to fix the dividend rights and terms, conversion
rights, voting rights, redemption rights and terms, liquidation preferences and any other rights, preferences, privileges and restrictions applicable to each series of preferred shares.

Subject to any rights, privileges, restrictions and conditions that may have been determined by the Board of Directors to apply to any series of preferred
shares, the holders of preferred shares shall be entitled to receive notice of meetings of the shareholders pursuant to the by-laws of the Company, but shall have no right to be present at or vote either in person, or by proxy, at any of the general
meetings by virtue of or in respect of their holding of preferred shares (except where holders of a specified class or series of shares are entitled to vote separately as a class or series as provided in the Canada Business Corporations Act
or under applicable securities laws).

Subject to any rights, privileges, restrictions and conditions that may have been determined by the Board to apply
to any series of preferred shares or any restrictions in any of the Companys debt agreements:



| | a) | the directors shall have complete uncontrolled discretion to pay dividends on any class or classes of shares or any series within a class of shares issued and outstanding in any particular year to the exclusion of any
other class or classes of shares or any series within a class of shares out of any or all profits or surplus available for dividends;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | with respect to the payment of dividends and the distribution of assets or return of capital in the event of liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of the
preferred shares shall rank on a parity with the preferred shares of every other series and be entitled to a preference and priority over the common shares and over any other shares of the Company ranking junior to the preferred shares; and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | on winding-up, liquidation or dissolution of the Company or upon the happening of any other event giving rise to a distribution of assets other than
by way of dividend amongst the Companys shareholders for the purposes of winding-up its affairs, the holders of the preferred shares shall be entitled to receive, before any distribution of any part of the assets of the
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



33



---

| | Company among the holders of any other shares, for each preferred share, an amount equal to the redemption price of such share and any dividends declared thereon and unpaid and no more.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Stock Options and Warrants

As at
December 31, 2014, a total of 3,691,962 stock options were outstanding under the Companys employee stock option plan. The Company has issued 609,838 warrants in connection with the private placement of US$6,610,157, net of cash
transaction costs of US$511,180, in exchange for 3,049,205 units at a price of $2.43 per unit, completed in February 2010. Each warrant has a five-year term and is exercisable for one common share at an exercise price of $3.00. The Company also
issued 128,066 broker warrants as a part of the compensation payable to a placement agent. The broker warrants have a term of three (3) years and are exercisable at a price of $2.82. On March 24, 2011, the Company closed a private
placement of US$14,280,240, net of transaction costs of US$998,207, in exchange for 4,731,864 units at a price of $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 for one common share at an exercise price of $3.18.

As at December 31, 2014, there are 290,089 warrants
outstanding from the February 2010 issuance and 1,561,515 warrants outstanding from the March 2011 issuance. All broker warrants have been exercised as at December 31, 2014.

Since the conversion of such shareholder warrants issued in February 2010 and March 2011 are in a currency different than the Companys functional
currency, International Financial Reporting Standards require that they be classified on the consolidated statement of financial position of the Company as a financial liability based on their fair values and are re-measured at each reporting
period. Any changes in fair values are recognized through the consolidated statements of loss and comprehensive loss.



34



---

|ITEM 11. | MARKET FOR SECURITIES
|-------- | ---------------------



|11. 1 | Trading Price and Volume
|----- | ------------------------

The Companys common shares are listed and posted for trading on the TSX
the under symbol NDQ. The price ranges and trading volume of Companys common shares in 2014 on the TSX were as follows (share price is stated in Canadian dollars per common share):



|                |  |      |       |  |      |  |       |     |  |  |       |  |  |                |       |  |  |  |         | 
|--------------- |  | ---- | ----- |  | ---- |  | ----- | --- |  |  | ----- |  |  | -------------- | ----- |  |  |  | ------- | 
|Month           |  | Open |       |  | High |  |       | Low |  |  | Close |  |  | Volume (Total) |      
|                |  |      |       |  |     
|January, 2014   |  |      | 17.28 |  |      |  | 23.58 |     |  |  | 17.25 |  |  |                | 22.92 |  |  |  | 142,598 | 
|                |  |      |       |  |     
|February, 2014  |  |      | 22.68 |  |      |  | 23.82 |     |  |  | 19.48 |  |  |                | 22.52 |  |  |  | 100,176 | 
|                |  |      |       |  |     
|March, 2014     |  |      | 22.39 |  |      |  | 26.02 |     |  |  | 21.51 |  |  |                | 24.56 |  |  |  | 119,813 | 
|                |  |      |       |  |     
|April, 2014     |  |      | 24.67 |  |      |  | 27.39 |     |  |  | 16.80 |  |  |                | 17.05 |  |  |  | 72,765  | 
|                |  |      |       |  |     
|May, 2014       |  |      | 17.40 |  |      |  | 18.19 |     |  |  | 14.89 |  |  |                | 15.81 |  |  |  | 131,099 | 
|                |  |      |       |  |     
|June, 2014      |  |      | 15.72 |  |      |  | 17.91 |     |  |  | 14.88 |  |  |                | 17.68 |  |  |  | 80,442  | 
|                |  |      |       |  |     
|July, 2014      |  |      | 17.80 |  |      |  | 18.67 |     |  |  | 16.33 |  |  |                | 16.63 |  |  |  | 65,731  | 
|                |  |      |       |  |     
|August, 2014    |  |      | 16.63 |  |      |  | 16.75 |     |  |  | 13.00 |  |  |                | 14.22 |  |  |  | 98,753  | 
|                |  |      |       |  |     
|September, 2014 |  |      | 14.16 |  |      |  | 15.09 |     |  |  | 13.75 |  |  |                | 14.30 |  |  |  | 23,383  | 
|                |  |      |       |  |     
|October, 2014   |  |      | 14.07 |  |      |  | 18.25 |     |  |  | 11.68 |  |  |                | 17.60 |  |  |  | 125,627 | 
|                |  |      |       |  |     
|November, 2014  |  |      | 17.60 |  |      |  | 18.39 |     |  |  | 15.84 |  |  |                | 16.37 |  |  |  | 66,904  | 
|                |  |      |       |  |     
|December, 2014  |  |      | 16.18 |  |      |  | 20.98 |     |  |  | 14.50 |  |  |                | 19.32 |  |  |  | 79,855  | 



35



---

The Companys common shares are listed and posted for trading on the NASDAQ under the symbol
NVDQ. The price ranges and trading volume of Companys common shares in 2013 on the NASDAQ was as follows (share price is stated in U.S. dollars per common share):



|                |  |      |       |  |      |  |       |     |  |  |       |  |  |                |       |  |  |  |            | 
|--------------- |  | ---- | ----- |  | ---- |  | ----- | --- |  |  | ----- |  |  | -------------- | ----- |  |  |  | ---------- | 
|Month           |  | Open |       |  | High |  |       | Low |  |  | Close |  |  | Volume (Total) |      
|                |  |      |       |  |     
|January, 2014   |  |      | 16.27 |  |      |  | 21.31 |     |  |  | 16.01 |  |  |                | 20.49 |  |  |  | 10,485,865 | 
|                |  |      |       |  |     
|February, 2014  |  |      | 20.25 |  |      |  | 21.43 |     |  |  | 17.52 |  |  |                | 20.40 |  |  |  | 8,726,959  | 
|                |  |      |       |  |     
|March, 2014     |  |      | 20.28 |  |      |  | 23.27 |     |  |  | 19.68 |  |  |                | 22.28 |  |  |  | 6,481,812  | 
|                |  |      |       |  |     
|April, 2014     |  |      | 22.23 |  |      |  | 24.09 |     |  |  | 15.27 |  |  |                | 15.65 |  |  |  | 12,679,904 | 
|                |  |      |       |  |     
|May, 2014       |  |      | 15.58 |  |      |  | 16.75 |     |  |  | 13.61 |  |  |                | 14.57 |  |  |  | 11,251,877 | 
|                |  |      |       |  |     
|June, 2014      |  |      | 14.54 |  |      |  | 16.62 |     |  |  | 13.50 |  |  |                | 16.48 |  |  |  | 5,784,461  | 
|                |  |      |       |  |     
|July, 2014      |  |      | 16.58 |  |      |  | 17.64 |     |  |  | 15.25 |  |  |                | 15.34 |  |  |  | 5,732,480  | 
|                |  |      |       |  |     
|August, 2014    |  |      | 15.35 |  |      |  | 15.58 |     |  |  | 11.85 |  |  |                | 13.06 |  |  |  | 14,230,662 | 
|                |  |      |       |  |     
|September, 2014 |  |      | 13.03 |  |      |  | 13.85 |     |  |  | 12.25 |  |  |                | 12.69 |  |  |  | 4,821,981  | 
|                |  |      |       |  |     
|October, 2014   |  |      | 12.58 |  |      |  | 16.61 |     |  |  | 10.35 |  |  |                | 15.62 |  |  |  | 10,448,453 | 
|                |  |      |       |  |     
|November, 2014  |  |      | 15.90 |  |      |  | 16.24 |     |  |  | 13.97 |  |  |                | 14.35 |  |  |  | 6,639,818  | 
|                |  |      |       |  |     
|December, 2014  |  |      | 14.26 |  |      |  | 18.24 |     |  |  | 13.15 |  |  |                | 16.62 |  |  |  | 9,314,054  | 



|11. 2 | Prior Sales
|----- | -----------

The price and volume of securities of the Company not traded or quoted on a marketplace
issued for the most recently completed fiscal year is discussed above under Description of Capital Structure.



|ITEM 12. | DIRECTORS AND OFFICERS
|-------- | ----------------------



|12. 1 | Directors and Executive Officers
|----- | --------------------------------

The names, municipalities of residence, principal occupations and
positions with the Company of the directors and executive officers of the Company are set forth below. Directors of the Company serve as such until the next annual meeting of shareholders, or until their successors are elected or appointed.

To the knowledge of the Company, as of December 31, 2014 and based on the information provided by the directors and executive officers, the directors and
executive officers of the Company collectively beneficially own or exercise control or direction over, directly or indirectly, 2,053,514 common shares of the Company, which represents approximately 4% of the issued and outstanding common shares as
of December 31, 2014.



36



---

|                                                               |  |                                        |  |                                                      |  |                               
|-------------------------------------------------------------- |  | -------------------------------------- |  | ---------------------------------------------------- |  | ------------------------------
|Name and Municipality of
Residence                             |  | Position with the
Company              |  | Principal
Occupation                                 |  | Director Since/
Expiry of Term
|DR. ARUN MENAWAT Oakville, Ontario,
Canada                     |  | President and Chief Executive Officer  |  | President and Chief Executive Officer                |  | July 2003/ [X]                
|                                                               |  |                                        | 
|RICK MANGAT Aurora, Ontario                                    |  | Sr. Vice President and General Manager |  | Sr. Vice President and General Manager               |  | Not applicable                
|                                                               |  |                                        | 
|ROGER DECK(1)
Toronto, Ontario, Canada                         |  | Chief Financial Officer                |  | Chief Financial Officer                              |  | Not applicable                
|                                                               |  |                                        | 
|LORI SWALM Dallas, Texas, United
States                        |  | Vice-President of Marketing            |  | Vice-President of Marketing                          |  | Not applicable                
|                                                               |  |                                        | 
|AARON DAVIDSON(2) (3)
Caledon, Ontario, Canada                 |  | Director                               |  | Managing Director, H.I.G. Capital Management         |  | July 2004/ [X]                
|                                                               |  |                                        | 
|ANTHONY GRIFFITHS(3)(4)
Toronto, Ontario, Canada               |  | Chairman                               |  | Business Consultant and Corporate Director           |  | June 2002 /[X]                
|                                                               |  |                                        | 
|HAROLD O. KOCH, JR.(2)(4)
Mandeville, Louisiana, United States |  | Director                               |  | Corporate Director                                   |  | September 2003/ [X]           
|                                                               |  |                                        | 
|WILLIAM A. MACKINNON(2)(3)
Toronto, Ontario, Canada            |  | Director                               |  | Corporate Director                                   |  | May 2009/[X]                  
|                                                               |  |                                        | 
|PATRICE MERRIN Toronto, Ontario,
Canada                        |  | Director                               |  | Corporate Director                                   |  | March 2015/[X]                
|                                                               |  |                                        | 
|THOMAS WELLNER(4)
Toronto, Ontario, Canada                     |  | Director                               |  | President and Chief Financial Officer of Revera Inc. |  | May 2009/[X]                  
|                                                               |  |                                        | 
|ROBERT S. WHITE Plymouth, Minnesota, United
States             |  | Director                               |  | Corporate Director                                   |  | May 2009/[X]                  

Notes:



|(1) | Effective December 22, 2014, Mr. Purcell resigned as Chief Financial Officer and Mr. Deck, who was formerly the Corporations Vice President of Operations, became the Chief Financial Officer of the
Company.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Denotes member of the Audit Committee.
|--- | --------------------------------------

|(3) | Denotes members of the Compensation Committee.
|--- | ----------------------------------------------

|(4) | Denotes members of the Governance Committee.
|--- | --------------------------------------------



37



---

The following is a brief description of the backgrounds of the current directors and officers of the Company:

Arun Menawat. Dr. Menawat has been the President and Chief Executive Officer of NOVADAQ since April 2003. From 1999 to
2003, Dr. Menawat held increasing executive responsibilities including President and Chief Operating Officer of Cedara Software Corporation, a publicly traded medical imaging software company. Prior to joining Cedara, Dr. Menawat was Vice
President of Operations at Tenneco Inc., a diversified business conglomerate, now separated into multiple companies. He also served as business manager and research & development manager at Hercules Incorporated, a specialty chemicals
company. Dr. Menawat holds a B.S. in biology from the University of District of Columbia and an M.S. and Ph.D. in Chemical (Bio) Engineering from the University of Maryland and research in biomedical engineering at the National Institutes of
Health. He also holds an Executive MBA from the J.L. Kellogg School of Management, Northwestern University.

Rick Mangat.
Dr. Mangat co-founded NOVADAQ in April of 2000 and is a co-inventor of the SPY System. The research element of his PhD thesis (Pharmacology and Therapeutics), performed at the National Research Council of Canada (Institute for Biodiagnostics),
formed the foundation for SPY Imaging and related IP. Dr. Mangat has led the research, development and commercialization teams at NOVADAQ from bench-top through clinical use of the SPY System and is now responsible for the general management of
NOVADAQs commercial business unit including sales and marketing. Dr. Mangat received his Bachelor of Science from the University of Toronto and a PhD from the University of Manitoba.

Roger Deck. Mr. Deck has over 20 years of operational and financial experience. Prior to being Chief Financial Officer, he
was the Vice-President of Operations for NOVADAQ from June 2008 to December 2014. Mr. Deck previously served as the Chief Financial Officer of NOVADAQ from 2004 to June 2008. Mr. Deck served as Vice President, Financial Advisory Services
at PricewaterhouseCoopers LLP from 2001 to 2003. From 2000 to 2001, Mr. Deck worked with J.R./Janus Merchant Brokers Ltd., an independent mid-market M&A advisory firm. Prior to that role, Mr. Deck served as Vice President of Merchant
Banking at Brascan Corporation, starting in this position in 1996. Mr. Deck is a chartered accountant and holds a Bachelors degree in Economics from the University of Western Ontario.

Lori Swalm. Ms. Swalm joined NOVADAQ in 2004 as Director of Market Development then served from 2007 until 2010 as Director
of Reimbursement. In 2010, as Vice President of Product Development, Ms. Swalm established NOVADAQs research, development and manufacturing operations in British Columbia. From April of 2013 to December 2014, Ms. Swalm served as Vice
President of Regulatory Affairs and Health Policy. In January 2015, she became the Vice President of Marketing and assumed additional responsibilities for clinical affairs, product and corporate marketing. Prior to joining NOVADAQ,
Ms. Swalm founded a not-for-profit Medical Education and Clinical Research Organization and worked in medical device start-ups in the areas of clinical and outcomes research and marketing. Ms. Swalm earned her MA in Political
Science and Public Law at the University of Las Vegas, Nevada.

Aaron Davidson. Mr. Davidson is a Managing Director of
H.I.G. BioVentures and focuses on investment opportunities in the life sciences sector. Prior to joining H.I.G. in 2004, he was a Vice President with Ventures West with a focus on venture investing in life science companies. Mr. Davidson began
his career with Eli Lilly where he spent a decade with Eli Lilly in various management roles in the U.S. and Canada including business development, strategic planning, market research, and financial planning. Mr. Davidson currently serves on
the boards of Alder Biopharmaceuticals Inc., Cardeas Pharma, HyperBranch Medical Technology, Intact Vascular, NeurAxon Inc., and NOVADAQ. He served on the board of Salmedix and Gemin X Pharmaceuticals prior to their acquisitions by Cephalonin in
2005 and 2011, respectively, and on the board of Oncogenex Pharmaceuticals prior to its public



38



---

listing. Mr. Davidson earned his MBA from Harvard Business School and a Bachelor of Commerce degree from McGill University.

Anthony Griffiths. Mr. Griffiths is Chairman of the Board and is currently an independent business consultant and corporate
director. Mr. Griffiths became the Chairman of Mitel Corporation, a telecommunications company, in 1987, and also assumed the positions of President and Chief Executive Officer in addition to that of Chairman from 1991 to 1993.
Mr. Griffiths is also the Chairman of Russel Metals Inc., and a director of Fairfax Financial Holdings Limited.

Harold O.
Koch, Jr. For the past 38 years, Mr. Koch has held senior management positions in research and development, regulatory, and business development in the pharmaceutical and Class III medical device fields. Mr. Koch was the Executive
Vice President and Chief Scientific Officer of Pamlab (now Nestlé Health Science  Pamlab, Inc.), a developer, licensor and marketer of pharmaceutical products prior to his retirement in 2014. Prior to joining Pamlab, Mr. Koch held
senior management positions with Rorer Group, Cooper Companies, Akorn, Inc., Santen, Inc. and has consulted for various ophthalmic biotechnology companies. Mr. Koch holds three U.S. patents in ophthalmology, one of which is the leading
viscoelastic product in the U.S. (Viscoat), with annual sales in excess of US$100,000,000 and four pending applications. Mr. Koch holds a Bachelor of Science degree in medical microbiology from Texas A&M University and is an active member
of the Licensing Executives Society.

William A. Mackinnon.Mr. Mackinnon was Chief Executive Officer of KPMG Canada
from April 1999 until his retirement in December 2008. Mr. Mackinnon joined KPMG Canada in 1971, became a partner in 1977, the Toronto Managing Partner in 1988 and the Greater Toronto Managing Partner in 1992. He obtained the Fellow Chartered
Accountant designation from the Institute of Chartered Accountants of Ontario in 1994 and, during the period between 1999 and 2002, became a member of the board of directors of each of KPMG Canada, KPMG International and KPMG Americas. He is an
active volunteer and currently serves as a member of the board of The Toronto Community Foundation, St. Stephen Community House and Roy Thomson Hall. Mr. Mackinnon is also a director of Telus Corp., Pioneer Petroleum and the Public Service
Pension Investment Board. Mr. Mackinnon holds a Bachelor of Commerce from the University of Manitoba.

Patrice Merrin.Ms. Merrin is a corporate director and is currently a non-executive director of Glencore PLC and Stillwater Mining Company. Ms. Merrin was Chairman of the Board of CML HealthCare Inc., a leading provider of medical laboratory
testing services, from 2011 to 2013, having served as a director since 2008. She was a director of Ornge, the Province of Ontarios air ambulance and medical transport service, from 2012 to 2015. Ms. Merrin served as President, CEO and
Director of Luscar Ltd., then owned equally by Sherritt International Corporation and Ontario Teachers Pension Plan Board, from 2005 to 2006, prior to which she served as Executive Vice-President and Chief Operating Officer of Sherritt
International from 1999 to 2004. She is a member of the Leadership Council at Perimeter Institute for Theoretical Physics and co-chairs its Emmy Noether Circle which aims to support and fund women in physics and mathematical physics at Perimeter.
Ms. Merrin holds a BA from Queens University and completed the Advanced Management Programme at INSEAD.

Thomas
Wellner is the President and CEO of Revera Inc. (Revera), a leading provider of seniors accommodations, care, and services, with over 30,000 employees and 242 sites in operation across Canada and the United States.
Mr. Wellner is also involved with the holding company, WellCap Advisors Limited, providing strategic guidance to a number of clients and investing in healthcare and technology companies. Prior to his role at Revera, Mr. Wellner was co-CEO
of LifeLabs, Canadas largest laboratory services company. There, he headed the integration of CML HealthCare (CML) into the LifeLabs organization while leveraging the opportunity to enhance the delivery of diagnostic healthcare
services to Canadians, as well as business development functions of the newly combined organization. Further, Mr. Wellner was President and CEO of CML, and in that role, he led the



39



---

company through a transformational and strategic re-assessment, culminating in both the signing of a $1.2 billion transaction to crystalize $300,000,000 in shareholder value and the merger with
LifeLabs.

Mr. Wellner also spent 20 years with Eli Lilly and Company in a variety of senior operational and strategic leadership roles in Canada,
China, the United States, Latin America, Europe, and the United Kingdom, and worked with private equity on a startup as President and CEO of Therapure Biopharma, a privately held bio-manufacturing and drug development company. He currently serves on
the following boards: the Ontario Association of Medical Laboratories, DiaMedica (DMA-TSX), Cipher Pharma (DND-TSX), Freshbooks (private company), Atlantic Healthcare Plc (private company in the U.K.), and Life Sciences Ontario (LSO  Industry
Association). He is also on the Board of Governors of Rothesay Netherwood School, a private Atlantic Canadian boarding school, has served on the editorial committee for Pharmaceutical Marketing Europe (since November 2011), and has led business
cases at INSEAD and Harvard Business School. Mr. Wellner holds a Bachelor of Science with Honours in Life Sciences from Queens University.

Robert S. White is a medical technology industry veteran with over 25 years of leadership experience gained through numerous
positions with Medtronic, Instromedix-LifeWatch, ALARIS Medical Systems, Eli Lilly and General Electric. Mr. White most recently served as President and Chief Executive Officer of TYRX, a privately-held company commercializing innovative,
implantable combination drug/device products designed to reduce surgical site infections, until it was acquired by Medtronic earlier this year. Prior to joining TYRX, Mr. White served as President of Medtronic Kyphon following the U.S.$3.9
billion acquisition of the spinal treatment business. During his time with Medtronic, Mr. White also served as President of Physio Control, Vice President of Corporate Development, and Vice President of U.S. Sales and Global Marketing where he
was responsible for all commercial operations for the Medtronic Cardiac Rhythm Management business.

Mr. White began his career with General
Electric. In 1989, he joined Eli Lilly and through successive promotional opportunities became the International Marketing Manager for IVAC based in Europe for 3 years. At ALARIS Medical Systems, a $400 million infusion therapy company, his last
role was as Vice President, Corporate Development. He then became Founder and CEO of Liquid Borders, a healthcare software development company. At Instromedix-LifeWatch, which specializes in selling non-invasive cardiac monitoring solutions, he
served as President and CEO.

Mr. White holds an MBA from Cornell University and a BS degree in Aerospace Engineering from the University of
Missouri-Rolla.



|12. 2 | Cease Trade Orders, Bankruptcies, Penalties or Sanctions
|----- | --------------------------------------------------------

Mr. Griffiths was a director of
AbitibiBowater Inc. until June 2010. The company and certain of its U.S. and Canadian subsidiaries filed for protection in Canada under the CCAA and in the U.S. under Chapter 11 of the U.S. Bankruptcy Code in April 2009. On December 9, 2010 the
company emerged from creditor protection under the CCAA in Canada and Chapter 11 in the U.S.

Mr. Griffiths was formerly a director of PreMD Inc.
until February 2010, and, in connection with the voluntary delisting of the companys shares from the TSX, cease trade orders were issued in April 2009, requiring all trading in and all acquisitions of securities of the company to cease
permanently due to the companys failure to file continuous disclosure materials required by Ontario securities law. The cease trade orders are still in effect.

Other than as noted above, no director or executive officer of the Company is, or within the past ten years before the date of this Annual Information Form
has (i) been a director, chief executive officer or chief financial officer of a company that was subject to a cease trade order or similar order or an order that denied the company access to any exemption under securities legislation for a
period of more than



40



---

30 consecutive days; or (ii) been a director of a company that, while the nominee was acting in that capacity, made a proposal under legislation relating to bankruptcy or insolvency or was
subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, trustee or receiver manager appointed to hold its assets; or (iii) was subject to a cease trade order or similar order or an order that denied
the company access to any exemption under securities legislation for a period of more than 30 consecutive days that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and
which resulted from an event that occurred while that person was acting in that capacity.



|12. 3 | Conflicts of Interest
|----- | ---------------------

Certain directors and officers of the Company are also directors, officers and
shareholders of other companies that are similarly engaged in the research and development of medical products. Such associations may give rise to conflicts of interest from time to time. The directors of the Company are required by law to act
honestly and in good faith, with a view to the best interests of the Company and to disclose any interest they may have in any property or opportunity. If a conflict of interest arises at a meeting of the Board of Directors, any director in conflict
will disclose his or her interest and abstain from voting on such matter.

In the opinion of the Company, there are no existing or potential conflicts of
interests among the Company, its subsidiary, any directors or officers of the Company or its subsidiary, or other insiders of the Company at this time.



|ITEM 13. | LEGAL PROCEEDINGS
|-------- | -----------------

Management of the Company is not aware of any litigation outstanding, threatened or
pending as of the date hereof by or against the Company which would be material to the Companys financial condition or results of operations.



|ITEM 14. | INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
|-------- | ----------------------------------------------------------

No director, executive officer or
shareholder who beneficially owns, directly or indirectly, or exercises control or direction over more than 10% of the outstanding common shares or known associate or affiliate of any such person, has or had any material interest, direct or
indirect, in any transaction within the last three years or in any proposed transaction, that has materially affected or will materially affect the Company.



|ITEM 15. | TRANSFER AGENT AND REGISTRARS
|-------- | -----------------------------

The transfer agent and registrar for the common shares is Computershare
Investor Services Inc. at its principal offices in Toronto, Ontario. Computershare Trust Company, N.A. is the co-transfer agent for the common shares at its offices in Golden, Colorado.



|ITEM 16. | MATERIAL CONTRACTS
|-------- | ------------------

The only material contracts entered into by the Company within the past year, or
entered into before the most recently completely financial year but still in effect, other than in the ordinary course of business, are the following:



| | (a) | License Agreement with National Research Council of Canada referred to under Intellectual Property;
| | --- | -----------------------------------------------------------------------------------------------------



41



---

| | (b) | License, Development and Supply Agreements with Intuitive referred to under Narrative Description of the Business  Alliances and Partnerships;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Distribution Agreement with Maquet Cardiovascular LLC referred to under Three-Year History  Fiscal 2012 Highlights and Narrative Description of the Business  Alliances and
Partnerships;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Distribution Agreements with Swissray Asia and CHC Healthcare Group referred to under Three-Year History  Fiscal 2013 Highlights and Narrative Description of the Business  Alliances and
Partnerships;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | Partnership Agreement with Serena Group referred to under Three-Year History  Fiscal 2014 Highlights and Narrative Description of the Business  Alliances and Partnerships;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) | Distribution Agreement with Mizuho Medical Corporation referred to under Three-Year History  Fiscal 2014 Highlights and Narrative Description of the Business  Alliances and
Partnerships;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (g) | Distribution Agreement with KTPL referred to under Three-Year History  Fiscal 2014 Highlights and Narrative Description of the Business  Alliances and Partnerships; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (h) | Sales and Distribution Agreement with LifeNet Health referred to under Three-Year History  Fiscal 2014 Highlights and Narrative Description of the Business  Alliances and
Partnerships.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 17. | INTERESTS OF AUDITORS
|-------- | ---------------------

KPMG LLP, Chartered Professional Accountants, Licensed Public Accountants, was
appointed as the auditors of the Corporation effective March 31, 2014, following the resignation of the Companys former auditors Ernst & Young LLP, and audited the consolidated financial statements of the Company for the fiscal
year ended December 31, 2014.



|ITEM 18. | ADDITIONAL INFORMATION
|-------- | ----------------------

Additional information relating to the Company may be found on SEDAR at
www.sedar.com. You may read and download some of the documents the Company has filed with the SECs Electronic Data Gathering and Retrieval system at www.sec.gov.

Additional information, including directors and officers remuneration and indebtedness, principal holders of the Companys securities and
securities authorized for issuance under equity compensation plans, if applicable, will be contained in the Companys most recent Management Information Circular dated April 17, 2014.

Additional financial information is provided in the Consolidated Financial Statements and Managements Discussion and Analysis for the financial year
ended December 31, 2014.



42



---

APPENDIX A

AUDIT COMMITTEE INFORMATION



|1. | Audit Committee Charter
|-- | -----------------------

See Schedule I attached hereto.



|2. | Composition of the Audit Committee
|-- | ----------------------------------

The Audit Committee of the Company is currently comprised of
Mr. William Mackinnon, Mr. Harold Koch Jr. and Mr. Aaron Davidson. Each member of the Audit Committee is independent and financially literate within the meaning of Multilateral Instrument 52-110  Audit Committees.



|3. | Relevant Education and Experience
|-- | ---------------------------------

Mr. Mackinnon was Chief Executive Officer of KPMG Canada from
April, 1999 until his retirement in December, 2008. Mr. Mackinnon joined KPMG Canada in 1971, became a partner in 1977, the Toronto Managing Partner in 1988 and the Greater Toronto Managing Partner in 1992. He obtained the FCA designation from
the Institute of Chartered Accountants of Ontario in 1994 and, during the period between 1999 and 2002, became a member of the Board of Directors of each of KPMG Canada, KMPG International and KMPG Americas. He is an active volunteer and currently
serves as Chair of the Board of Directors and a member of the board of The Toronto Community Foundation and Roy Thomson Hall. Mr. Mackinnon is also a director of Telus Corp., of Pioneer Petroleum, of Osisko Mining Corporation and of the Public
Service Pension Investment Board. Mr. Mackinnon holds a Bachelor of Commerce from the University of Manitoba.

For the past 38 years Mr. Koch
has held senior management positions in research and development, regulatory, and business development in the pharmaceutical and Class III medical device fields. Mr. Koch was the Executive Vice President and Chief Scientific Officer at Pamlab
L.L.C., a developer, licensor and marketer of pharmaceutical products prior to his retirement in 2014. Prior to joining Pamlab, Mr. Koch held senior management positions with Rorer Group, Cooper Companies, Akorn, Inc., Santen, Inc. and has
consulted for various ophthalmic biotechnology companies. Mr. Koch holds three U.S. patents in ophthalmology, one of which is the leading viscoelastic product in the US (Viscoat), with annual sales in excess of US$100,000,000. Mr. Koch
holds a Bachelor of Science degree in medical microbiology from Texas A&M University and is an active member of the Licensing Executives Society.

Mr. Davidson is a Managing Director of H.I.G. BioVentures and focuses on investment opportunities in the life sciences sector. Prior to joining H.I.G. in
2004, he was a Vice President with Ventures West with a focus on venture investing in life science companies. Mr. Davidson began his career with Eli Lilly where he spent a decade with Eli Lilly in various management roles in the U.S. and Canada
including business development, strategic planning, market research, and financial planning. Mr. Davidson currently serves on the boards of Alder Biopharmaceuticals Inc., Cardeas Pharma, HyperBranch Medical Technology, Intact Vascular, NeurAxon
Inc., and NOVADAQ. He served on the board of Salmedix and Gemin X Pharmaceuticals prior to their acquisitions by Cephalonin in 2005 and 2011, respectively, and on the board of Oncogenex Pharmaceuticals prior to its public listing. Mr. Davidson
earned his MBA from Harvard Business School and a Bachelor of Commerce degree from McGill University.



43



---

The Audit Committee has delegated to Mr. Mackinnon the authority to approve non-audit services up to a
maximum amount of $25,000, unless Mr. Mackinnon is of the view that the provision by KPMG LLP of such non-audit services could potentially impair the independence of KPMG LLP as the Companys external auditor. Mr. Mackinnon is
required, under the terms of such delegation, to report to the Audit Committee with respect to any such pre-approvals at the first scheduled meeting of the Audit Committee following such pre-approval.



|4. | External Auditor Services
|-- | -------------------------

Audit Fees

KPMG LLP charged the Company $216,000 for audit services in from January 1, 2014 to December 31, 2014 and Ernst & Young LLP charged the
Company $277,500 for audit services in 2013.

Audit Related Fees

KPMG LLP charged the Company $71,500 for audit related services for the period from January 1, 2014 to December 31, 2014 and Ernst & Young
LLP charged the Company $268,350 for audit related services for the period from January 1, 2013 to December 31, 2013.

Tax Fees

KPMG LLP charged the Company $6,292 for tax services for the period of January 1, 2014 to December 31, 2014 and Ernst & Young LLP charged
the Company $52,000 for tax services for the period of January 1, 2014 to December 31, 2014, and $159,750 for tax services for the period between January 1, 2013 and December 31, 2013.

All Other Fees

KPMG LLP charged the Company nil for other
services for the period of January 1, 2014 to December 31, 2014 and Ernst & Young LLP charged the Company $2,000 for other services for the period of January 1, 2013 to December 31, 2013.



44



---

SCHEDULE I

AUDIT COMMITTEE CHARTER OF

NOVADAQ TECHNOLOGIES INC.



|Section 1 | PURPOSE
|--------- | -------

The Audit Committee is a committee of the Board of Directors (the Board) of NOVADAQ
Technologies Inc., and any subsidiaries from time to time, (the Company). The primary function of the Audit Committee is to assist the directors of the Company in fulfilling their applicable roles by:



| | (a) | recommending to the Board the external auditor to be nominated for the purpose of preparing or issuing an auditors report or performing other audit, review or attest services for the Company and the compensation
of such external auditor;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | directly overseeing the work of the external auditor engaged for the purpose of preparing or issuing an auditors report or performing other audit, review or attest services for the Company, including the
resolution of disagreements between management and the external auditor regarding financial reporting;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | pre-approving all non-audit services (or delegating such pre-approval if and to the extent permitted by law) to be provided to the Company by the Companys external auditor;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | satisfying themselves that adequate procedures are in place for the review of the Companys public disclosure of financial information, other than those described in (g) below, extracted or derived from its
financial statements, including periodically assessing the adequacy of such procedures;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls or auditing matters, and for the confidential, anonymous submission by
employees of the Company of concerns regarding questionable accounting or auditing matters;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) | reviewing and approving any proposed hiring of current or former partner or employee of the present and former auditor of the Company;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------



| | (g) | reviewing and approving the annual and interim financial statements, related Management Discussion and Analysis (MD&A), and other financial information provided by the Company to any governmental body or
the public; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (h) | monitoring compliance with the Companys Code of Ethics through the assistance of the Disclosure and Compliance Committee, which comprises the Chief Executive Officer, the Chief Financial Officer and a senior vice
president.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Audit Committee should primarily fulfill these roles by carrying out the activities enumerated in this Charter. However, it
is not the duty of the Committee to prepare financial statements, to plan or conduct audits, to determine that the financial statements are complete and accurate and are in accordance with Canadian generally accepted accounting principles, to
conduct investigations or to



45



---

assure compliance with laws and regulations or the Companys internal policies, procedures and controls, as these are the responsibility of management and in certain cases the external
auditor.



|Section 2 | COMPOSITION AND MEETINGS
|--------- | ------------------------

The Audit Committee should be comprised of a minimum of three
directors, such directors as are determined by the Board, each of whom shall be independent and financially literate, within the meaning of Multilateral Instrument 52-110 of the Canadian Securities Administrators. A majority of members must be
resident Canadians. All members of the Committee should have (or should gain within a reasonable period of time after appointment) a working familiarity with basic finance and accounting practices. Committee members may enhance their familiarity
with finance and accounting by participating in educational programs conducted by the Company or an outside consultant. Each member should have experience or education that provides for an understanding of the accounting principles used by the
Company to prepare its financial statements, an ability to assess the general application of such accounting principles in connection with the accounting for estimates, accruals and reserves, experience preparing, auditing, analyzing or evaluating
financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Companys financial statements
(or experience actively supervising one or more persons engaged in such activities) and an understanding of internal controls and procedures for financial reporting.

The members of the Committee shall be elected by the Board on an annual basis or until their successors shall be duly appointed. Unless a
Chair is elected by the full Board, the members of the Committee may designate a Chair by majority vote of the full Committee membership.

The members of the Audit Committee may be removed by the other members of the Board at any time. The Chair may be removed by the other members
of the Board or the Committee in consultation with the Board at any time.

The Committee should meet at least four times annually, or more
frequently as circumstances require. The Committee should meet within forty-five (45) days following the end of the first three financial quarters to review and discuss the unaudited financial results for the preceding quarter and the related
MD&A, and should meet within 90 days following the end of the fiscal year end to review and discuss the audited financial results for the preceding quarter and year and the related MD&A.

The Committee may ask members of Company management or others to attend meetings and provide pertinent information as necessary. For purposes
of performing their duties, members of the Committee shall have full access to all corporate information and any other information deemed appropriate by them, and shall be permitted to discuss such information and any other matters relating to the
financial position of the Company with senior employees, officers and the external auditor of the Company, and others as they consider appropriate.

In order to foster open communication, the Committee or its Chair should meet at least annually with management and the external auditor in
separate sessions to discuss any matters that the Committee or each of these groups believes should be discussed privately. In addition, the Committee or its Chair should meet with Company management quarterly in connection with the Companys
interim financial statements.

A quorum for the transaction of business at any meeting of the Committee shall be a majority of the number
of members of the Committee or such greater number as the Committee shall by resolution determine, provided that a majority thereof are resident Canadians.



46



---

Meetings of the Audit Committee shall be held from time to time and at such place as any member
of the Committee shall determine upon 48 hours of notice to each of its members. The notice period may be waived by all members of the Committee. Each of the Chairman of the Board, the external auditor, the President and Chief Executive Officer, the
Chief Financial Officer or the Secretary shall be entitled to request that any member of the Committee to call a meeting.



|Section 3 | ROLE
|--------- | ----

In addition to the matters described in Section 1, the Audit Committee should:



|(1) | Determine any desired agenda items.
|--- | -----------------------------------



|(2) | Review and recommend to the Board changes to this Charter, as considered appropriate from time to time.
|--- | -------------------------------------------------------------------------------------------------------



|(3) | Review the public disclosure regarding the Audit Committee required by Multilateral Instrument 52-110.
|--- | ------------------------------------------------------------------------------------------------------



|(4) | Summarize in the Companys annual report the Committees composition and activities, as required.
|--- | -------------------------------------------------------------------------------------------------



|(5) | Submit the minutes of all meetings of the Audit Committee to the Board upon request.
|--- | ------------------------------------------------------------------------------------

Documents/Reports
Review



|(6) | Review the Companys annual budgets, and annual and interim financial statements, including any certification, report, opinion or review rendered by the external auditor, and review related MD&A.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | Review other financial information provided to any governmental body or the public as they see fit.
|--- | ---------------------------------------------------------------------------------------------------



|(8) | Review and approve the Companys annual and interim earnings press releases before the Company publicly discloses this information.
|--- | -----------------------------------------------------------------------------------------------------------------------------------



|(9) | Seek to ensure that adequate procedures are in place for the review of the Companys public disclosure of financial information extracted or derived from the Companys financial statements and periodically
assess the adequacy of those procedures.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

External Auditor



|(10) | Recommend to the Board the selection of the external auditor, considering independence and effectiveness, and review the fees and other compensation to be paid to the external auditor. Instruct the external auditor that
its ultimate client is not management.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(11) | Monitor the relationship between management and the external auditor including reviewing any management letters or other reports of the external auditor and discussing any material differences of opinion between
management and the external auditor.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(12) | Review and discuss, on an annual basis, with the external auditor all significant relationships they have with the Company to determine their independence.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



47



---

|(13) | Review and approve requests for any material non-audit services or other engagement to be performed by the external auditor and be advised of any other material study undertaken by the external auditor at the request of
management that is beyond the scope of the audit engagement letter and related fees.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(14) | Review the performance of the external auditor and any proposed discharge of the external auditor when circumstances warrant.
|---- | -----------------------------------------------------------------------------------------------------------------------------



|(15) | Periodically consult with the external auditor out of the presence of management about significant risks or exposures, internal controls and other steps that management has taken to control such risks, and the fullness
and accuracy of the financial statements, including the adequacy of internal controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(16) | Communicate directly with the external auditor; and arrange for the external auditor to report directly to the Audit Committee.
|---- | -------------------------------------------------------------------------------------------------------------------------------



|(17) | Communicate directly with the external auditor and arrange for the external auditor to be available to the Committee and the full Board as needed.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------

Financial Reporting Processes



|(18) | Review the integrity of the financial reporting processes, both internal and external, in consultation with the external auditor as they see fit.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------



|(19) | Consider the external auditors judgments about the quality, transparency and appropriateness, not just the acceptability, of the Companys accounting principles and financial disclosure practices, as applied
in its financial reporting, including the degree of aggressiveness or conservatism of its accounting principles and underlying estimates, and whether those principles are common practices or are minority practices.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(20) | Review all material balance sheet issues, material contingent obligations (including those associated with material acquisitions or dispositions) and material related party transactions.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(21) | Consider proposed major changes to the Companys accounting principles and practices.
|---- | -------------------------------------------------------------------------------------

Reporting
Process



|(22) | If considered appropriate, establish separate systems of reporting to the Committee by each of management and the external auditor.
|---- | -----------------------------------------------------------------------------------------------------------------------------------



|(23) | Review the scope and plans of the external auditors audit and reviews. The Committee may authorize the external auditor to perform supplemental reviews or audits as the Committee may deem desirable.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(24) | Periodically consider the need for an internal audit function, if not present.
|---- | ------------------------------------------------------------------------------



|(25) | Following completion of the annual audit and quarterly reviews, review separately with each of management and the external auditor any significant changes to planned procedures, any difficulties encountered during the
course of the audit and, if applicable, reviews, including any restrictions on the scope of work or access to required information and the cooperation that the external auditor received during the course of the audit and, if applicable, reviews.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



48



---

|(26) | Review any significant disagreements among management and the external auditor in connection with the preparation of the financial statements.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------



|(27) | Where there are significant unsettled issues that do not affect the audited financial statements, the Committee shall seek to ensure that there is an agreed course of action leading to the resolution of such matters.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(28) | Review with the external auditor and management significant findings during the year and the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been
implemented. This review should be conducted at an appropriate time subsequent to implementation of changes or improvements, as decided by the Committee.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(29) | Review the system in place to seek to ensure that the financial statements, related MD&A and other financial information disseminated to governmental organizations and the public satisfy applicable requirements.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Risk Management



|(30) | Review program of risk assessment and steps taken to address significant risks or exposures of all types, including insurance coverage and tax compliance.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

General



|(31) | If considered appropriate, conduct or authorize investigations into any matters within the Committees scope of activities. The Committee is empowered to retain independent counsel, accountants and other
professionals to assist it in the conduct of any such investigation.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(32) | Perform any other activity as the Committee deems necessary or appropriate.
|---- | ---------------------------------------------------------------------------



|(33) | Notwithstanding the foregoing and subject to applicable law, the Committee shall not be responsible to prepare financial statements, to plan or conduct internal or external audits or to determine that the Companys
financial statements are complete and accurate and are in accordance with generally accepted accounting principles, as these are the responsibility of management and in certain cases the external auditor. Nothing contained in this Charter is
intended to require the Committee to ensure the Companys compliance with applicable laws or regulations.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(34) | The Committee is a committee of the Board of Directors and is not and shall not be deemed to be an agent of the Companys security holders for any purpose whatsoever. The Board of Directors may, from time to time,
permit departures from the terms hereof, either prospectively or retrospectively, and no provision contained herein is intended to give rise to civil liability to security holders of the Company or other liability whatsoever.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Section 4 | AUDIT COMMITTEE COMPLAINT PROCEDURES
|--------- | ------------------------------------

Submitting a Complaint



|(1) | Anyone may submit a complaint regarding conduct by the Company or its respective employees or agents (including its independent auditors) reasonably believed to involve questionable accounting, internal accounting
controls or auditing matters. The Chair of the Audit Committee should oversee the treatment of such complaints.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



49



---

Procedures



|(2) | The Chair of the Audit Committee is designated to receive and administer or supervise the administration of employee complaints.
|--- | --------------------------------------------------------------------------------------------------------------------------------



|(3) | In order to preserve anonymity when submitting a complaint regarding questionable accounting or auditing matters, the employee may submit a complaint to (the following confidential e-mail address (l) or to a
confidential mail box at l).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Investigation



|(4) | The Chair of the Audit Committee should review and investigate the complaint. Corrective action should be taken when and as warranted.
|--- | --------------------------------------------------------------------------------------------------------------------------------------

Confidentiality



|(5) | The identity of the complainant and the details of the investigation should be kept confidential throughout the investigatory process.
|--- | --------------------------------------------------------------------------------------------------------------------------------------

Records and Report

The
Chair of the Audit Committee should maintain a log of complaints, tracking their receipt, investigation, findings and resolution, and should prepare a summary report for the Audit Committee.



50