Novadaq Corp. Reports Third Quarter 2009 Financial Results

TORONTO, ONTARIO--(Marketwire - November 12, 2009) - Novadaq® Technologies Inc. (TSX: NDQ), a developer of real-time imaging systems for use in the operating room, today announced 2009 third quarter revenues of $1,723,000 compared to revenue of $3,311,000 in third quarter 2008. In accordance with corporate policy, a previously reported order in excess of $2,000,000 has not been recorded in sales due to cash not yet received.

Financial Results

As at September 30, 2009, the Company had cash and cash equivalents of $5,063,000. The Company’s cash used in operating activities was $3,117,000 in Q3-2009 compared to $3,430,000 in Q3-2008. Based on current cash utilization and the cash the Company expects to generate, the Company believes it has sufficient resources to support operations through the end of year 2010. Novadaq’s Q3-2009 net loss of $3,852,000 or $0.16 per share, compared to net loss of $4,066,000 or $0.17 per share in Q3-2008. Unless otherwise indicated, all dollar amounts expressed in this press release are United States (U.S.) dollars.

“Because SPY Imaging is a platform technology, this year has been more about finding and validating the most compelling applications and less about growing revenues in an unusually difficult market for new technologies. In particular, clinical data presented in October 2009 demonstrates the potential for SPY Imaging to substantially eliminate skin necrosis and other complications associated with breast reconstruction,” said Dr. Arun Menawat, Novadaq CEO and President. “As a result of the emerging data, we are now in discussions with five multinational corporations to pursue technology alliances that would allow us to leverage their strong sales and marketing capabilities. The latest data, and the potential for alliances, will be topics of the discussion during the analyst web conference call scheduled on November 12, 2009 at 10 am ET.”

Recently Reported Clinical Data

At the Annual Meeting of the American Society of Plastic Surgeons, Plastics 2009, held in Seattle in October, Glyn E. Jones, MD., Director of Reconstructive Surgery at the University of Illinois College of Medicine at Peoria, reported that when following the evidence provided by SPY Imaging, skin edge necrosis rates in non-smoking, skin sparing mastectomy patients was reduced from the 15% national average to 3%. Skin necrosis in TRAM flap breast reconstruction patients was also reduced from the average of 8%-10% to virtually 0%. Dr. Jones concluded that the information provided by SPY Imaging was highly accurate.

Additionally in October, at the 95th Annual American College of Surgeons Clinical Congress, Tom DeMeester, MD., Chairman of the Department of Surgery at the University of Southern California, School of Medicine, and his colleagues, presented the results of a study of 45 patients undergoing esophageal reconstruction following esophagectomy using a gastric pull-up conduit and involving SPY Imaging. Gastric pull-up conduits are frequently reported to be relatively ischemic at their tip. Results of the study demonstrated that SPY reduced the potential for anastomotic complications in gastric pull-up reconstruction by accurately identifying uneven conduit perfusion in 31% of patients and compromised perfusion requiring further resection in 18%.

Conference Call

Novadaq is pleased to invite all interested parties to participate in a webcast and conference call on November 12th at 10:00 a.m. Eastern Time during which the Q3 results and details of recently reported data from studies involving SPY Imaging will be discussed.

 To access the live webcast: Please login 5-10 minutes prior to the event start time. Go to website: http://www.investorcalendar.com/IC/CEPage.asp?ID=151467 Select “3rd Qtr. 2009 Financial Results”, fill in login information, and then click ‘OK’ A pop-up window will open to display the web conference To access the live conference call: Live Participant Dial-In (Toll Free): (877) 407-0778 Live Participant Dial-In (International): (201) 689-8565 Technical Support and Vcall System Requirements: For technical assistance while logging on, or during the conference, you may dial (i)0 if you are listening by telephone. If not listening by telephone, or if you require technical support prior to the conference, you may write to support@vcall.com or call: (North America):+1.866.490.5412 (International) + 1.302.824.7749. To review Vcall Interactive System Requirements please visit http://www.vcall.com/vcall/support/systemrequirements.aspx 

A telephonic replay of the conference call will be made available until midnight on 12/12/09 and can be accessed by dialing 1-877-660-6853 (within Canada and the United States) or 1-201-612-7415 (international callers) and entering the account number 286 and the conference identification number 336494 when prompted. The webcast will be archived for 365 days on the company’s website at http://www.novadaq.com under the “Events” tab in the Investors section. In addition, a replay of the call will be available for download to a portable audio player or computer, as an MP3 or podcast file, at the same location on Novadaq’s website.

About Novadaq Technologies Inc.

Novadaq develops and commercializes real-time imaging systems for use in the operating room. Novadaq’s SPY® Imaging System uniquely enables surgeons to visualize blood vessels, tumors, tumor margins, blood flow and the lymphatic system in real-time during surgery. This core technology is now being applied across multiple surgical markets such as cardiac, plastic and reconstructive, urological, general, micro and transplant. The PINPOINT™ System for endoscopic autofluorescence imaging is Novadaq’s first minimally invasive product. PINPOINT allows surgeons to differentiate between healthy and cancerous tissue in the lung and other hollow organs. To expand its portfolio of minimally invasive products, Novadaq developed SPY scope which combines the typical features of a standard endoscope with the capabilities of SPY Imaging. The ability to visualize tissue perfusion and flow through vessels, ducts and the lymphatic system adds another dimension to the images available to surgeons during endoscopic surgical procedures. Novadaq also leverages its core technology to offer the OPTTX® System, which is designed for the diagnosis, evaluation and treatment of wet Age-related Macular Degeneration (AMD). Novadaq is the exclusive United States distributor of PLC Medical’s CO2 HEART LASER™ System, which is used in the same cardiac procedures as the SPY Imaging System. For more information, please visit the company’s website at http://www.novadaq.com.

Forward-Looking Statements

Certain statements included in this press release may be considered forward-looking. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on Novadaq’s current beliefs as well as assumptions made by and information currently available to Novadaq and relate to, among other things, results of future clinical tests of PINPOINT, SPY scope and the SPY Imaging System, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance and future commitments. Business strategies, especially those involving arrangements with third parties, are subject to various risks and uncertainties and there can be no assurance that any such arrangements, whether joint venture, partnership or otherwise, will occur, or if they occur, as to the terms thereof. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by Novadaq in its public securities filings actual events may differ materially from current expectations. Novadaq disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 INTERIM CONSOLIDATED BALANCE SHEET (Unaudited) (expressed in U.S. dollars) As at As at September 30, December 31, 2009 2008 $ $ --------------------------- ASSETS Current Cash and cash equivalents 5,062,728 3,991,833 Accounts receivable 1,806,144 3,242,490 Prepaid expenses and other receivables 2,254,543 1,092,356 Inventory 1,039,687 1,186,878 --------------------------- Total current assets 10,163,102 9,513,557 --------------------------- Investments 150,000 200,000 Long-term receivables 43,006 - Property, plant and equipment, net 1,903,427 2,585,963 Prepaid expenses and other receivables 169,639 203,094 Deferred development costs 405,195 405,195 Intangible assets, net 8,873,031 9,797,772 --------------------------- 21,707,400 22,705,581 --------------------------- --------------------------- LIABILITIES AND SHAREHOLDERS’ EQUITY Current Accounts payable and accrued liabilities 3,335,040 3,311,389 Current portion of deferred revenue 3,748,553 772,805 --------------------------- Total current liabilities 7,083,593 4,084,194 --------------------------- Long-term debt 3,327,595 - Deferred revenue 273,700 308,850 --------------------------- Total liabilities 10,684,888 4,393,044 --------------------------- Shareholders’ equity Share capital 81,188,324 81,178,719 Contributed surplus 6,652,321 4,269,907 Deficit (76,818,133) (67,136,089) --------------------------- Total shareholders’ equity 11,022,512 18,312,537 --------------------------- 21,707,400 22,705,581 --------------------------- --------------------------- Novadaq Technologies Inc. INTERIM CONSOLIDATED STATEMENT OF LOSS AND COMPREHENSIVE LOSS AND DEFICIT (Unaudited) (expressed in U.S. dollars) Three-month period ended Nine-month period ended September 30 September 30 2009 2008 2009 2008 $ $ $ $ --------------------------------------------------- REVENUE Product sales 1,332,758 2,909,912 5,334,009 8,318,461 Service revenue 389,784 401,555 1,101,751 1,222,701 --------------------------------------------------- Total revenue 1,722,542 3,311,467 6,435,760 9,541,162 Cost of sales 1,078,948 1,587,806 3,556,418 4,681,125 --------------------------------------------------- Gross profit 643,594 1,723,661 2,879,342 4,860,037 --------------------------------------------------- OPERATING EXPENSES Sales and marketing 1,751,555 2,708,064 5,406,979 8,506,607 Research and development 965,346 1,511,777 2,771,625 4,457,442 General and administration 869,218 1,193,763 2,432,830 4,257,287 Depreciation 103,841 92,983 302,151 266,759 Amortization 308,247 308,247 924,740 924,741 Write-down of inventory 266,379 -- 266,379 -- Loss on foreign exchange 85,854 15,763 107,089 14,430 --------------------------------------------------- Total operating expenses 4,350,440 5,830,597 12,211,793 18,427,266 --------------------------------------------------- Loss before the following: (3,706,846) (4,106,936) (9,332,451) (13,567,229) --------------------------------------------------- Interest expense (67,425) -- (162,894) -- Imputed interest expense (81,578) -- (196,579) -- Gain on investments -- 5,000 -- 30,000 Interest income 3,549 36,286 9,880 261,438 --------------------------------------------------- Net loss and comprehensive loss for the period (3,852,300) (4,065,650) (9,682,044) (13,275,791) --------------------------------------------------- Deficit, beginning of period (72,965,833) (59,546,797) (67,136,089) (50,336,656) --------------------------------------------------- Deficit, end of period (76,818,133) (63,612,447) (76,818,133) (63,612,447) --------------------------------------------------- --------------------------------------------------- Basic and fully diluted loss per share (.16) (.17) (.39) (.54) --------------------------------------------------- --------------------------------------------------- Novadaq Technologies Inc. INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (expressed in U.S. dollars) Three-month period ended Nine-month period ended September 30 September 30 2009 2008 2009 2008 $ $ $ $ --------------------------------------------------- OPERATING ACTIVITIES Net loss for the period (3,852,300) (4,065,650) (9,682,044) (13,275,791) Add (deduct) items not involving cash Depreciation and amortization 589,704 594,489 1,767,534 1,787,509 Inventory write-down 266,379 -- 266,379 -- Imputed interest expense 81,578 -- 196,579 -- Gain on redemption of long-term investment -- (5,000) -- (30,000) Stock-based compensation 203,591 228,675 455,637 808,141 --------------------------------------------------- (2,711,048) (3,247,486) (6,995,915) (10,710,141) Net change in non-cash working capital balances related to operations (406,048) (182,653) 3,147,761 1,500,443 --------------------------------------------------- Cash used in operating activities (3,117,096) (3,430,139) (3,848,154) (9,209,698) --------------------------------------------------- FINANCING ACTIVITIES Issuance of convertible debentures, net of transaction costs -- -- 5,062,409 -- Issuance of common shares, net 4,989 -- 4,989 34,735 --------------------------------------------------- Cash provided by financing activities 4,989 -- 5,067,398 34,735 --------------------------------------------------- INVESTING ACTIVITIES Purchase of property, plant, and equipment (30,303) (56,836) (160,257) (966,534) Purchase of TMR business -- -- -- (2,089,284) Redemption of long-term investment -- 50,000 50,000 300,000 Sale (purchase) of short- term investments, net 699,304 1,026,741 -- 8,941,811 --------------------------------------------------- Cash (used in) provided by investing activities 669,001 1,019,905 (110,257) 6,185,993 --------------------------------------------------- Foreign exchange income (loss) on cash held in foreign currency (23,869) 13,032 (38,092) 15,814 --------------------------------------------------- Net increase (decrease) in cash and cash equivalents during the period (2,466,975) (2,397,202) 1,070,895 (2,973,156) Cash and cash equivalents, beginning of period 7,529,703 6,841,975 3,991,833 7,417,929 --------------------------------------------------- Cash and cash equivalents, end of period 5,062,728 4,444,773 5,062,728 4,444,773 --------------------------------------------------- ---------------------------------------------------