<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                                   FORM 10-Q

(Mark One)
[x]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

     For the quarterly period ended September 30, 1999
                                    ------------------

   or

[_]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of   1934

     For the transition period from __________ to __________

                      Commission file number:  000-21001
                                               ---------

                               NMT Medical, Inc.
                               -----------------
            (Exact Name of Registrant as Specified in Its Charter)

           Delaware                                     95-4090463
           --------                                     ----------
(State or Other Jurisdiction of                      (I.R.S. Employer
Incorporation or Organization)                      Identification No.)

27 Wormwood Street, Boston, Massachusetts                    02210
-----------------------------------------                   --------
(Address of Principal Executive Offices)                   (Zip Code)

                                 617-737-0930
                                 ------------
             (Registrant's Telephone Number, Including Area Code)

                                Not Applicable
                                --------------
             (Former Name, Former Address and Former Fiscal Year,
                         if Changed Since Last Report)

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes x   No
                                               ---    ---

     As of November 5, 1999, there were 10,783,278 shares of Common Stock, $.001
par value per share, outstanding.
<PAGE>

                               NMT Medical, Inc.

                                     INDEX
                                     -----


<TABLE>
<CAPTION>
                                                                     Page Number
                                                                     -----------
Part I.   Financial Information
          ---------------------
<S>           <C>                                                          <C>
     Item 1.   Financial Statements.

               Consolidated Balance Sheets at September 30, 1999
               and December 31, 1998                                         3

               Consolidated Statements of Operations for the Three
               Months Ended September 30, 1999 and 1998 and for the
               Nine Months Ended September 30, 1999 and 1998                 4

               Consolidated Statements of Cash Flows for the Nine
               Months Ended September 30, 1999 and 1998                      5

               Notes to Consolidated Financial Statements                    6

     Item 2.   Management's Discussion and Analysis of Financial
               Condition and Results of Operations.                         17

     Item 3.   Quantitative and Qualitative Disclosures about
               Market Risk.                                                 27


Part II.       Other Information
               -----------------

     Item 2.   Changes in Securities and Use of Proceeds.                   28

     Item 3.   Defaults Upon Senior Securities.                             28

     Item 6.   Exhibits and Reports on Form 8-K.                            28

Signatures                                                                  30

</TABLE>

                                       2
<PAGE>

Part I -- Financial Information
Item 1.   Financial Statements

NMT Medical, Inc. (formerly Nitinol Medical Technologies, Inc.) and Subsidiaries
                          Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                                            At                At
                                                                                        September 30,    December 31,
                                                                                           1999             1998
                                                                                      -------------------------------
                                                                                       (Unaudited)
<S>                                                                                  <C>               <C>
                     Assets
Current assets:
                 Cash and cash equivalents                                             $  1,259,924     $  4,007,014
                 Marketable securities                                                            -        5,113,537
                 Accounts receivable, net of allowances for doubtful accounts
                     of $994,000 and $946,000 as of September 30, 1999 and
                     December 31, 1998, respectively                                     11,247,350       11,785,861
                 Inventories                                                             11,158,237       10,848,432
                 Prepaid expenses and other current assets                                3,779,848        3,516,610
                                                                                      -------------------------------
                                 Total current assets                                    27,445,359       35,271,454
                                                                                      -------------------------------

Property, plant and equipment, at cost:
                 Land and Buildings                                                       4,650,000        4,650,000
                 Laboratory and computer equipment                                        2,848,715        2,621,211
                 Office furniture and equipment                                           2,888,146        2,299,589
                 Leasehold improvements                                                   4,222,856        4,429,235
                 Equipment under capital lease                                            1,322,982        1,144,982
                                                                                      -------------------------------
                                                                                         15,932,699       15,145,017
                 Less- Accumulated depreciation and amortization                          3,219,373        1,961,869
                                                                                      -------------------------------
                                                                                         12,713,326       13,183,148
                                                                                      -------------------------------

Long-term investments in marketable securities                                                    -        1,009,401

Notes receivable from Image Technologies Corporation                                              -        1,600,898

Goodwill and other intangible assets, net                                                13,038,833       13,478,010

Other assets                                                                              1,188,851        1,640,218
                                                                                      -------------------------------
                                                                                       $ 54,386,369     $ 66,183,129
                                                                                      ===============================

                 Liabilities and Stockholders' Equity
Current Liabilities:
                 Accounts payable                                                      $  4,820,286     $  6,619,190
                 Accrued expenses                                                         5,785,359        5,219,500
                 Current portion of debt obligations                                        445,787          386,248
                                                                                      -------------------------------
                                 Total current liabilities                               11,051,432       12,224,938
                                                                                      -------------------------------

Long-term debt obligations, net of current portion                                       13,411,597       17,798,743
Deferred tax liability                                                                    1,917,708        1,990,808

Stockholders' equity
     Preferred stock, $.001 par value-
                 Authorized-3,000,000 shares
                 Issued and outstanding-none                                                      -                -
     Common stock, $.001 par value-
                 Authorized-30,000,000 shares
                 Issued and outstanding-10,769,239 and 10,680,117 shares
                 at September 30, 1999 and December 31,1998, respectively                    10,770           10,681
      Addditional paid-in capital                                                        41,184,487       40,999,277
      Cumulative translation adjustment                                                    (139,000)         687,000
      Accumulated deficit                                                               (13,050,625)      (7,528,318)
                                                                                      -------------------------------
                       Total stockholders' equity                                        28,005,632       34,168,640
                                                                                      -------------------------------
                                                                                       $ 54,386,369     $ 66,183,129
                                                                                      ===============================

</TABLE>

 The accompanying Notes are an integral part of these Consolidated Financial
 Statements.

                                       3
<PAGE>

NMT Medical, Inc. (formerly Nitinol Medical Technologies, Inc.) and Subsidiaries
                     Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                For the Three Months Ended        For the Nine Months Ended
                                                                       September 30,                     September 30,
                                                                  1999            1998              1999             1998
                                                              -----------------------------     ------------------------------
<S>                                                         <C>              <C>               <C>              <C>
Revenues:
     Product sales                                            $ 11,948,630    $ 11,920,173      $ 34,365,725     $ 17,445,695
     License fees                                                  777,000         296,558         1,645,938        1,523,810
                                                              -----------------------------     ------------------------------
                                                                12,725,630      12,216,731        36,011,663       18,969,505
                                                              -----------------------------     ------------------------------
Expenses:
     Cost of product sales                                       4,899,845       5,024,891        14,253,660        7,139,029
     Research and development                                    1,375,464       1,120,353         3,789,134        2,792,718
     General and administrative                                  3,167,872       2,234,606         9,053,233        3,547,956
     Selling and marketing                                       2,853,700       2,748,310         8,079,768        3,473,668
     In-process research and development                                 -       4,710,000                 -        4,710,000
     Merger and integration                                              -         687,242                 -          687,242
     Write down of notes receivable from Image
        Technologies Corporation                                 1,364,369               -         1,364,369                -
                                                              -----------------------------     ------------------------------
                                                                13,661,250      16,525,402        36,540,164       22,350,613
                                                              -----------------------------     ------------------------------
                 Income (loss) from operations                    (935,620)     (4,308,671)         (528,501)      (3,381,108)
                                                              -----------------------------     ------------------------------

Equity in net loss of Image Technologies Corporation              (188,979)       (154,614)         (488,529)        (247,951)
Currency transaction gain (loss)                                  (220,902)        (18,939)            6,142          (88,403)
Interest expense                                                  (687,193)       (658,973)       (2,257,714)        (689,528)
Interest income                                                    108,462         155,109           458,623          946,485
                                                              -----------------------------     ------------------------------
                                                                  (988,612)       (677,417)       (2,281,478)         (79,397)
                                                              -----------------------------     ------------------------------

                 Loss before provision (benefit)
                    for income taxes                            (1,924,232)     (4,986,088)       (2,809,979)      (3,460,505)

Provision (benefit) for income taxes                               127,300         (38,313)           93,900          512,187
                                                              -----------------------------     ------------------------------

                 Loss before extraordinary loss
                    on early extinguishment of  debt            (2,051,532)     (4,947,775)       (2,903,879)      (3,972,692)

Extraordinary loss on early extinguishment of debt              (2,618,428)              -        (2,618,428)               -
                                                              -----------------------------     ------------------------------

     Net loss                                                 $ (4,669,960)   $ (4,947,775)      $(5,522,307)     $(3,972,692)
                                                              =============================     ==============================

Basic and diluted loss per common share before
     extraordinary loss on early extinguishment of debt       $      (0.19)   $      (0.47)      $     (0.27)     $     (0.40)
                                                              =============================     ==============================

Basic and diluted loss per common share for
     extraordinary loss on early extinguishment of debt       $      (0.24)   $          -       $     (0.24)     $         -
                                                              =============================     ==============================

Basic and diluted net loss per common share                   $      (0.43)   $      (0.47)      $     (0.52)     $     (0.40)
                                                              =============================     ==============================

Basic and diluted weighted average common shares
                   outstanding                                  10,769,239      10,464,675        10,710,234       10,041,041
                                                              =============================     ==============================

</TABLE>

 The accompanying Notes are an integral part of these Consolidated Financial
 Statements.

                                       4
<PAGE>

NMT Medical, Inc. (formerly Nitinol Medical Technologies, Inc.) and Subsidiaries
                     Consolidated Statements of Cash Flows
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                                                                    For the Nine Months Ended
                                                                                                          September 30,
                                                                                                      1999              1998
                                                                                             -----------------------------------
<S>                                                                                            <C>                  <C>
Cash flows from operating activities:
     Net loss                                                                                     $(5,522,307)       (3,972,692)
     Adjustments to reconcile net loss to net cash
     used in operating activities-
                 In-process research and development                                                        -         4,710,000
                 Acceleration of stock options                                                              -            11,679
                 Equity in net loss of Image Technologies Corporation                                 488,259           247,951
                 Write down of notes receivable from
                   Image Technologies Corporation                                                   1,364,369                 -
                 Depreciation and amortization                                                      1,777,615           780,872
                 Deferred tax benefit                                                                (390,000)                -
                 Noncash tax provision                                                                330,000                 -
                 Noncash interest expense                                                             504,722           178,785
                 Noncash interest expense related to early extinguishment of debt                   2,358,940
                 Increase (decrease) in accounts receivables reserves                                (489,109)                -
                 Changes in assets and liabilities-                                                                           -
                                Accounts receivable                                                 1,808,866        (8,663,892)
                                Inventories                                                          (408,567)          416,260
                                Prepaid expenses and other current assets                             (52,386)       (1,193,929)
                                Accounts payable                                                   (2,626,422)        6,078,947
                                Accrued expenses                                                      652,857           274,004
                                Deferred revenue                                                            -          (300,000)
                                                                                             -----------------------------------
                                    Net cash used in operating activities                            (202,893)       (1,432,015)
                                                                                             -----------------------------------

Cash flows from investing activities:
     Maturities of marketable securities                                                            6,135,921        14,920,848
     Purchases of property, plant and equipment                                                    (1,204,157)         (551,004)
     Increase in investment in Image Technologies Corporation, net                                    (62,000)       (1,247,800)
     Increase in other assets                                                                        (540,032)         (971,871)
     Acquisition of Elekta Neurosurgical Instruments, net of cash acquired                                  -       (33,193,714)
                                                                                             -----------------------------------
                                    Net cash provided by (used in) investing activities             4,329,732       (21,043,541)
                                                                                             -----------------------------------

Cash flows from financing activities:
     Payments of capital lease obligations                                                           (162,435)         (135,454)
     Proceeds from issuance of common stock                                                           135,299         4,178,492
     Payments of senior debt                                                                         (132,000)          (17,592)
     (Payments of) borrowings under subordinated debt, net                                        (14,000,000)       16,744,999
     Borrowings under senior secured debt, net                                                      7,504,881                 -
                                                                                             -----------------------------------
                                    Net cash provided by (used in) financing activities            (6,654,255)       20,770,445
                                                                                             -----------------------------------

Effect of exchange rate changes on cash                                                              (219,674)          267,032
                                                                                             -----------------------------------

Net decrease in cash and cash equivalents                                                          (2,747,090)       (1,438,079)
Cash and cash equivalents, beginning of period                                                      4,007,014         5,561,445
                                                                                             -----------------------------------
Cash and cash equivalents, end of period                                                          $ 1,259,924       $ 4,123,366
                                                                                             ===================================
Supplemental disclosure of cash flow information:
     Cash paid during the period for-
                 Interest                                                                         $ 1,705,955       $   689,528
                                                                                             ===================================
                 Taxes                                                                            $   121,148       $   528,324
                                                                                             ===================================

Noncash investing and financing activities:
     Issuance of warrants in connection with debt waiver                                          $    50,000       $         -
                                                                                             ===================================
     Equipment under capital lease obligation                                                     $    22,988       $    58,538
                                                                                             ===================================
     Acquisition of Elekta Neurosurgical Instruments:
                 Fair value of assets acquired                                                              -        32,691,000
                 Goodwill and intangible assets                                                             -        10,081,714
                 In-process research and development                                                        -         4,710,000
                 Liabilities assumed                                                                        -       (12,096,000)
                 Cash acquired                                                                              -        (2,193,000)
                                                                                             -----------------------------------
                                                                                                            -        33,193,714
                                                                                             ===================================
</TABLE>
 The accompanying Notes are an integral part of these Consolidated Financial
 Statements.

                                       5
<PAGE>

NMT MEDICAL, INC. (FORMERLY NITINOL MEDICAL TECHNOLOGIES, INC.) AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Operations

     NMT Medical, Inc. (formerly Nitinol Medical Technologies, Inc.) (the
     Company) designs, develops and markets innovative medical devices that
     utilize advanced technologies and are delivered by minimally invasive
     procedures. The Company's products are designed to offer alternative
     approaches to existing complex treatments, thereby reducing patient trauma,
     shortening procedure, hospitalization and recovery times and lowering
     overall treatment costs. The Company's patented medical devices include
     self-expanding stents, vena cava filters and septal repair devices (the
     CardioSeal Septal Occluder). The Company's stents have been commercially
     launched in Europe and in the United States for certain indications, its
     vena cava filters are marketed in the U.S. and abroad and the CardioSEAL
     Septal Occluder is in the clinical trials stage in the U.S. and is sold
     commercially in the U.S. for certain humanitarian uses only, and in Europe
     and other international markets. As a result of the Company's acquisition
     on July 8, 1998 of Elekta Neurosurgical Instruments (ENI), the
     neurosurgical instruments business of Elekta AB (PUBL), a Swedish
     corporation (Elekta AB), which the Company operates through its NMT
     Neurosciences division, the Company develops, manufactures, markets, and
     sells specialty implants and instruments for neurosurgery including
     cerebral spinal fluid shunts, the Selector Ultrasonic Aspirator, Ruggles
     Surgical Instruments, the Spetzler Titanium Aneurysm Clip and endoscopes
     and instrumentation for minimally invasive surgery.

     As of September 30, 1999, the Company was not in compliance with certain of
     the debt covenants contained in both the subordinated note agreement and
     the senior secured debt agreement discussed in Note 4. The Company
     negotiated a waiver of default with each of these debtholders.

2.   Interim Financial Statements

     The accompanying Consolidated Financial Statements as of September 30, 1999
     and for the three and nine month periods then ended are unaudited. In
     management's opinion, these unaudited Consolidated Financial Statements
     have been prepared on the same basis as the audited Consolidated Financial
     Statements included in the Company's Annual Report on Form 10-K for the
     year ended December 31, 1998, as filed with the Securities and Exchange
     Commission on April 15, 1999, and include all adjustments, consisting of
     only normal recurring adjustments, necessary for a fair presentation of the
     results for such interim periods.

                                       6
<PAGE>

NMT MEDICAL, INC. (FORMERLY NITINOL MEDICAL TECHNOLOGIES, INC.) AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


2.   Interim Financial Statements--(continued)

     The results of operations for the three and nine month periods ended
     September 30, 1999 are not necessarily indicative of the results expected
     for the fiscal year ending December 31, 1999.

3.   Acquisition of Elekta Neurosurgical Instruments

     On July 8, 1998, the Company acquired ENI and financed this transaction
     with $13 million of the Company's cash, plus acquisition costs of $3.1
     million, and $20 million of subordinated debt borrowed from an affiliate of
     a significant stockholder of the Company (see Note 4).

     The following table presents selected unaudited financial information of
     the Company and the neurosurgical division of Elekta AB, assuming the
     companies combined on January 1, 1998. The unaudited pro forma results are
     not necessarily indicative of either the actual results that would have
     occurred had the acquisition been consummated on January 1, 1998, or of
     future results:

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,              1999                   1998
                                             ---------------------  --------------------
                                                   (Actual)             (Pro forma)
<S>                                          <C>                    <C>
     Net revenues                                     $36,011,663           $35,789,000
                                                      ===========           ===========
     Net loss                                         $(5,522,307)          $(6,843,000)
                                                      ===========           ===========
     Basic and diluted weighted
          average shares outstanding                   10,710,234            10,716,041
                                                      ===========           ===========
     Basic and diluted net loss per share             $      (.52)          $      (.64)
                                                      ===========           ===========
</TABLE>

4.   Debt

     (a)  Subordinated Note Payable

     The Company financed a significant portion of the acquisition of ENI (see
     Note 3) with $20 million of subordinated debt borrowed from an affiliate of
     a significant stockholder of the Company. The subordinated debt is due
     September 30, 2003 with quarterly interest payable at 10.101% per annum and
     is subject to certain covenants, as amended.

                                       7
<PAGE>

NMT MEDICAL, INC. (FORMERLY NITINOL MEDICAL TECHNOLOGIES, INC.) AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


4.   Debt

     (a)  Subordinated Note Payable--(continued)

     On September 13, 1999, the Company entered into a $10 million senior
     secured debt facility with a bank (See Note 4(b)), $8 million of the
     proceeds of which was used to reduce the principal amount of the
     subordinated note. The Company also used $6 million of its own cash to
     further reduce the principal amount of this note. As of September 30, 1999,
     the Company was not in compliance with certain of the debt covenants of the
     subordinated note and has obtained a waiver of default from the holder of
     the note. In conjunction with this transaction, the Company recorded a $2.6
     million extraordinary loss on the early extinguishment of debt in the
     accompanying statement of operations which primarily relates to the
     accelerated pro-rata write-off of the original issue discount and deferred
     financing costs of the subordinated note payable.

     (b)  Senior Secured Debt

     On September 13, 1999, the Company entered into a $10 million senior
     secured debt facility with a bank, $8 million of the proceeds of which was
     used to reduce the principal amount of the Company's subordinated note
     payable (See Note 4(a)). The remaining $2 million of the senior secured
     debt facility is available to be drawn down by the Company for working
     capital purposes, as needed. The facility has a term of three years with
     interest payable monthly at the bank's prime lending rate on U.S.
     borrowings and an equivalent market rate on foreign currency borrowings. As
     of September 30, 1999, the Company had outstanding borrowings of $7.5
     million under this facility. As of September 30, 1999, the Company was not
     in compliance with certain of the debt covenants of the secured debt
     facility and has obtained a waiver of default from the bank.

5.   Reclassifications

     Certain prior period amounts have been reclassified to conform to the
     current period's presentation.

                                       8
<PAGE>

NMT MEDICAL, INC. (FORMERLY NITINOL MEDICAL TECHNOLOGIES, INC.) AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


6.   Cash and Cash Equivalents, Marketable Securities, and Long-Term Investments
     in Marketable Securities

     The Company considers all investments with maturities of 90 days or less
     from the date of purchase to be cash equivalents and all investments with
     original maturity dates greater than 90 days to be marketable securities.
     Marketable securities are classified as current or long term based on their
     remaining maturity as of the balance sheet date. The Company considers all
     investments with maturities of 90 days or less from the date of purchase to
     be cash equivalents and all investments with original maturity dates
     greater than 90 days to be marketable securities. Marketable securities are
     classified as current or long term based on their remaining maturity as of
     the balance sheet date.

     In accordance with Statement of Financial Accounting Standards (SFAS) No.
     115, Accounting for Certain Investments in Debt and Equity Securities, the
     Company has classified certain of its marketable securities as held-to-
     maturity and available-for-sale and its long-term investments in marketable
     securities as held-to-maturity. Held-to-maturity securities represent those
     securities for which the Company has the intent and ability to hold to
     maturity and are reported at amortized cost. Available-for-sale securities
     represent those securities that do not meet the classification of held-to-
     maturity, are not actively traded and are reported at fair market value
     with unrealized gains and losses included in stockholders' equity. There
     were no unrealized gains or losses for the three and nine month periods
     ended September 30, 1999 and 1998.

     Cash and cash equivalents, which are carried at cost and approximate market
     value, consist of the following at:

<TABLE>
<CAPTION>
                               September  30,          December 31,
                                    1999                   1998
                               --------------          ------------
<S>                           <C>                   <C>
     Cash                          $1,259,924            $3,995,112
     Cash equivalents--
        Money market                       --                11,902
                                   ----------            ----------
                                   $1,259,924            $4,007,014
                                   ==========            ==========
</TABLE>


                                       9
<PAGE>

NMT MEDICAL, INC. (FORMERLY NITINOL MEDICAL TECHNOLOGIES, INC.) AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


6.   Cash and Cash Equivalents, Marketable Securities, and Long-Term Investments
     in Marketable Securities--(continued)

     Marketable securities, with a weighted average maturity of approximately 7
     1/2 months at December 31, 1998 are carried at cost which approximates
     market value and consist of the following at:

<TABLE>
<CAPTION>
                                         September 30,           December 31,
                                              1999                  1998
                                         -------------           ------------
<S>                                      <C>                  <C>
  Held-to-maturity--
          Eurodollar bonds                       $  --            $3,310,627
          Medium-term notes                         --               500,847
          Corporate debt securities                 --               502,063
                                           -----------            ----------
                                                    --             4,313,537
  Available-for-sale--
          Taxable auction securities                --               800,000
                                           -----------            ----------
                                                 $  --            $5,113,537
                                           ===========            ==========
</TABLE>

     There were no realized gains or losses on the sale of available-for-sale
     securities during the three and nine month periods ended September 30, 1999
     and 1998.

     Long-term investments, with a weighted average maturity of approximately 15
     months at December 31, 1998, are carried at cost which approximates market
     value. As of December 31, 1998, the amount of long-term investments was
     $1,009,401 and consisted of medium-term notes. The Company held no long-
     term investments as of September 30, 1999.

     In addition, the following amounts of interest receivable generated from
     the Company's cash and cash equivalents, marketable securities, and long-
     term investments are included in prepaid expenses and other current assets
     and in other assets in the accompanying balance sheets at:

<TABLE>
<CAPTION>
                                     SEPTEMBER 30,             DECEMBER 31,
                                         1999                      1998
                                     -------------             ------------
<S>                                  <C>                 <C>
  Short-term interest receivable          $  --                  $117,687
  Long-term interest receivable              --                    12,985
                                          -----                  --------
                                          $  --                  $130,672
                                          =====                  ========
</TABLE>


                                       10
<PAGE>

NMT MEDICAL, INC. (FORMERLY NITINOL MEDICAL TECHNOLOGIES, INC.) AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)

7.   Inventories

     Inventories are stated at the lower of cost (first-in, first-out) or market
     and consist of the following:

<TABLE>
<CAPTION>
                         SEPTEMBER 30,  DECEMBER 31,
                             1999           1998
                         -------------  ------------
<S>                      <C>            <C>

       Components          $ 3,550,697   $ 3,117,848
       Finished Goods        7,607,540     7,730,584
                           -----------   -----------
                           $11,158,237   $10,848,432
                           ===========   ===========
</TABLE>

8.   Net Loss per Common and Common Equivalent Share

     The Company applies SFAS No. 128, Earnings per Share. SFAS No. 128
     establishes standards for computing and presenting earnings per share and
     applies to entities with publicly held common stock or potential common
     stock.

     Diluted loss per share is the same as basic loss per share for the three
     and nine month periods ended September 30, 1999 as the effects of the
     Company's potential common stock (294,154 shares and 449,385 shares for the
     three and nine month periods ended September 30, 1999, respectively) are
     antidilutive.

9.   Foreign Currency

     The accounts of the Company's subsidiaries are translated in accordance
     with SFAS No. 52, Foreign Currency Translation. Accordingly, the accounts
     of the Company's foreign subsidiaries are translated from their local
     currency, which is the functional currency, into U.S. dollars, the
     reporting currency, using the exchange rate at the balance sheet date.
     Income and expense accounts are translated using an average rate of
     exchange during the period. Cumulative foreign currency translation gains
     or losses are reflected as a component of consolidated stockholders' equity
     and amounted to a gain of $728,000 and a loss of $139,000 for the three and
     nine month periods ended September 30, 1999, respectively. For the three
     and nine month periods ended September 30, 1998, the Company had a
     cumulative foreign currency translation gain of $669,000. Additionally, the
     Company had a foreign currency exchange transaction loss of approximately
     $221,000 and $19,000 for the three month periods ended September 30, 1999
     and 1998, respectively.

                                       11
<PAGE>

NMT MEDICAL, INC. (FORMERLY NITINOL MEDICAL TECHNOLOGIES, INC.) AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


 9.  Foreign Currency--(continued)

     For the nine months ended September 30, 1999, the Company had a foreign
     currency transaction gain of approximately $6,000 and a foreign currency
     transaction loss of $88,000 for the nine months ended September 30, 1998.
     Foreign currency transaction gains and losses result from differences in
     exchange rates between the functional currency and the currency in which a
     transaction is denominated and are included in the consolidated statement
     of operations in the period in which the exchange rate changes.

10.  Comprehensive Income

     The Company applies the provisions of SFAS No. 130, Reporting Comprehensive
     Income which establishes standards for reporting and displaying
     comprehensive income and its components in the consolidated financial
     statements. Comprehensive income is defined as the change in equity of a
     business enterprise during a period from transactions and other events and
     circumstances from non-owner sources. The adoption of this standard did not
     have a material effect on the Company's financial statements, as the only
     element of comprehensive income related to the Company is the foreign
     currency translation adjustment which is presented separately on the
     balance sheet as required. If presented on the statement of operations,
     comprehensive net gain would have decreased the reported net loss by
     $728,000 and $669,000 for the three months ended September 30, 1999 and
     1998, respectively. For the nine month periods ended September 30, 1999,
     the comprehensive net loss would have increased the reported net loss by
     $826,000 and decreased the reported net loss by $669,000 for the nine
     months ended September 30, 1998.

11.  Investment in Image Technologies Corporation

     In May 1997, the Company invested $2.3 million in Image Technologies
     Corporation (ITC) in exchange for 345,722 shares of ITC's redeemable
     convertible Series A preferred stock, $.01 par value per share, which
     represented a 23% ownership interest in ITC. During the three and nine
     months ended September 30, 1999, the Company recorded $189,000 and $489,000
     as its equity in the net loss of ITC. Under the terms of this agreement,
     the Company also extended to ITC a $2 million senior credit line that bears
     interest at 10% per annum, payable quarterly beginning March 31, 2001. This
     $2 million senior note is secured by substantially all of the assets of
     ITC. The principal amount of the note is convertible at the option of the
     Company into additional shares of ITC Series A preferred stock at a price
     per share of $2.54 at any time before January 1, 2001, and, if converted,
     any interest accrued as of such date shall be forgiven. If not converted,
     the note is payable on December 31, 2002, but may be prepaid in whole or in
     part by ITC without penalty after December 31, 2000.

                                       12
<PAGE>

NMT MEDICAL, INC. (FORMERLY NITINOL MEDICAL TECHNOLOGIES, INC.) AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


11.  Investment in Image Technologies Corporation--(continued)

     On December 30, 1998 and February 3, 1999, the Company amended its
     revolving credit note agreement with ITC to provide for additional
     borrowings of $50,000 and $100,000, respectively, under which ITC borrowed
     $38,043 and $100,000. Borrowings under the $50,000 note were repaid in
     April 1999. The $100,000 note accrues interest at 10% per annum and is
     generally subject to the same terms as the $2 million credit line
     agreement, except that it is convertible into additional shares of ITC
     Series A preferred stock at a price per share of $9.97. As of September 30,
     1999, ITC has borrowed $2.1 million under these agreements and owes the
     Company accrued interest of $226,000. In connection with the issuance of
     the $100,000 note, ITC granted a warrant to the Company to purchase 10,030
     shares of ITC Series A preferred stock at $9.97 per share.

     On March 30, 1999, ITC entered into a finance agreement with a third party
     whereby the third party purchased 120,361 shares of ITC's common stock at
     $9.97 per share. In connection with this financing, ITC issued to the
     Company an additional 39,159 shares of ITC Series A preferred stock. A
     portion of the proceeds from this financing was used to repay certain
     bridge financing, including approximately $38,000 borrowed from the Company
     in December 1998. The agreement provides for the issuance of additional
     shares of common stock to the third party and the Company if ITC does not
     achieve certain milestones as set forth in the agreement. As a result, on
     June 30, 1999, ITC issued to the third party 471,414 shares of ITC common
     stock and to the Company 267,072 shares of ITC Series A preferred stock.

     On August 27, 1999, ITC entered into two senior secured convertible note
     agreements with this same third party for $1.5 million and $500,000
     respectively (the "Series A Note" and the "Series B Note," respectively).
     The Series A Note and Series B Note are secured by substantially all of the
     assets of ITC and accrue interest at 10% per annum which is payable
     quarterly beginning March 31, 2001. These notes mature on December 31, 2002
     but may be prepaid without penalty on or after December 31, 2000. Prior to
     December 31, 2000, the Series A Note is convertible, at the option of the
     lender into shares of ITC common stock at a rate of $1.25 per share. The
     Series B Note also has a similar conversion feature at a rate to be
     determined in accordance with the note agreement but not less than $1.00
     per share. As of September 30, 1999, ITC has borrowed $1.5 million under
     the Series A Note agreement. In connection with this financing, ITC issued
     to the Company an additional 753,540 shares of ITC Series A preferred
     stock.






                                       13
<PAGE>

NMT MEDICAL, INC. (FORMERLY NITINOL MEDICAL TECHNOLOGIES, INC.) AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


11.  Investment in Image Technologies Corporation--(continued)

     As of September 30, 1999, the Company performed a detailed review of the
     ITC operations. Based upon this review and discussion with ITC's
     management and investors, the Company determined that there was a
     significant risk that its notes receivable would be repaid by ITC. The
     review and discussions indicated that at September 30, 1999, ITC had
     insufficient cash resources to fund its operations, that product revenue
     had declined in the third quarter of 1999 and was far below planned levels
     and that future financing would possibly by dilutive to the Company's
     equity position and may contain a security interest senior to the Company's
     notes receivable. Accordingly, the Company charged the $1.4 million
     carrying value of the notes receivable and related costs of $190,000 to
     operations in the third quarter of 1999.

12.  Prepaid Expenses and Other Current Assets

     Prepaid expenses and other current assets consist of the following at:

<TABLE>
<CAPTION>
                                         September 30,   December 31,
                                             1999          1998
                                         -------------   ------------
<S>                                      <C>             <C>
      Refundable and deferred income       $1,343,297      $  753,749
       taxes
      Other prepaid expenses                2,436,551       2,762,861
                                           ----------      ----------
                                           $3,779,848      $3,516,610
                                           ==========      ==========
</TABLE>

13.  Accrued Expenses

  Accrued expenses consist of the following at:

<TABLE>
<CAPTION>
                                         SEPTEMBER 30,   DECEMBER 31,
                                             1999            1998
                                        -------------    ------------
<S>                                     <C>              <C>
     Payroll and payroll related           $1,431,122      $1,803,859
     Income taxes                           1,268,294         275,600
     Inventory                                726,659         493,059
     Other accrued expenses                 2,359,284       2,646,982
                                           ----------      ----------
                                           $5,785,359      $5,219,500
                                           ==========      ==========
</TABLE>


                                       14
<PAGE>

NMT Medical, Inc. (FORMERLY NITINOL MEDICAL TECHNOLOGIES, INC.) and Subsidiaries
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


14.  Segment Reporting

     The Company applies the provisions of SFAS No. 131, Disclosures about
     Segments of an Enterprise and Related Information. SFAS No. 131 established
     standards for reporting information about operating segments in annual
     financial statements and requires selected information about operating
     segments in interim financial reports issued to stockholders. It also
     established standards for related disclosures about products and services
     and geographic areas. Operating segments are defined as components of an
     enterprise about which separate financial information is available that is
     evaluated regularly by the chief operating decision, or decision making
     group, in deciding how to allocate resources and in assessing performance.
     The Company's chief operating decision making group is the Chief Executive
     Officer, members of Senior Management and the Board of Directors. The
     operating segments are managed separately because each represents specific
     types of medical devices for specific markets (i.e., the core technologies
     segment includes minimally-invasive medical devices that were the Company's
     primary products prior to its acquisition of ENI, while the neurosurgical
     segment includes primarily neurosurgical medical devices that were the
     primary products of ENI). The Company's operating segments include the core
     technologies product line and the neurosurgical product line. Revenues for
     the core technologies product line are derived from sales of the Simon
     Nitinol Filter (SNF) and the CardioSEAL Septal Occluder, as well as from
     licensing revenues from the Company's self-expanding stents. Revenues for
     the neurosurgical product line are derived from sales of cerebral spinal
     fluid shunts, the Selector Ultrasonic Aspirator, Ruggles Surgical
     Instruments, the Spetzler Titanium Aneurysm Clip and endoscopes and
     instrumentation for minimally invasive surgery.

     The accounting policies of the segments are the same as those described in
     the summary of significant accounting policies. The Company evaluates
     performance based on stand-alone operating segment net income. Revenues are
     attributed to geographic areas based on where the customer is located.
     Segment information is presented as follows:

                                       15
<PAGE>

NMT Medical, Inc. (FORMERLY NITINOL MEDICAL TECHNOLOGIES, INC.) and Subsidiaries
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)


<TABLE>
<CAPTION>
                                                            FOR THE THREE MONTHS ENDED             FOR THE NINE MONTHS ENDED
                                                                  SEPTEMBER 30,                          SEPTEMBER 30,
                                                             1999               1998                1999               1998
                                                       -----------------  -----------------  ------------------  -----------------
<S>                                                    <C>                <C>                <C>                 <C>
  Segment Revenues:
     Core technologies products                             $ 4,035,630        $ 3,238,731         $10,754,335        $ 9,991,505
     Neurosurgical products                                   8,690,000          8,978,000          25,257,328          8,978,000
                                                            -----------        -----------         -----------        -----------
           Total revenues                                   $12,725,630        $12,216,731         $36,011,663        $18,969,505
                                                            ===========        ===========         ===========        ===========

  Segment Interest Income:
     Core technologies products                             $   108,462        $   155,109         $   441,623        $   946,485
     Neurosurgical products                                          --                 --              17,000                 --
                                                            -----------        -----------         -----------        -----------
           Total                                            $   108,462        $   155,109         $   458,623        $   946,485
                                                            ===========        ===========         ===========        ===========

  Segment Interest Expense:
     Core technologies products                             $  (171,855)       $  (193,205)        $  (565,276)       $  (223,760)
     Neurosurgical products                                    (515,338)          (465,768)         (1,692,438)          (465,768)
                                                            -----------        -----------         -----------        -----------
           Total                                            $  (687,193)       $  (658,973)        $(2,257,714)       $  (689,528)
                                                            ===========        ===========         ===========        ===========

  Segment Income Tax Provision (Benefit):
     Core technologies products                             $   147,735        $  (459,370)        $   491,775        $    91,130
     Neurosurgical products                                     (20,435)           421,057            (397,875)           421,057
                                                            -----------        -----------         -----------        -----------
           Total                                            $   127,300        $   (38,313)        $    93,900        $   512,187
                                                            ===========        ===========         ===========        ===========

Segment Depreciation and Amortization:
     Core technologies products                             $   341,383        $   260,573         $   990,451        $   528,379
     Neurosurgical products                                     257,407            252,493             787,164            252,493
                                                            -----------        -----------         -----------        -----------
           Total                                            $   598,790        $   513,066         $ 1,777,615        $   780,872
                                                            ===========        ===========         ===========        ===========

Segment Equity in Net Loss of Investee:
     Core technologies products                             $(1,553,348)       $  (154,614)        $(1,852,898)       $  (247,951)
     Neurosurgical products                                          --                 --                  --                 --
                                                            -----------        -----------         -----------        -----------
           Total                                            $(1,553,348)       $  (154,614)        $(1,852,898)       $  (247,951)
                                                            ===========        ===========         ===========        ===========

Segment Income (Loss):
     Core technologies products                             $(4,722,357)       $(5,396,314)        $(5,970,846)       $(4,421,232)
     Neurosurgical products                                      52,397            448,539             448,539            448,540
                                                            -----------        -----------         -----------        -----------
           Total                                            $(4,669,960)       $(4,947,775)        $(5,522,307)       $(3,972,692)
                                                            ===========        ===========         ===========        ===========

 Segment Expenditures for Long-Lived
      Assets:
     Core technologies products                             $    63,433        $    54,243         $   101,682        $    83,870
     Neurosurgical products                                     467,870            467,134           1,102,475            467,134
                                                            -----------        -----------         -----------        -----------
           Total                                            $   531,303        $   521,377         $ 1,204,157        $   551,004
                                                            ===========        ===========         ===========        ===========
</TABLE>


                                       16
<PAGE>

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          ---------------------------------------------------------------
          RESULTS OF OPERATIONS.
          ---------------------

This Quarterly Report on Form 10-Q for the quarterly period ended September 30,
1999, other than the historical financial information, contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. All such forward-looking statements involve known and unknown risks,
uncertainties or other factors which may cause actual results, performance or
achievement of the Company to be materially different from any future results,
performance, or achievement expressed or implied by such forward-looking
statements. Factors that might cause such a difference include uncertainties in
market demand and acceptance, government regulation and approvals, and
intellectual property rights and litigation; the impact of healthcare reform
programs and competitive products and pricing; risks associated with technology
and product development and commercialization, potential product liability,
management of growth, and dependence on significant corporate relationships, and
other risks detailed in the Company's Annual Report on Form 10-K as of December
31, 1998 filed with the Securities and Exchange Commission on April 15, 1999.

RESULTS OF OPERATIONS

Three months ended September 30, 1999 compared with three months ended September
30, 1998

Revenues. Revenues for the three months ended September 30, 1999 increased to
$12.7 million from $12.2 million for the three months ended September 30, 1998.
Product sales remained constant at $11.9 million for the three months ended
September 30, 1999 and 1998. The Company had increased unit sales of the
CardioSEAL Septal Occluder and the vena cava filter which partially offset a
decrease in the Company's neurosurgical products revenue during the three months
ended September 30, 1999 as compared with the three months ended September 30,
1998. License fees for the three months ended September 30, 1999 amounted to
$777,000 and consist of minimum quarterly royalty payments of $375,000 and cost-
sharing payments from Boston Scientific of $50,000 and a patent license payment
from Johnson & Johnson for $352,000. License fees for the three months ended
September 30, 1998 amounted to $297,000 consisting of minimum quarterly royalty
payments of $199,000 and cost-sharing payments from Boston Scientific of
approximately $98,000.

Cost of  Product Sales. Cost of product sales decreased to $4.9 million for the
three months ended September 30, 1999 from $5.0 million for the three months
ended September 30, 1998.  The decrease was primarily due to the Company's
increased sales of the CardioSEAL Septal Occluder and the vena cava filter which
have a lower cost of product sales as a percent of sales than do the Company's
neurosurgical products, and as a result, cost of product sales, as a percent of
product sales, decreased to 41% for the three months ended September 30, 1999
from 42% for the three months ended September 30, 1998.

                                       17
<PAGE>

Research and Development. Research and development expense increased to $1.4
million for the three months ended September 30, 1999 from $1.1 million for the
three months ended September 30, 1998. The increase is primarily attributable to
increased regulatory and clinical trial expenses relating to clinical trials of
the CardioSEAL Septal Occluder that commenced in September 1996, as well as for
more recent clinical trials related to fenestrated Fontan procedures (FEF's),
and ventricular septal defects (VSD's) for which the Company received Food and
Drug Administration (FDA) approval during the three months ended September 30,
1999. In addition, the Company has had increased activity in the Company's
development programs for vena cava filters, including CE Mark approval for its
removable vena cava filter in September 1999, and for other products under
development.

General and Administrative.  General and administrative expenses increased to
$3.2 million for the three months ended September 30, 1999 from $2.2 million for
the three months ended September 30, 1998.  The increase is primarily
attributable to increased professional fees and travel expenses related to
supporting the operations of the Company's neurosurgical division, which was
acquired on July 8, 1998.

Selling and Marketing.  Selling and marketing expenses increased to $2.9 million
for the three months ended September 30, 1999 from $2.7 million for the three
months ended September 30, 1998.  The increase is primarily attributable to an
increase in the allowance for doubtful accounts as the Company continues to
focus its efforts on better collections of its accounts receivable and providing
reserves for those accounts that may become uncollectible.

In-Process Research and Development.  For the three months ended September 30,
1998, the Company recorded $4.7 million of in-process research and development
expenses related to the Company's acquisition of ENI on July 8, 1998.  See Note
3 of the Notes to Consolidated Financial Statements in the accompanying
financial statements as of September 30, 1999.  On the date of acquisition,
ENI's in-process research and development value was comprised of five primary
research and development programs that were expected to reach completion between
late 1998 and 2000.  At the acquisition date, continuing research and
development commitments to complete the projects were expected to be
approximately $2.0 million through 2000 ($680,000, $888,000, and $383,000 in
1998, 1999, and 2000, respectively).  These estimates are subject to change,
given the uncertainties of the development process, and no assurance can be
given that deviations from these estimates will not occur.

Merger and Integration Expense. As a result of the acquisition of ENI on July 8,
1998, the Company reorganized certain of its operations.  In connection with
this reorganization, the Company recorded merger and integration expenses of
$687,000 in the quarter ended September 30, 1998.

Write Down of Notes Receivable from Image Technologies Corporation. As of
September 30, 1999, the Company performed a detailed review of the ITC
operations. Based upon this review and discussion with ITC's management and
investors, the Company determined that there was a significant risk that its
notes receivable would be repaid by ITC. The review and discussions indicated
that at September 30, 1999, ITC had insufficient cash resources to fund its
operations, that product revenue had declined in the third quarter of 1999 and
was far below planned levels and that future financing would possibly be
dilutive to the Company's equity position and may contain a security interest
senior to the Company's notes receivable. Accordingly, the Company charged the
$1.4 million carrying value of the notes receivable and related costs of
$190,000 to operations in the third quarter of 1999.

Equity in Net Loss of Image Technologies Corporation.  During the three months
ended September 30, 1999 and 1998, the Company recorded $189,000 and $155,000,
respectively as its equity in the net loss of ITC.  The carrying value of the
note receivable from ITC has been reduced by these amounts.

                                       18
<PAGE>


Interest Expense. Interest expense was $687,000 for the three months ended
September 30, 1999 as compared to $659,000 for the three months ended September
30, 1998. The slight increase was primarily the result of the Company
refinancing its subordinated debt with an affiliate of a significant stockholder
of the Company on September 13, 1999.  See Note 4 of the Notes to Consolidated
Financial Statements in the accompanying financial statements as of September
30, 1999.

Interest Income.  Interest income was $108,000 for the three months ended
September 30, 1999 as compared to $155,000 for the three months ended September
30, 1998.  The decrease was due to the Company's liquidation of its marketable
securities and long term investments in marketable securities in order to partly
reduce its subordinated debt with an affiliate of a significant stockholder of
the Company.  See Note 4 of the Notes to Consolidated Financial Statements in
the accompanying financial statements as of September 30, 1999.

Extraordinary Loss on Early Extinguishment of Debt. In connection with the $14
million reduction in September 1999 of its $20 million subordinated note payable
to an affiliate of a significant stockholder of the Company (see Note 4 of the
Notes to Consolidated Financial Statements in the accompanying financial
statements as of September 30, 1999), the Company recorded a $2.6 million
extraordinary loss on the early extinguishment of debt in the statement of
operations for the three months ended September 30, 1999 which primarily relates
to the accelerated pro-rata write-off of the original issue discount and
deferred financing costs of the subordinated note payable.

Provision (Benefit) for Income Taxes.  The Company had a provision for income
taxes of $127,000 for the three months ended September 30, 1999 based on an
operating income in Europe before nondeductible items and an estimated effective
tax rate of approximately 40%.  The Company did not record a benefit for the net
operating loss generated in the United States for the three months ended
September 30, 1999.  For the three months ended September 30, 1998 the Company
had a benefit for income taxes of $38,000 based on an operating loss before
nondeductible items and an estimated effective tax rate of approximately 40%.

                                       19
<PAGE>

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1998

Revenues.  Revenues for the nine months ended September 30, 1999 increased to
$36.0 million from $19.0 million for the nine months ended September 30, 1998.
Product sales increased to $34.4 million for the nine months ended September 30,
1999 from $17.4 million for the nine months ended September 30, 1998.  The
increase is primarily attributable to the Company's acquisition of ENI on July
8, 1998 and accordingly ENI's product revenues of $25.3 million for the nine
months ended September 30, 1999 represent nine months of activity as compared
with $9.0 million which represents less than three months of activity during the
nine month period ended September 30, 1998.  Additionally, the Company had
increased unit sales of the CardioSEAL Septal Occluder and vena cava filter
during the nine months ended September 30, 1999 as compared with the nine months
ended September 30, 1998.  License fees for the nine months ended September 30,
1999 amounted to approximately $1.6 million and consist of minimum quarterly
royalty payments of $1.1 million and cost-sharing payments from Boston
Scientific of approximately $169,000 and a patent license payment from Johnson &
Johnson of $352,000.  License fees for the nine months ended September 30, 1998
amounted to approximately $1.5 million and consist of minimum quarterly royalty
payments of $1.1 million, milestone payments of $300,000 and cost-sharing
payments from Boston Scientific of approximately $99,000.

Cost of Product Sales. Cost of product sales increased to $14.3 million for the
nine months ended September 30, 1999 from $7.1 million for the nine months ended
September 30, 1998. The increase is primarily attributable to the Company's
acquisition of ENI on July 8, 1998 and accordingly ENI's cost of sales of $10.6
million for the nine months ended September 30, 1999 represents nine months of
activity as compared with $3.9 million which represents less than three months
of activity during the nine month period ended September 30, 1998. Additionally,
the Company had increased unit sales of the CardioSEAL Septal Occluder and vena
cava filter during the nine months ended September 30, 1999 as compared with the
nine months ended September 30, 1998. Cost of product sales, as a percent of
product sales, increased slightly from 41% to 42% for the nine months ended
September 30, 1999 and 1998 as a result of increased sales of the CardioSEAL
Septal Occluder and the vena cava filter which have a lower cost of product
sales as a percent of sales than do the Company's neurosurgical products offset
by the inclusion of sales of the neurosurgical products during the nine month
periods ended September 30, 1999 and 1998.

Research and Development.  Research and development expenses increased to $3.8
million for the nine months ended September 30, 1999 from $2.8 million for the
nine months ended September 30, 1998.  The increase is primarily attributable to
the Company's acquisition of ENI on July 8, 1998 and accordingly ENI's research
and development expenses of $859,000 for the nine months ended September 30,
1999 represents nine months of activity as compared with $231,000 which
represents less than three months of activity during the nine month period ended
September 30, 1998.

                                       20
<PAGE>

Additionally, the Company had increased regulatory and clinical trial expenses
relating to clinical trials of the CardioSEAL Septal Occluder that commenced in
September 1996, as well as for more recent clinical trials related to FEF's, and
VSD's for which the Company received FDA approval during the three months ended
September 30, 1999. In addition, the Company has had increased activity in the
Company's development programs for vena cava filters, including CE Mark approval
for its removable vena cava filter in September 1999, and for other products
under development.

General and Administrative.  General and administrative expenses increased to
$9.1 million for the nine months ended September 30, 1999 from $3.5 million for
the nine months ended September 30, 1998.  The increase is primarily
attributable to the Company's acquisition of ENI on July 8, 1998 and accordingly
ENI's general and administrative expenses of $5.7 million for the nine months
ended September 30, 1999 represents nine months of activity as compared with
$1.5 million which represents less than three months of activity during the nine
month period ended September 30, 1998.  In connection with this acquisition,
general and administrative expenses include goodwill amortization of $485,000
and $110,000 for the nine months ended September 30, 1999 and 1998,
respectively. Additionally, the Company had increased professional fees and
travel expenses related to supporting the operations of the Company's
neurosurgical division.

Selling and Marketing.  Selling and marketing expenses increased to $8.1 million
for the nine months ended September 30, 1999 from $3.5 million for the nine
months ended September 30, 1998.  The increase is primarily attributable to the
Company's acquisition of ENI on July 8, 1998 and accordingly ENI's selling and
marketing expenses of $6.6 million for the nine months ended September 30, 1999
represents nine months of activity as compared with $2.1 million which
represents less than three months of activity during the nine month period ended
September 30, 1998.

In-Process Research and Development.  For the nine months ended September 30,
1998, the Company recorded $4.7 million of in-process research and development
expenses related to the Company's acquisition of ENI on July 8, 1998.  See Note
3 of the Notes to Consolidated Financial Statements in the accompanying
financial statements as of September 30, 1999.  On the date of acquisition,
ENI's in-process research and development value was comprised of five primary
research and development programs that were expected to reach completion between
late 1998 and 2000.  At the acquisition date, continuing research and
development commitments to complete the projects were expected to be
approximately $2.0 million through 2000 ($680,000, $888,000, and $383,000 in
1998, 1999, and 2000, respectively).  These estimates are subject to change,
given the uncertainties of the development process, and no assurance can be
given that deviations from these estimates will not occur.

Merger and Integration Expense. As a result of the acquisition of ENI on July 8,
1998, the Company reorganized certain of its operations.  In connection with
this reorganization, the Company recorded merger and integration expenses of
$687,000 in the quarter ended September 30, 1998.

                                       21
<PAGE>

Write Down of Notes Receivable from Image Technologies Corporation. As of
September 30, 1999, the Company performed a detailed review of the ITC
operations. Based upon this review and discussion with ITC's management and
investors, the Company determined that there was a significant risk that its
notes receivable would be repaid by ITC. The review and discussions indicated
that at September 30, 1999, ITC had insufficient cash resources to fund its
operations, that product revenue had declined in the third quarter of 1999 and
was far below planned levels and that future financing would possibly be
dilutive to the Company's equity position and may contain a security interest
senior to the Company's notes receivable. Accordingly, the Company charged the
$1.4 million carrying value of the notes receivable and related costs of
$190,000 to operations in the third quarter of 1999.

Equity in Net Loss of Image Technologies Corporation. During the nine months
ended September 30, 1999 and 1998, the Company recorded $489,000 and $248,000,
respectively, as its equity in the net loss of ITC.

Interest Expense. Interest expense was $2.3 million for the nine months ended
September 30, 1999 as compared to $690,000 for the nine months ended September
30, 1998. The increase was primarily the result of the Company's acquisition of
ENI on July 8, 1998 for which the Company borrowed $20 million of subordinated
debt which accrues interest at 10.101% per annum. In addition, the amortization
of original issue discount related to the subordinated note of $338,000 and
$179,000 for the nine months ended September 30, 1999 and 1998, respectively,
included interest expense in the statements of operations. See Note 4 of the
Notes to Consolidated Financial Statements in the accompanying financial
statements as of September 30, 1999.

Interest Income.  Interest income was $459,000 for the nine months ended
September 30, 1999 as compared to $946,000 for the nine months ended September
30, 1998.  The decrease was due to the Company's lower cash balances as a result
of its financing the acquisition of ENI on July 8, 1998 with cash of $16.1
million.

Extraordinary Loss on Early Extinguishment of Debt.   In connection with the $14
million reduction in September 1999 of its $20 million subordinated note payable
to an affiliate of a significant stockholder of the Company (see Note 4 of the
Notes to Consolidated Financial Statements in the accompanying financial
statements as of September 30, 1999), the Company recorded a $2.6 million
extraordinary loss on the early extinguishment of debt in the statement of
operations for the nine months ended September 30, 1999 which primarily relates
to the accelerated pro-rata write-off of the original issue discount and
deferred financing costs of the subordinated note payable.

Provision for Income Taxes.  The Company had a provision for income taxes of
$94,000 and $512,000 for the nine months ended September 30, 1999 and 1998,
respectively, based on an operating income in Europe before nondeductible items
and an estimated effective tax rate of 40%.  The Company recorded a benefit for
income taxes of $390,000 for the net operating loss generated in the United
States for the nine months ended September 30, 1999.

                                       22
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and cash equivalents and marketable securities equal to
$1.3 million at September 30, 1999 as compared to $9.1 million at December 31,
1998.  The decrease is primarily due to the refinancing of its subordinated note
payable (See Note 4 of the Notes to Consolidated Financial Statements in the
accompanying financial statements as of September 30, 1999) whereby the Company
used $6 million of cash to reduce the subordinated note payable.  During the
nine months ended September 30, 1999, the Company's operations used cash of
approximately $203,000 which consists of approximately $233,000 of cash
generated by operations prior to approximately $5.8 million of noncash charges
and before changes in working capital items.

In July 1998, the Company financed a portion of the acquisition of ENI with
$16.1 million of the Company's cash and a $20 million subordinated note issued
to an affiliate of a significant stockholder of the Company. The subordinated
note is due September 30, 2003 with quarterly interest payable at 10.101% per
annum, The subordinated debt includes certain covenants relating to maintenance
of certain ratios and cash levels. On September 13, 1999, the Company entered
into a $10 million senior secured debt facility with a bank, $8 million of the
proceeds of which was used to reduce the principal amount of the $20 million
subordinated note. The Company also used $6 million of its own cash to further
reduce the principal amount of the $20 million subordinated note. The remaining
$2 million of the senior secured debt facility is available to be drawn down by
the Company for working capital purposes, as needed. The facility has a term of
three years with interest payable monthly at the bank's prime lending rate on
U.S. borrowings and an equivalent market rate on foreign currency borrowings. As
of September 30, 1999, the Company was not in compliance with certain of the
debt covenants contained in both the subordinated note agreement and the senior
secured debt agreement. As a result, the Company negotiated a waiver of default
with each of these debtholders. See Note 4 of the Notes to Consolidated
Financial Statements in the accompanying financial statements as of September
30, 1999 for additional disclosure.

Purchases and capitalized leases of property and equipment for use in the
Company's research and development and general and administrative activities
amounted to $531,000 and $1.2 million for the three and nine month periods ended
September 30, 1999, respectively.  The Company anticipates that it will spend
approximately $1.5 million on purchases of property and equipment in 1999
primarily in connection with the Company's implementation of new management
information systems.  See "Year 2000 Readiness."

In May 1997, the Company acquired a 23 percent ownership interest in ITC for
$2.3 million and incurred approximately $149,000 of expenses associated with the
investment.  ITC was a development stage Company in May 1997 and was focusing
its efforts on developing certain early stage technologies.  Due to the
uncertainty regarding the realization of its investment, the Company charged the
amount of the purchase price and related acquisition costs to operations during
the year ended December 31, 1997 as in-process research and development.

                                       23
<PAGE>

In connection with the Company's equity investment in ITC, the Company has
extended to ITC a credit line of up to $2.0 million and an additional $100,000
of senior debt under a loan agreement that bears interest at 10% per annum. The
carrying value of these notes receivable from ITC has been reduced by the equity
in the net loss of ITC through September 30, 1999. As of September 30, 1999 the
Company determined that there was a significant risk that its notes receivable
from ITC would be repaid due to ITC having insufficient cash resources to fund
its operations and product revenue that was far below planned levels as of
September 30, 1999. Accordingly, the Company charged the carrying value of the
notes receivable from ITC of approximately $1.4 million and related costs of
$190,000 to operations in the third quarter of 1999. There can be no assurance
that ITC will be able to pay the principal and accrued interest on these notes,
in whole or in part, when due. Any failure of ITC to pay such principal or
interest could have a material adverse effect on the Company's financial
condition or results of operations. See Note 11 of the Notes to Consolidated
Financial Statements in the accompanying financial statements as of September
30, 1999.

As an international concern, the Company faces exposure to adverse movements in
foreign currency exchange rates.  These exposures may change over time and could
have a material adverse impact on the Company's financial condition and results
of operations.  The Company's most significant foreign currency exposures relate
to the United Kingdom and France, as a result of its manufacturing activities
and assets in those countries.  The accounts of the Company's foreign
subsidiaries are translated in accordance with SFAS No. 52, Foreign Currency
Translation.  In translating the accounts of the foreign subsidiaries into U.S.
dollars, assets and liabilities are translated at the rate of exchange in effect
at the end of each reporting period, while stockholders' equity is translated at
historical rates.  Revenue and expense accounts are translated using the
weighted average exchange rate in effect during the year.  The Company's foreign
currency transaction gains and losses are included in the accompanying
statements of operations and amounted to a foreign currency transaction gain of
$6,000 for the nine months ended September 30, 1999 as compared with a foreign
currency transaction loss of $88,000 for the nine months ended September 30,
1998.  The Company records the effects of changes in balance sheet items (i.e.,
cumulative foreign currency translation gain and losses) as a component of
consolidated stockholders' equity.  The Company had a cumulative foreign
currency translation gain of $728,000 for the three months ended September 30,
1999 and a cumulative foreign currency translation loss of $139,000 for the nine
months then ended.

The Company is party to various other substantial contractual arrangements
including salaries and fees for current employees and consultants which are
likely to increase as additional agreements are entered into and additional
personnel are retained.  The Company also has committed to purchase certain
minimum quantities of the vena cava filter from a supplier through June 2001.
See Note 10 of Notes to the Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K as filed with the Securities and Exchange
Commission on April 15, 1999.  All of these arrangements require cash payments
by the Company over varying periods of time.  Certain of these arrangements are
cancelable on short notice and certain require termination or severance payments
as part of any early termination.

                                       24
<PAGE>

The Company may require additional funds for its research and product
development programs, preclinical and clinical testing, operating expenses,
regulatory processes, manufacturing and marketing programs and potential
licenses and acquisitions.  Any additional equity financing may be dilutive to
stockholders, and additional debt financing, if available, may involve
restrictive covenants.  The Company's capital requirements will depend on
numerous factors, including the sales of its products, the progress of its
research and development programs, the progress of clinical testing, the time
and cost involved in obtaining regulatory approvals, the cost of filing,
prosecuting, defending and enforcing any patent claims and other intellectual
property rights, competing technological and market developments, developments
and changes in the Company's existing research, licensing and other
relationships and the terms of any collaborative, licensing and other similar
arrangements that the Company may establish.

YEAR 2000 READINESS

Prior to the Company's acquisition of ENI, the Company had reviewed its internal
computer systems and their capabilities of recognizing the year 2000 and years
thereafter. At that time, the Company believed that it was year 2000 compliant
in all material respects and currently believes that it is year 2000 compliant.

In addition, prior to the acquisition of ENI by the Company, management of ENI
had determined that its financial and operational systems needed modification or
replacement not only to be year 2000 compliant but to (a) improve functionality,
(b) assure continued euro currency compliance, (c) provide more meaningful
information and (d) integrate the various companies within ENI onto a world-
class Enterprise Reporting System ("ERP"). ENI management had developed a
comprehensive plan for implementing the new system, including selecting the
system and related providers of implementation assistance, but the decision to
proceed was postponed until the closing of the acquisition.

After the closing of the acquisition, the Company authorized the plan described
above in August 1998, and committed to the implementation of a new ERP system
for its NMT Neurosciences Division.  The new systems are expected to be fully
operational by the beginning of December 1999 at a total project cost of $2.0
million, of which approximately $1.3 million will be for computer hardware and
other capital expenditures.  The Company has financed a portion of the capital
component and has funded the remainder from operating cash flows.

Currently, two of the three major divisions of the Neurosciences Division have
implemented and have been using their systems successfully with the third
division to follow by early December 1999. Because the Company is completely
replacing the systems at its Neurosciences Division with a commercially
available and tested ERP product, it believes that the project is proceeding
more efficiently than had the Company chosen to modify its existing systems.  As
a result, the Company currently does not have a contingency plan in the event a
particular system is not year 2000 compliant, but such a plan will be developed
if it becomes clear that the Company is not going to achieve its scheduled
compliance objectives.

                                       25
<PAGE>

Since the Company interfaces with its major customers and suppliers via
telephone and fax, the Company does not expect to incur significant losses in
the event that either the Company or its customers and suppliers are not year
2000 compliant.  The Company has obtained notices from major customers and
suppliers that they are year 2000 compliant.  In addition, the Company's
products are year 2000 compliant.

The costs of the project and the date on which the Company believes it will
complete the implementation of its ERP system are based on management's best
estimates, which were derived utilizing numerous assumptions of future events,
including the continued availability of resources and other factors.  However,
there can be no guarantee that these estimates will be achieved and actual
results could differ materially from those anticipated.

EURO CONVERSION

On January 1, 1999, eleven of the fifteen member countries of the European Union
adopted the "euro" as their national currency unit and irrevocable established
fixed conversion rates between their existing sovereign currencies and the euro.
During the three year transition period between January 1, 1999 and January 1,
2002, the euro will be a "cashless" currency, existing only as a unit of
account.  Payments made to accounts in these member states may be made either in
the denominated member state currency unit of the account or in euros.
Beginning on January 1, 2002, euro banknotes and coins will be introduced, and
member state currency banknotes and coins will be withdrawn from circulation.
No later than July 1, 2002, the euro will be the sole national currency unit in
these member states, and the member state currency banknotes and coins will no
longer be accepted as legal tender.

The Company, including its Neurosciences Division, conducts a substantial
portion of its business within the member countries of the European Union, and
accordingly, its existing systems are generally capable of accommodating
multiple currencies, including the euro.  The new ERP system described above is
designed to facilitate continued euro currency compliance.

The Company is assessing the potential impact from the euro conversion in a
number of areas, including the following: (1) the competitive impact of cross-
border price transparency, which may make it more difficult for businesses to
charge different prices for the same products on a country-by-country basis; (2)
the impact on currency exchange costs and currency exchange rate risk and (3)
the impact on existing contracts.

As of September 30, 1999 the euro conversion has not had a material impact on
the operations of the Company.

                                       26
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
         ----------------------------------------------------------

The Company is subject to market risk in the form of interest rate risk and
foreign currency risk.  Interest rate risk is immaterial to the Company.  As an
international concern, the Company faces exposure to adverse movements in
foreign currency exchange rates.  These exposures may change over time and could
have a material adverse impact on the Company's financial condition and results
of operations.  The Company's most significant foreign currency exposures relate
to the United Kingdom and France as a result of its manufacturing activities and
assets in those countries.  The accounts of the Company's foreign subsidiaries
are translated in accordance with SFAS No. 52, Foreign Currency Translation.  In
translating the accounts of the foreign subsidiaries into U.S. dollars, assets
and liabilities are translated at the rate of exchange in effect at the end of
each reporting period, while stockholders' equity is translated at historical
rates.  Revenue and expense accounts are translated using the weighted average
exchange rate in effect during the year.  The Company's foreign currency
transaction gains or losses are included in the accompanying consolidated
statements of operations and amounted to a foreign currency transaction gain of
$6,000 for the nine months ended September 30, 1999 as compared with a foreign
currency transaction loss of $88,000 for the nine months ended September 30,
1998.  The Company records the effects of changes in balance sheet items (i.e.,
cumulative foreign currency translation gains and losses) as a component of
consolidated stockholders' equity.  The Company recorded a cumulative foreign
currency translation gain of $728,000 for the three months ended September 30,
1999 and a cumulative foreign currency translation loss of $139,000 for the nine
months then ended.

                                       27
<PAGE>

PART II.  OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS.
          -----------------------------------------

     (d)  Uses of Proceeds from Registered Securities. During the third quarter
          -------------------------------------------
of 1999, the Company used the balance of its offering proceeds, approximately
$6 million, from the sale of securities by the Company pursuant to its
Registration Statement on Form S-1 (Registration No. 333-06463), which was
declared effective on September 27, 1996, to repay a portion of the subordinated
note payable to a significant stockholder of the Company.

     The Company financed a significant portion of the acquisition of ENI with
$20 million of subordinated debt borrowed from an affiliate of a significant
stockholder of the Company. During the third quarter of 1999, the Company
entered into a $10 million senior secured debt facility with a
bank, $8 million of the proceeds of which was used to reduce the principal
amount of the $20 million subordinated note. The subordinated note agreement
dated July 8, 1998 and the credit agreement dated September 13, 1999 contain
working capital restrictions and limitations upon the payment of dividends. The
subordinated note agreement, as amended to date, is filed as an exhibit to the
Company's Current Report on Form 8-K dated July 8, 1998, the Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999 and this Quarterly Report on Form
10-Q for the quarter ended September 30, 1999, and the credit agreement is filed
as an exhibit to this Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.
          -------------------------------

     (a)  Material Default with Respect to Indebtedness. As of September 30,
          ---------------------------------------------
1999, the Company was not in compliance with certain of the debt covenants
contained in both its subordinated note agreement and its credit agreement. The
Company obtained a waiver of default from each of the debtholders. See
Management's Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital Resources, and Note 4 of the Notes to
Consolidated Financial Statements in the accompanying financial statements as of
September 30, 1999. Each of the waivers of default are filed an exhibit to this
Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K.
          --------------------------------

     (a)  Exhibits.
          --------

          10.1   Credit Agreement, dated as of September 13, 1999, among NMT
                 Medical, Inc., NMT Heart, Inc., NMT Investments Corp., NMT
                 NeuroSciences (International), Inc., NMT NeuroSciences (US),
                 Inc., NMT NeuroSciences (IP), Inc. and NMT Neurosciences
                 Innovasive Systems, Inc., as Borrowers, and Brown Brothers
                 Harriman & Co., as Lender

          10.2   $5 Million Promissory Note, dated as of September 13, 1999,
                 issued by NMT Medical, Inc., NMT Heart, Inc., NMT Investments
                 Corp., NMT NeuroSciences (International), Inc., NMT
                 NeuroSciences (US), Inc., NMT NeuroSciences (IP), Inc. and NMT
                 Neurosciences Innovasive Systems, Inc. in favor of Brown
                 Brothers Harriman & Co.

          10.3   Guarantee, dated as of September 13, 1999, made by NMT Medical,
                 Inc., NMT Heart, Inc., NMT Investments Corp., NMT NeuroSciences
                 (International), Inc., NMT NeuroSciences (US), Inc., NMT
                 NeuroSciences (IP), Inc. and NMT Neurosciences Innovasive
                 Systems, Inc. in favor of Brown Brothers Harriman & Co.

          10.4   Security Agreement, dated as of September 13, 1999, between NMT
                 Medical, Inc., NMT Heart, Inc., NMT Investments Corp., NMT
                 NeuroSciences (International), Inc., NMT NeuroSciences (US),
                 Inc., NMT NeuroSciences (IP), Inc. and NMT Neurosciences
                 Innovasive Systems, Inc., as Debtors, and Brown Brothers
                 Harriman & Co., as Lender

          10.5   Collateral Patent Assignment, dated as of September 13, 1999,
                 made by NMT Medical, Inc. in favor of Brown Brothers Harriman
                 & Co.

          10.6   Pledge Agreement, dated as of September 13, 1999, between NMT
                 Medical, Inc., NMT Heart, Inc., NMT Investments Corp., NMT
                 NeuroSciences (International), Inc., NMT NeuroSciences (US),
                 Inc., NMT NeuroSciences (IP), Inc. and NMT Neurosciences
                 Innovasive Systems, Inc., as Pledgors, and Brown Brothers
                 Harriman & Co., as Lender

          10.7   Amendment No. 2 to Subordinated Note and Common Stock Purchase
                 Agreement, dated as of September 13, 1999, by and among NMT
                 Medical, Inc., Whitney Subordinated Debt Fund, L.P. and, for
                 certain purposes, J.H. Whitney & Co.

          10.8   $6 Million Subordinated Promissory Note, dated as of July 8,
                 1998, issued by NMT Medical, Inc. in favor of Whitney
                 Subordinated Debt Fund, L.P.

          10.9   Amended and Restated Loan and Security Agreement, dated as of
                 August 27, 1999, between NMT Medical, Inc. and Image
                 Technologies Corporation

                                       28
<PAGE>

          10.10  Second Amended and Restated Stockholders' Option Agreement,
                 dated as of August 27, 1999, by and among NMT Medical, Inc.,
                 Image Technologies Corporation and the Stockholders of Image
                 Technologies Corporation listed on Schedule A thereto

          10.11  Letter Agreement of Waiver of Compliance with Certain
                 Covenents under Credit Agreements, dated as of November 15,
                 1999, by and among NMT Medical, Inc., NMT Heart, Inc., NMT
                 Investments Corp., NMT NeuroSciences (International), Inc., NMT
                 NeuroSciences (US), Inc., NMT NeuroSciences (IP), Inc. and NMT
                 Neurosciences Innovasive Systems, Inc., as Borrowers, and Brown
                 Brothers Harriman & Co., as Lender

          10.12  Waiver No. 2, made as of November 12, 1999, by and between NMT
                 Medical, Inc. and Whitney Subordinated Debt Fund, L.P.

          27.1   Financial Data Schedule

     (b)  Reports on Form 8-K. On September 15, 1999, the Company filed a
          -------------------
Current Report on Form 8-K with the Securities and Exchange Commission
disclosing that on September 13, 1999, the Company closed a $10 million senior
secured debt facility with Brown Brothers Harriman & Co. A copy of the Company's
September 13, 1999 press release announcing the closing of the senior secured
debt facility was included as Exhibit 99.1 to the Form 8-K.

                                       29
<PAGE>

                                  SIGNATURES


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

                                   NMT MEDICAL, INC.



Date:  November 15, 1999          By:/s/ Thomas M. Tully
                                      -------------------------------------
                                      Thomas M. Tully
                                      President and Chief Executive Officer



Date:  November 15, 1999           By:/s/ William J. Knight
                                      -------------------------------------
                                      William J. Knight
                                      Vice President of Finance and
                                      Administration and Chief Financial
                                      Officer

                                       30

<PAGE>

                                 EXHIBIT INDEX
Exhibits.
--------

  10.1    Credit Agreement, dated as of September 13, 1999, among NMT Medical,
          Inc., NMT Heart, Inc., NMT Investments Corp., NMT NeuroSciences
          (International), Inc., NMT NeuroSciences (US), Inc., NMT NeuroSciences
          (IP), Inc. and NMT Neurosciences Innovasive Systems, Inc., as
          Borrowers, and Brown Brothers Harriman & Co., as Lender

  10.2    $5 Million Promissory Note, dated as of September 13, 1999, issued by
          NMT Medical, Inc., NMT Heart, Inc., NMT Investments Corp., NMT
          NeuroSciences (International), Inc., NMT NeuroSciences (US), Inc., NMT
          NeuroSciences (IP), Inc. and NMT Neurosciences Innovasive Systems,
          Inc. in favor of Brown Brothers Harriman & Co.

  10.3    Guarantee, dated as of September 13, 1999, made by NMT Medical, Inc.,
          NMT Heart, Inc., NMT Investments Corp., NMT NeuroSciences
          (International), Inc., NMT NeuroSciences (US), Inc., NMT NeuroSciences
          (IP), Inc. and NMT Neurosciences Innovasive Systems, Inc. in favor of
          Brown Brothers Harriman & Co.

  10.4    Security Agreement, dated as of September 13, 1999, between NMT
          Medical, Inc., NMT Heart, Inc., NMT Investments Corp., NMT
          NeuroSciences (International), Inc., NMT NeuroSciences (US), Inc., NMT
          NeuroSciences (IP), Inc. and NMT Neurosciences Innovasive Systems,
          Inc., as Debtors, and Brown Brothers Harriman & Co., as Lender

  10.5    Collateral Patent Assignment, dated as of September 13, 1999, made by
          NMT Medical, Inc. in favor of Brown Brothers Harriman & Co.

  10.6    Pledge Agreement, dated as of September 13, 1999, between NMT Medical,
          Inc., NMT Heart, Inc., NMT Investments Corp., NMT NeuroSciences
          (International), Inc., NMT NeuroSciences (US), Inc., NMT NeuroSciences
          (IP), Inc. and NMT Neurosciences Innovasive Systems, Inc., as
          Pledgors, and Brown Brothers Harriman & Co., as Lender

  10.7    Amendment No. 2 to Subordinated Note and Common Stock Purchase
          Agreement, dated as of September 13, 1999, by and among NMT Medical,
          Inc., Whitney Subordinated Debt Fund, L.P. and, for certain purposes,
          J.H. Whitney & Co.

  10.8    $6 Million Subordinated Promissory Note, dated as of July 8, 1998,
          issued by NMT Medical, Inc. in favor of Whitney Subordinated Debt
          Fund, L.P.

  10.9    Amended and Restated Loan and Security Agreement, dated as of August
          27, 1999, between NMT Medical, Inc. and Image Technologies Corporation

                                       31
<PAGE>

  10.10   Second Amended and Restated Stockholders' Option Agreement, dated as
          of August 27, 1999, by and among NMT Medical, Inc., Image Technologies
          Corporation and the Stockholders of Image Technologies Corporation
          listed on Schedule A thereto

  10.11   Letter Agreement of Waiver of Compliance with Certain Covenants under
          Credit Agreements, dated as of November 15, 1999, by and among NMT
          Medical, Inc., NMT Heart, Inc., NMT Investments Corp., NMT
          NeuroSciences (International), Inc., NMT NeuroSciences (US), Inc., NMT
          NeuroSciences (IP), Inc. and NMT Neurosciences Innovasive Systems,
          Inc., as Borrowers, and Brown Brothers Harriman & Co., as Lender

  10.12   Waiver No. 2, made as of November 12, 1999, by and between NMT
          Medical, Inc. and Whitney Subordinated Debt Fund, L.P.

  27.1    Financial Data Schedule

                                       32