<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


For the quarterly period
ended September 30,1999                           Commission File Number 0-20991
      -----------------

                              CAMBRIDGE HEART, INC.
             (Exact name of Registrant as specified in its charter)

            DELAWARE                                      13-3679946
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
   incorporation or organization)

        1 OAK PARK DRIVE
      BEDFORD, MASSACHUSETTS                                01730
(Address of principal executive offices)                  (Zip Code)

                                  781-271-1200
              (Registrant's telephone number, including area code)



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
    ----------    --------


Number of shares outstanding of each of the issuer's classes of common stock
as of November 10, 1999:


               Class                              Number of Shares Outstanding
---------------------------------------           ----------------------------
Common Stock, par value $.001 per share                   13,782,152
<PAGE>

                              CAMBRIDGE HEART, INC.

                                      INDEX

<TABLE>
<CAPTION>

                                                                                   PAGE NUMBER
                                                                                   -----------


<S>                                                                          <C>
PART I.   FINANCIAL INFORMATION

          ITEM 1.    FINANCIAL STATEMENTS

                     BALANCE SHEET AT DECEMBER 31, 1998 AND
                     SEPTEMBER 30, 1999 (Unaudited)                                      3

                     STATEMENT OF OPERATIONS
                     FOR THE THREE MONTH AND NINE MONTH
                     PERIODS ENDED SEPTEMBER 30,1998 AND 1999(Unaudited)                 4

                     STATEMENT OF CASH FLOWS FOR THE NINE MONTH PERIOD ENDED
                     SEPTEMBER 30, 1998 AND 1999 (Unaudited) 5

                     NOTES TO CONDENSED FINANCIAL
                     STATEMENTS                                                          6

          ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS
                     OF FINANCIAL CONDITION AND RESULTS OF
                     OPERATIONS                                                          7



PART II.  OTHER INFORMATION

          ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
                     MARKET RISK                                                        17

          ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                     HOLDERS                                                            17

          ITEM 5.    OTHER INFORMATION                                                  17

          ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K                                   18


SIGNATURES                                                                              18

</TABLE>


  This Quarterly Report on Form 10-Q contains forward-looking statements.
For this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements.  Without
limiting the foregoing, the words "believes," "anticipates," "plans," "expects,"

                                       2
<PAGE>

and similar expressions are intended to identify forward-looking statements.
The important factors discussed below under the caption "Certain Factors That
May Affect Future Operating Results," among others, could cause actual results
to differ materially from those indicated by forward-looking statements made
herein and presented elsewhere by the Company's management from time to time.





                         PART I - FINANCIAL INFORMATION
                                     ITEM 1
                              FINANCIAL STATEMENTS
                              CAMBRIDGE HEART, INC.
                                  BALANCE SHEET


<TABLE>
<CAPTION>
                                                               December 31,    September 30,
                                                                   1998             1999
                                                               ------------     ------------
                                                                                  (Unaudited)
<S>                                                           <C>              <C>
Assets
Current assets:
Cash and cash equivalents ................................     $  2,426,032     $  1,120,092
Marketable securities ....................................        4,064,321        4,681,542
Accounts receivable,(net of allowance for doubtful
 accounts of $32,000 and $40,000 at December 31,
 1998 and September 30, 1999 respectively) ...............          555,991          650,854
Inventory ................................................          426,489          397,984
Prepaid expenses and other current assets ................          190,667          157,442
                                                               ------------     ------------
  Total current assets ...................................        7,663,500        7,007,914

Fixed assets, net ........................................          647,629          684,886
Other assets .............................................          403,604          456,015
                                                               ------------     ------------
                                                               $  8,714,733     $  8,148,815
                                                               ============     ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable .........................................     $    415,842     $    310,230
Accrued expenses .........................................          485,949          567,563
                                                               ------------     ------------
Total current liabilities                                           901,791          877,793
                                                               ------------     ------------

Stockholder's equity:
Common stock, $.001 par value; 20,000,000 shares
  authorized; 10,906,174 and 11,865,988 shares
  issued and outstanding at December 31, 1998
  and September 30, 1999, respectively ...................           10,906           11,866
Additional paid-in capital ...............................       29,603,435       34,310,675
Accumulated deficit ......................................      (21,700,389)
                                                               ------------     ------------

                                                                  7,913,952        7,325,889
Less: deferred compensation ..............................         (101,010)         (54,867)
                                                               ------------     ------------
Total stockholders' equity ...............................        7,812,942        7,271,022
                                                               ------------     ------------
                                                                $ 8,714,733      $ 8,148,815
                                                               ============     ============
</TABLE>

           See accompanying notes to condensed financial statements.



                              CAMBRIDGE HEART, INC.
                             STATEMENT OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>

                                     Three months ended September 30,    Nine months ended September 30,
                                     --------------------------------    -------------------------------
                                         1998            1999                 1998             1999
                                      -----------     -----------          -----------     ------------
<S>                                   <C>            <C>                  <C>            <C>
Revenue..........................     $   661,260     $   540,298          $ 1,511,452     $  1,635,121

Cost of goods sold...............         550,415         537,699            1,360,623        1,517,214
                                      -----------     -----------          -----------     ------------
                                         (110,845)          2,599              150,829          117,907
Cost and expenses:
Research and development.........         899,259         699,332            2,863,002        2,086,515

Selling, general and administrative       868,979       1,214,224            2,739,321        3,538,891
                                      -----------     -----------          -----------     ------------

  Loss from operations...........      (1,657,393)     (1,910,957)          (5,451,494)      (5,507,499)

Interest income..................         133,424          80,048              462,308          211,236
                                      -----------     -----------          -----------     ------------

Net loss.........................     $(1,523,969)    $(1,830,909)         $(4,989,186)    $( 5,296,263)
                                      ===========     ===========          ===========     ============

Net loss per share  basic
and diluted.....................      $     (0.14)    $     (0.15)         $      (.47)    $       (.46)
                                      ===========     ===========          ===========     ============
Weighted average common shares
 outstanding  basic and diluted        10,810,080      11,865,739           10,698,837       11,546,176
                                      ===========     ===========          ===========     ============

</TABLE>
     See accompanying notes to condensed financial statements.

                                       3
<PAGE>

                              CAMBRIDGE HEART, INC
                             STATEMENT OF CASH FLOWS
                                   (unaudited)



<TABLE>
<CAPTION>
                                                            Nine months ended September 30,
                                                                 1998           1999
                                                             -------------  -------------
<S>                                                          <C>            <C>
Cash flows from operating activities:
Net loss...................................................   $(4,989,186)   $(5,296,263)
Adjustments to reconcile net loss to net
  cash used for operating activities:
Depreciation and amoritization.............................       216,590        399,297
Compensation expense related to stock options..............        51,316         27,855
Changes in assets and liabilities:
  Increase in accounts receivable.........................       (230,893)       (94,863)
  Decrease in inventory                                           110,252         28,505
  Decrease in prepaid expenses and other
   current assets..........................................        37,034         33,225
  Decrease in other assets ................................        61,977         13,807
  Increase (decrease) in accounts payable
   and accrued expenses....................................       292,874        (23,998)
                                                               ----------    -----------
  Net cash used for operating activities...................    (4,450,036)    (4,912,435)
Cash flows from investing activities:
(Purchase) sale of marketable securities...................     2,123,214       (617,221)
Purchase of fixed assets...................................      (291,304)      (294,129)
Capitalization of software development costs...............      (237,475)      (208,644)
                                                               ----------    -----------
  Net cash provided by(used for) investing activity             1,594,435     (1,119,994)
                                                               ----------    -----------

Cash flows from financing activities:
Proceeds from issuance of common stock, net

</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>

<S>                                                            <C>          <C>
Of issuance costs                                                  54,093      4,726,489
                                                               ----------    -----------
  Net cash provided by financing activities                        54,093      4,726,489

Net decrease in cash and cash equivalents..................    (2,801,508)    (1,305,940)
Cash and cash equivalents at beginning
  of period................................................     5,665,736      2,426,032
                                                               ----------    -----------
Cash and cash equivalents at end
  of period................................................    $2,864,228    $ 1,120,092
                                                               ==========    ===========
</TABLE>

     See accompanying notes to condensed financial statements.






                              CAMBRIDGE HEART, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

1.   NATURE OF BUSINESS

     Cambridge Heart, Inc. (the "Company"), was incorporated in Delaware on
     January 16, 1990 and is engaged in the research, development and
     commercialization of products for the non-invasive diagnosis of cardiac
     disease. The Company sells its products primarily to hospitals, research
     institutions and cardiology specialists.

2.   BASIS OF PRESENTATION

     The condensed financial statements have been prepared by the Company
     without audit, pursuant to the rules and regulations of the Securities and
     Exchange Commission. Certain information and footnote disclosures normally
     included in financial statements prepared in accordance with generally
     accepted accounting principles have been omitted pursuant to such rules and
     regulations. These condensed financial statements should be read in
     conjunction with the financial statements dated December 31, 1998 and the
     notes thereto included in the Company's 1998 Annual Report on Form 10-K. In
     the opinion of management, all adjustments, consisting only of normal
     recurring adjustments, necessary to present fairly the financial position
     of the Company as of September 30, 1999, and the results of its operations
     and its cash flows for the nine month periods ended September 30, 1998 and
     1999, have been made. The results of operations for such interim periods
     are not necessarily indicative of the results for the full year or any
     future period.


3.   INVENTORIES

     Inventories, consisting primarily of purchased components, are stated at
     the lower of cost or market. Cost is determined using the first in, first
     out (FIFO) method.

                                       5
<PAGE>

4.   NET LOSS PER SHARE

          Consistent with SFAS 128, basic loss per share amounts are based on
     the weighted average number of shares of common stock outstanding during
     the period. Diluted loss per share amounts are based on the weighted
     average number of shares of common stock and potential common stock
     outstanding during the period. The Company has excluded 1,431,222 and
     1,519,238 of potential common stock from the calculation of diluted
     weighted average share amounts for the three and nine month periods ended
     September 30, 1998 and 1999 respectively, as its inclusion would have been
     anti-dilutive.

5.   SUBSEQUENT EVENT

          In October 1999 the Company raised gross proceeds of $4.9 million in
     equity capital less approximately $395,455 in issuance costs from the sale
     of 1,386,347 shares of Common Stock through a private placement with a
     group of  investors at a 19% premium to the final trading price of the
     Company's stock on the NASDAQ on the date of the closing.  In addition,
     warrants with a four year term for the purchase of 277,269 shares of Common
     Stock at $3.50 per share were issued.  If the Company sells Common Stock in
     a capital raising transaction at a lower price per share over the next 12
     months, the investors have the right to receive additional shares to adjust
     the price of their transaction. The sales agent in the transaction, Sunrise
     Securities, Inc. also received warrants with a four year term for the
     purchase of 97,044 shares of Common Stock at $4.20 per share. The proceeds
     of the sale will be used to fund operations. The Company has executed
     Subscription Agreements for an additional 130,000 shares of Common Stock
     for gross proceeds of $455,000 that have not yet closed from this
     transaction. The Company anticipates that these Subscription Agreements
     will be funded before December 31, 1999.

         As a result of this sale of Common Stock at $3.50 per share, the
     Company was obligated to issue 529,817 additional shares of Common Stock to
     the investors that participated in the Company's June, 1999 sale of Common
     Stock. Terms of that transaction provided the investors with the right to
     receive additional shares if the Company sold Common Stock at a price below
     the $5.25 per share they paid.



                                     ITEM 2
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS


OVERVIEW

     The Company is engaged in the research, development and commercialization
of products for the non-invasive diagnosis of cardiac disease. Using innovative
technologies, the Company is addressing such key problems in cardiac diagnosis
as the identification of those at risk of sudden cardiac death, the early
detection of coronary artery disease and the prompt and accurate diagnosis of
heart attack. Clinical research conducted to date has demonstrated that the
presence of T-wave alternans in patients with known, suspected or at risk of
ventricular tachyarrhythmia predicts increased risk of a cardiac event
(ventricular tachyarrhythmia or sudden death).  Sudden cardiac death accounts
for approximately one-half of all cardiac related deaths, or about 350,000 in
the United States each year.

                                       6
<PAGE>

RESULTS OF OPERATIONS

     The Company's principal products are the CH 2000 Alternans System and Hi-
Resolution sensors. Both products have received 510(k) clearance from the Food
and Drug Administration ("FDA") for sale in the United States. Internationally,
the CH 2000 System has received the CE mark for sale in Europe and has been
approved for sale by the Ministry of Health in Japan.


     Late in the third quarter, the Company introduced an upgrade to its T-wave
alternans technology that allows a treadmill to be used to exercise a patient
during an Alternans test, allowing the Alternans test to fit seamlessly into the
physicians normal testing routine and eliminating the need for the purchase of
other non standard devices to exercise patients. In the U.S. a treadmill is the
preferred device used by physicians to elevate a patients heart rate during a
standard stress test. By adding this capability the Company believes that it has
addressed a major requirement for widespread clinical use of its Alternans test.

     In anticipation of the introduction of the treadmill technology, early in
the quarter the Company instructed its U.S. sales force to focus only on
potential customers that can generate revenues of its proprietary disposable
sensors through the clinical use of the Alternans test.  Prior to this, a
significant portion of the Company's revenues came from the sale of standard
stress test systems without the Alternans Option.  The reaction to this change
in focus was a significant increase in revenue from the sale of disposable
sensors for the quarter. For the first time the majority of the Company's
U.S. revenue came from the sale of CH2000 Alternans systems and disposable
products.

     In early October 1999, the Company introduced two new programs to the
marketplace targeted at increasing clinical adoption of Alternans testing.  The
programs address customer concerns regarding a shortage of available funds for
the purchase of capital equipment and the absence of reimbursement from third
party payers for the performance of the Alternans test.  The Company has
partnered with a financing company to provide customers with the opportunity to
acquire T-wave alternans technology through a commitment to the clinical use of
the Alternans test and a minimal upfront cash investment.  The Company has also
introduced to customers a program that provides them support in their efforts to
make successful submissions for reimbursement to third party payers for their
performance of the Alternans test. The Company will guarantee a payment of
$90.00 for each Alternans test performed only after all appeals have been
exhausted. The Company will record a reserve against revenue at the time it
records the sale of the sensors for an amount equal to the actual guarantee
payout experience. This guarantee ends at the earliest of the date a third party
payer begins to reimburse for the Alternans test or June 30, 2001.

     Also during October 1999 the Company raised gross proceeds of $4.9 million
in equity capital less approximately $395,455 in issuance costs from the sale of
1,386,347 shares of Common Stock through a private placement with a group of
investors at a 19% premium to the final trading price of the Company's stock on
the NASDAQ on the date of the closing. In addition, warrants with a four year
term for the purchase of 277,269 shares of Common Stock at $3.50 per share were
issued. If the Company sells Common Stock in a capital raising transaction at a
lower price per share over the next 12 months, the investors have the right to
additional shares to adjust the pricing of their transaction. The sales agent in
the transaction, Sunrise Securities, Inc. also received warrants with a four
year term for the purchase of 97,044 shares of Common Stock at $4.20 per share.
The Company has executed Subscription Agreements for an additional 130,000
shares of Common Stock for gross proceeds of $455,000 that have not yet closed
from this transaction. The Company anticipates that these Subscription
Agreements will be funded before December 31, 1999.

     As a result of this sale of Common Stock at $3.50 per share, the
Company was obligated to issue 529,817 additional shares of Common Stock to
the investors that participated in the Company's June, 1999 sale of Common
Stock. Terms of that transaction provided the investors with the right to
receive additional shares if the Company sold Common Stock at a price below
the $5.25 per share they paid.


                                       7

<PAGE>

THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1999

     Revenue for the three month periods ended September 30, 1998 and 1999 were
$661,260 and $540,298 respectively, a decrease of 18%. Revenue for the nine
month periods ended September 30, 1998 and 1999 were $1,511,452 and $1,635,121
respectively, an increase of 8%. As stated above, the focus of the Company's
U.S. sales organization has been on targeting customers capable of generating
revenue from the sale of proprietary disposable sensors for the Company through
clinical use of the Alternans Test. Sales of CH2000 Alternans systems and
disposable sensors accounted for 60% of U.S. revenue and 56% of Company revenue
for the quarter ended September 30, 1999 compared to 34% and 47% respectively
for the same period last year. Total revenue from the sale of disposable sensors
increased to $40,026 for the three month period ended September 30,1999. This is
a 640% increase over the same period of 1998 and a 117% increase over the
quarter ended June 30, 1999. As a result of directing the U.S. sales force to
focus only on T-wave alternans sales, U.S. sales of standard stress test units,
i.e., those without T-wave alternans, declined from 13 units to 3 units for the
three month period ended September 30, 1998 and 1999, respectively. Worldwide
sales of standard stress units declined from 19 to 11 for the same periods of
1998 and 1999.

     The gross margin for the three month periods ended September 30, 1998 and
1999 were 17% and less than 1% of revenue respectively. Gross margin for the
nine month periods ended September 30, 1998 and 1999 were 10% and 7% of revenue
respectively. Special pricing considerations for selected current international
distributors and initial demonstration unit pricing for two new international
distributors are reflected in the results for the three month periods ended
September 30, 1998 and 1999.

     Research and development expenses decreased from $899,259 in the three
month period ended September 30, 1998 to $699,332 for the same period of 1999.
In 1998 the Company incurred costs associated with the continuation of data
collection for its Labeling and Follow - Up Studies supporting the submission of
the 510(k) with the FDA for expansion of labeling claims for its T-wave
alternans technology. These costs were not repeated in 1999 since FDA approval
of the expanded label was received by the Company in April, 1999. The Research
and Development expenses for the nine month period ended September 30, 1998 and
1999 were $2,863,002 and $2,086,515 respectively. The Company anticipates that
its research and development expenses will increase during the final quarter of
1999 into the first half of 2000 due to costs associated with the development of
the Company's low cost T-wave alternans product scheduled for market
introduction in 2000.

     Selling, general and administrative expenses increased from $868,979 in the
three month period ended September 30, 1998 to $1,214,224 in the same period in
1999. The incremental costs are associated with the Company's various marketing
and media initiatives targeted at increasing awareness of the benefits of T-wave
alternans and the Alternans test among both the medical community and the
patient population at large. The Company will continue its efforts targeted at
increasing T-wave alternans awareness and has introduced a program intended to
address customer concerns regarding third party reimbursement for the
performance of the Alternans test as described above. For the nine month period

                                       8
<PAGE>

ended September 30, 1998 and 1999, selling, general and administrative expenses
were $2,739,321 and $3,538,891 respectively.

     Interest income was $133,424 for the three month period ended September 30,
1998 compared to $80,048 for the same period in 1999. For the nine month period
ended September 30, 1998 and 1999, interest income was $462,308 and $211,236
respectively. This decrease is a result of a lower cash balance due to operating
losses incurred by the Company for the three and nine month periods ended
September 30, 1999.


LIQUIDITY AND CAPITAL RESOURCES

     The Company initially financed operations primarily from the sale of
convertible preferred stock. Through June 30, 1996 the Company had raised
$9,065,000 (net of stock issuance costs) from the sales of equity securities. On
August 2, 1996, the Company raised approximately $19,650,000 (net of issuance
costs) from the sale of 2,437,750 shares of common stock in the Company's
initial public offering. In conjunction with the initial public offering,
4,455,708 shares of preferred stock were converted to common stock.

     In June 1999, the Company raised approximately $4,775,000 (net of issuance
costs) from the sale of 952,380 shares of common stock to a group of investors
led by the Tail Wind Fund Ltd. In addition, warrants for the purchase of 95,238
shares of common stock were also issued at an exercise price of $7.22 per share
with a term of four years. These proceeds are intended to be used to fund the
Company's operations.

     In October 1999, the Company raised approximately $4,457,000 (net of stock
issuance costs) from the sale of 1,386,347 shares of common stock to a group of
investors. In addition, warrants with a four year term for the purchase of
277,269 shares of Common Stock at $3.50 per share were issued to the investors
and warrants with a four year term for the purchase of 97,044 shares of Common
Stock at $4.20 per share were issued to the Agent, Sunrise Securities Inc. The
proceeds of this transaction are intended to be used to fund the Company's
operations.


     As of September 30, 1999, the Company had cash, cash equivalents and
marketable securities of $5,801,634. During the nine month period ended
September 30, 1999, the Company's cash, cash equivalents and marketable
securities decreased by $688,719, or 11% consistent with its net loss for the
period of $5,296,263, net of proceeds from the sale of common stock in June 1999
of $4,775,000. Fixed asset additions related to improvements in the Company's
information systems infrastructure and increased sales demonstration and
clinical research units amounted to $291,544 as of September 30, 1999.

     The Company anticipates that its existing capital resources after the funds
raised in October 1999, will be adequate to satisfy its capital requirements for
the next fifteen months.  However, in the event unforeseen difficulties arise,
the Company's available capital may be exhausted in less than twenty months.  In
any event, the Company will require additional funds to support its operating
requirements or for other purposes and intends to raise such additional funds
through public or private equity financing or from other sources. There can be
no assurance that additional financing will be available at all or, if
available, such financing would be obtainable on terms acceptable to the
Company.  If adequate financing is not available, the Company may be

                                       9
<PAGE>

required to curtail its operations significantly or to obtain funds through
entering into collaborative agreements or other arrangements on less favorable
terms. The failure of the Company to raise capital on acceptable terms would
have a material adverse effect on the Company's business, financial condition
and results of operations.

     The Company expects its capital expenditures to increase as it continues to
commercialize its products and expand its clinical trial efforts.  The Company
does not expect capital expenditures to exceed an aggregate of $1,000,000 over
the next two years.

     Under the terms of various license, consulting and technology agreements,
the Company is required to pay royalties on sales of its products. Minimum
license maintenance fees under these license agreements, which are creditable
against royalties otherwise payable for each year, range from $20,000 to $45,000
per year in total through 2008. The Company is committed to pay an aggregate of
$320,000 of such minimum license maintenance fees subsequent to September 30,
1999 as the technology is used. As part of these agreements, the Company is also
committed to meet certain development and sales milestones, including a
requirement to spend a minimum of $200,000 in any two-year period for research
and development, clinical trials, marketing, sales and/or manufacturing of
products related to certain technology covered by the consulting and technology
agreements.



YEAR 2000 ISSUES

     Many currently installed computer systems and software products are coded
to accept or recognize only two digit entries in the date code field. These
systems may recognize a date using "00" as the year 1900 rather than the year
2000. As a result, computer systems and/or software used by many companies and
government agencies may need to be upgraded to comply with year 2000
requirements or risk system failure or miscalculations causing disruptions of
normal business activities.

     The Company has completed its assessment of its exposure to the year 2000
issue and has established a response to that exposure.  Generally, the Company
has year 2000 exposure in three areas: (i) the Company's business information
systems, including computer operating systems and applications, (ii) the
hardware and software included in the CH 2000 System, and (iii) computer systems
used by third parties, including suppliers of the Company.

     The Company has upgraded its existing software to versions that are year
2000 compliant and is in the process of installing a new business information
system for functionality reasons.  The new business information system is
currently in place.  All business information system changes would be performed
regardless of the year 2000 issue from both a timing and cost perspective.  The
Company therefore believes that it has spent and is spending an immaterial
incremental amount on year 2000 remediation over what it would spend to
implement its planned business information system improvements.

     The Company believes that its CH 2000 System is year 2000 compliant.
Software used in the CH2000 Alternans System has been upgraded to year 2000

                                       10
<PAGE>

compliant versions and the Company has successfully tested hardware, operating
system and applications software simulating post year 2000 systems clock dates.

     The Company has sent written requests for year 2000 information to all
suppliers.  The Company has been informed by all suppliers of material hardware
and software components of the CH 2000 System, and substantially all of the
suppliers, that the products used by the Company are currently year 2000
compliant.

     Management continues to support the compliance efforts through allocation
of the resources necessary to complete the project. Management does not expect
the costs of bringing the Company's systems into compliance with Year 2000 to
have a material adverse effect on the Company's financial position, results of
operations or liquidity.  The Company does not believe that it is subject to
significant business risk related to its customers' and suppliers' Year 2000
efforts.


CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

     This Quarterly Report on Form 10-Q (the "Quarterly Report") contains
forward-looking statements.  For this purpose, any statements contained herein
that are not statements of historical fact may be deemed to be forward-looking
statements.  Without limiting the foregoing, the words "believes,"
"anticipates," "plans," "expects," "intends" and similar expressions are
intended to identify forward-looking statements.  There are a number of
important factors that could cause the Company's actual results to differ
materially from those indicated by such forward-looking statements.  These
factors include, without limitation, those set forth below and elsewhere in this
Quarterly Report.  In this section, "we," "us," and "our" refer to Cambridge
Heart, Inc.(unless the context otherwise requires).



                         RISKS RELATED TO OUR OPERATIONS

WE MAY NEVER GENERATE SUBSTANTIAL REVENUES

     We are engaged primarily in the commercialization, manufacture, research
and development of our products for the non-invasive diagnosis of cardiac
disease.  We have incurred substantial and increasing net losses through
September 30, 1999.  We can give no assurance that we will ever generate
substantial revenues or achieve profitability on a quarterly or annual basis.
We believe that our research and development expenses will increase
significantly in the future as we develop additional products and fund clinical
trials of our product candidates.  Our research and development expenses may
also increase in the future as we supplement our internal research and
development with additional third party technology licenses and potential
acquisition of complimentary products and technologies.  We also expect that our
selling, general and administrative expenses will continue to increase in
connection with the continued expansion of our sales and marketing activities.
Revenues generated from the sale of our products will depend upon numerous
factors, including:

 .  the timing of regulatory actions;

                                       11
<PAGE>

 .  progress of product development;

 .  the extent to which our products gain market acceptance;

 .  varying pricing promotions and volume discounts to customers;

 .  competition; and

 .  the availability of third-party reimbursement.

OUR TECHNOLOGY MAY NEVER ACHIEVE MARKET ACCEPTANCE

     We believe that our future success will depend, in large part, upon the
successful commercialization and market acceptance of our T-wave alternans
technology.  Market acceptance will depend upon our ability to demonstrate the
diagnostic advantages and cost-effectiveness of this technology.  We can give no
assurance that we will be able to successfully commercialize or achieve market
acceptance of our T-wave alternans technology or that our competitors will not
develop competing technologies that are superior to our technology.

THE RESULTS OF FUTURE CLINICAL STUDIES MAY NOT SUPPORT THE USEFULNESS OF OUR
TECHNOLOGY

     We have sponsored and are continuing to sponsor clinical studies relating
to our T-wave alternans technology and Hi-Resolution sensors to establish the
prognostic value of such technology. Although studies on high risk patients to
date have indicated that the measurement of T-wave alternans to predict the
vulnerability to ventricular arrhythmia is comparable to electro physiology
testing, there can be no assurances that the results of such studies,
particularly studies involving patients who are not high risk, will continue to
be favorable. Any clinical studies or trials which fail to demonstrate that the
measurement of T-wave alternans is at least comparable in accuracy to
alternative diagnostic tests, or which otherwise call into question the cost-
effectiveness, efficacy or safety of our technology, would have a material
adverse effect on our business, financial condition and results of operations.

WE MAY NOT RECEIVE NECESSARY FOREIGN REGULATORY APPROVALS

     A significant portion of our revenue is dependent upon sales of our
products outside the United States.  Foreign regulatory bodies have established
varying regulations, duties and tax requirements.  Specifically, the European
Union has promulgated rules which require that medical products receive the
right to affix the CE mark, an international symbol of adherence to quality
assurance standards and compliance with applicable European medical device
directives.  We can give no assurance that we will be able to obtain European
Union approval for any future products.  Our inability or failure, or the
inability or failure of our international distributors, to comply with varying
foreign regulations or the imposition of new regulations could restrict or, in
certain countries, result in the prohibition of the sale of our products, and
thereby adversely affect our business, financial condition and results of
operations.

                                       12
<PAGE>

WE MAY HAVE DIFFICULTY RESPONDING TO CHANGING TECHNOLOGY

     The medical device market is characterized by rapidly advancing technology.
Our future success will depend, in large part, upon our ability to anticipate
and keep pace with advancing technology and competitive innovations.  However,
there can be no assurance that we will be successful in identifying, developing
and marketing new products or enhancing our existing products.  In addition,
there can be no assurance that new products or alternative diagnostic techniques
will not be developed that will render our current or planned products obsolete
or inferior.  Rapid technological development by competitors may result in our
products becoming obsolete before we recover a significant portion of the
research, development and commercialization expenses incurred with respect to
such products.

WE HAVE SIGNIFICANT COMPETITION FROM A VARIETY OF SOURCES

     Competition from competitors' medical devices that diagnose cardiac disease
is intense and likely to increase. We compete with manufacturers of
electrocardiogram stress tests, the conventional method of diagnosing ischemic
heart disease, as well as with manufacturers of other invasive and non-invasive
tests, including EP testing, electrocardiograms, Holter monitors, ultrasound
tests and systems of measuring cardiac late potentials. Many of our competitors
and prospective competitors have substantially greater capital resources, name
recognition, research and development experience and regulatory, manufacturing
and marketing capabilities. Many of these competitors offer broad, well-
established product lines and ancillary services not offered by Cambridge Heart.
Some of our competitors have long-term or preferential supply arrangements with
physicians and hospitals which may act as a barrier to market entry.

WE DEPEND HEAVILY ON INDEPENDENT MANUFACTURERS' REPRESENTATIVES AND FOREIGN
DISTRIBUTORS

     We currently market our products in the United States through a small
direct sales force and independent manufacturers' representatives. There can be
no assurance that we will be able to continue to recruit and retain skilled
sales management, direct sales persons or independent manufacturers'
representatives. We market our products internationally through independent
distributors. These distributors also distribute competing products under
certain circumstances. The loss of a significant international distributor could
have a material adverse effect on our business if a new distributor, sales
representative or other suitable sales organization could not be found on a
timely basis in the relevant geographic market. To the extent that we rely on
sales in certain territories through distributors, any revenues we receive in
those territories will depend upon the efforts of our distributors. Furthermore,
there can be no assurance that a distributor will market our products
successfully or that the terms of any future distribution arrangements will be
acceptable to us.

          RISKS RELATED TO THE MARKET FOR CARDIAC DIAGNOSTIC EQUIPMENT

OUR BUSINESS COULD BE SUBJECT TO PRODUCT LIABILITY CLAIMS


     The testing, manufacture, marketing and sale of medical devices entails the
inherent risk of liability claims or product recalls.  Although we maintain
product liability insurance in the United States and in other countries in which
we conduct business, including clinical trials and product marketing and sales,

                                       13
<PAGE>

there can be no assurance that such coverage is adequate or will continue to be
available.  Product liability insurance is expensive and in the future may not
be available on acceptable terms, if at all.  A successful product liability
claim or product recall could inhibit or prevent commercialization of the CH 200
System or cause a significant financial burden on Cambridge Heart, or both, and
could have a material adverse effect on our business, financial condition and
ability to market the CH 2000 Alternans System as currently contemplated.

OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE ARE UNABLE TO PROTECT OUR
PROPRIETARY TECHNOLOGY

     Our success will depend, in large part, on our ability to develop
patentable products, enforce our patents and obtain patent protection for our
products both in the United States and in other countries.  However, the patent
positions of medical device companies, including Cambridge Heart, are generally
uncertain and involve complex legal and factual questions.  We can give no
assurance that patents will issue from any patent applications we own or license
or that, if patents do issue, the claims allowed will be sufficiently broad to
protect our proprietary technology.  In addition, we can give no assurance that
any issued patents we own or license will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide us with
competitive advantages.  We also rely on unpatented trade secrets to protect our
proprietary technology, and we can give no assurance that others will not
independently develop or otherwise acquire substantially equivalent techniques,
or otherwise gain access to our proprietary technology, or disclose such
technology or that we can ultimately protect meaningful rights to such
unpatented proprietary technology.

OTHERS COULD CLAIM THAT WE INFRINGE THEIR INTELLECTUAL PROPERTY RIGHTS

     Our commercial success will depend in part on our neither infringing
patents issued to others nor breaching the licenses upon which our products
might be based.  Our licenses of patents and patent applications impose various
commercialization, sublicensing, insurance, royalty and other obligations on our
part.  If we fail to comply with these requirements, licenses could convert from
being exclusive to nonexclusive in nature or could terminate.

WE COULD BECOME INVOLVED IN LITIGATION OVER INTELLECTUAL PROPERTY RIGHTS

     The medical device industry has been characterized by extensive litigation
regarding patents and other intellectual property rights.  Litigation, which
would likely result in substantial cost to us, may be necessary to enforce any
patents issued or licensed to us and/or to determine the scope and validity of
others' proprietary rights.  In particular, our competitors and other third
parties hold issued patents and are assumed to hold pending patent applications
which may result in claims of infringement against us or other patent
litigation.  We also may have to participate in interference proceedings
declared by the United States Patent and Trademark Office, which could result in
substantial cost, to determine the priority of inventions.  Furthermore, we may
have to participate at substantial cost in International Trade Commission
proceedings to abate importation of products which would compete unfairly with
our products.

WE MAY NOT BE ABLE TO PROTECT OUR TRADE SECRETS

     We rely on confidentiality agreements with our collaborators, employees,
advisors, vendors and consultants.  We can give no assurance that these

                                       14
<PAGE>

agreements will not be breached, that we would have adequate remedies for any
breach or that our trade secrets will not otherwise become known or be
independently developed by competitors. Failure to obtain or maintain patent and
trade secret protection, for any reason, could have a material adverse effect on
Cambridge Heart.



WE MAY NOT BE ABLE TO OBTAIN THIRD-PARTY REIMBURSEMENT

     Our revenues currently depend and will continue to depend, to a significant
extent, on sales of the CH 2000 Alternans System.  Our ability to successfully
commercialize the CH 2000 Alternans System depends in part on the availability
of, and our ability to obtain, adequate levels of third-party reimbursement for
use of the CH 2000 Alternans System.  Reimbursement is not currently available
for the use of the CH 2000 Alternans System for measuring T-wave alternans.

     The amount of reimbursement in the United States that will be available for
clinical use of the CH 2000 Alternans System, if any, is uncertain and may vary.
In the United States, the cost of medical care is funded, in substantial part,
by government insurance programs, such as Medicare and Medicaid, and private and
corporate health insurance plans.  Third-party payors may deny reimbursement if
they determine that a prescribed device has not received appropriate FDA or
other governmental regulatory clearances, is not used in accordance with cost-
effective treatment methods as determined by the payor, or is experimental,
unnecessary or inappropriate.  Our ability to commercialize the CH 2000
Alternans System successfully will depend, in large part, on the extent to which
appropriate reimbursement levels for the cost of the use of the CH 2000
Alternans System are obtained from government authorities, private health
insurers and other organizations, such as health maintenance organizations.

     We can give no assurance that reimbursement in the United States or foreign
countries will be available for the CH 2000 Alternans System, or if available,
will not be decreased in the future or that reimbursement amounts will not
reduce the demand for, or the price of, the CH 2000 Alternans System.  The
unavailability of third-party reimbursement or the inadequacy of the
reimbursement for medical tests using the CH 2000 Alternans System would have a
material adverse effect on Cambridge Heart.


WE HAVE A NUMBER OF RISKS ASSOCIATED WITH THE YEAR 2000

     Although we do not believe that year 2000 issues will have a significant
impact on our internal operations or on our products, there can be no assurance
that we will not experience interruptions of operations because of year 2000
problems.  Year 2000 problems could require us to incur unanticipated expenses,
and such expenses could have a material adverse effect on our business,
financial condition and results of operations.  Furthermore, the purchasing
patterns of customers or potential customers may be affected by year 2000 issues
as companies expend significant resources to correct their current systems for
year 2000 compliance.  These expenditures may result in reduced funds being
available to purchase products offered by Cambridge Heart.

                                       15
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Item 3.    Quantitative and Qualitative Disclosure about Market Risk

In January 1997, the securities and Exchange Commission issued Financial
Reporting Release No. 48, which expands the disclosure requirements for certain
derivatives and other financial instruments.  The Company does not utilize
derivative financial instruments.  The carrying amounts reflected in the balance
sheet of cash and cash equivalents, marketable securities, trade receivables and
trade payables approximates fair value at September 30,1999 due to the short
maturities of these instruments.



                           PART II - OTHER INFORMATION



Item 1.  Nothing to report

Item 2.  Nothing to report

Item 3.  Nothing to report

Item 4.  Nothing to report

Item 5.  OTHER INFORMATION

1.   The Company hired James Sheppard as Vice President, Operations in August
     1999.

2.   The Board of Directors have approved the calling of a special meeting of
     all of the Company's Stockholders of record on November 16, 1999 to
     authorize an amendment to the Company's 1996 Equity Incentive Plan to
     increase the total number of shares available for grant to employees as
     stock options from 1,000,000 to 1,300,000 and to approve continuation of
     the 1996 Equity Incentive Plan. The meeting will be held on December 21,
     1999 at 10:00 a.m. at the offices of Hale & Dorr LLP, 60 State Street,
     Boston, MA.

                                       16
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                                     ITEM 6
                        EXHIBITS AND REPORTS ON FORM 8-K

a.   The exhibits listed in the Exhibit Index filed as part of this report are
     filed as part of or are included in this report.



                                    SIGNATURE



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



                                         CAMBRIDGE HEART, INC.


Date: November 15, 1999                  By: /s/ Jeffrey M. Arnold
                                         ---------------------------------------
                                            Jeffrey M. Arnold
                                            Chairman, President, Chief
                                            Executive Officer

                                       17
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                                  EXHIBIT INDEX



Exhibit Number                Description
--------------                -----------


     11                       Statement re Computation of Net Loss per Share

     27                       Financial Data Schedule