SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 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 period ended         DECEMBER 31, 2000
                    ------------------------------------------------------------

                                      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        1-8403
                                        ---------------------

                            ENERGY CONVERSION DEVICES, INC.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

     DELAWARE                                            38-1749884
-------------------------------------------------------------------------------
(State or other jurisdiction of            (I. R.S. Employer Identification No.)
incorporation or organization)

    1675 WEST MAPLE ROAD, TROY, MICHIGAN                    48084
--------------------------------------------------------------------------------
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code        (248) 280-1900
                                                     --------------------------

--------------------------------------------------------------------------------
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 February 12, 2001, there were 219,913 shares of Class A Common
Stock, 430,000 shares of Class B Common Stock and 18,889,274 shares of Common
Stock outstanding.

                             Page 1 of 37 Pages


<PAGE>

                        PART I - FINANCIAL INFORMATION
                        ------------------------------

Item 1.  Financial Statements
-------  --------------------

                      ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                           CONSOLIDATED STATEMENTS OF OPERATIONS
                           -------------------------------------
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                   Three Months Ended            Six Months Ended
                                                       December 31,                December 31,
                                                --------------------------  -------------------------
                                                    2000         1999           2000          1999
                                                ------------ -------------  ------------  -----------

<S>                                              <C>           <C>           <C>           <C>
REVENUES
   Product sales                                 $ 3,768,948   $ 1,377,228   $ 6,960,512   $ 3,247,395
   Royalties                                         798,224     1,074,879     1,673,860     1,738,034
   Revenues from product development
     agreements                                    7,768,228     1,992,195    12,861,704     5,909,749
   Revenues from license
      agreements                                   2,500,000     1,778,000     2,800,000     2,178,000
   Other                                             252,480       547,617       925,914     1,276,813
                                                 -----------   -----------   -----------   -----------
      TOTAL REVENUES                              15,087,880     6,769,919    25,221,990    14,349,991

EXPENSES
   Cost of product sales                           3,786,622     2,287,791     6,981,181     4,638,488
   Cost of revenues from product
      development agreements                       7,422,280     2,260,195    11,982,880     5,897,963
   Product development and research                3,048,166     4,205,219     5,427,506     7,337,820
   Patents, including patent defense               1,024,160       419,642     2,014,767       893,359
   Operating, general and administrative           1,845,362     1,348,374     3,947,061     2,767,504
                                                 -----------   -----------   -----------   -----------
      TOTAL EXPENSES                              17,126,590    10,521,221    30,353,395    21,535,134
                                                 -----------   -----------   -----------   -----------

LOSS FROM OPERATIONS                              (2,038,710)   (3,751,302)   (5,131,405)   (7,185,143)

OTHER INCOME (EXPENSE)
   Interest income                                 1,633,200       192,443     3,187,212       418,902
   Interest expense                                 (210,579)     (117,463)     (431,272)     (216,256)
   Equity loss in joint ventures                    (597,019)     (738,000)     (803,521)   (1,298,000)
   Minority interest share of losses                 360,047          -          454,947          -
   Other nonoperating income (net)                   136,893       123,866       262,907       244,901
                                                 -----------   ------------  -----------   -----------
      TOTAL OTHER INCOME (EXPENSE)                 1,322,542      (539,154)    2,670,273      (850,453)
                                                 -----------   ------------  -----------   -----------

NET LOSS                                         $  (716,168)  $(4,290,456)  $(2,461,132)  $(8,035,596)
                                                 ===========   ============  ===========   ===========

BASIC NET LOSS PER SHARE                         $  (.04)      $  (.32)      $  (.13)      $  (.60)
                                                 ========      ========      ========      ========
DILUTED NET LOSS PER SHARE                       $  (.04)      $  (.32)      $  (.13)      $  (.60)
                                                 ========      ========      ========      ========
</TABLE>

See notes to consolidated financial statements.


                                       2
<PAGE>



                  ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------
                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
                                                                 December 31,     June 30,
                                                                    2000            2000
                                                               --------------  --------------
                                                                 (Unaudited)
<S>                                                              <C>             <C>
CURRENT ASSETS (NOTE A)
   Cash, including cash equivalents of
      $33,288,000 at December 31, 2000 and
      $44,386,000 at June 30, 2000                               $ 33,295,069    $ 44,592,017
   Investments                                                     59,945,615      44,723,500
   Accounts receivable (net of allowance for
      uncollectible accounts of approximately
      $579,000 at December 31, 2000 and
      at June 30, 2000)                                             6,572,235       6,915,578
   Amounts due from related parties                                17,690,059       9,149,942
   Inventories                                                      1,042,945         994,077
   Other                                                              920,267         302,413
                                                                 ------------    ------------
         TOTAL CURRENT ASSETS                                     119,466,190     106,677,527

PROPERTY, PLANT AND EQUIPMENT
   Land and land improvements                                         312,588         312,588
   Buildings and improvements                                         957,548       1,042,781
   Machinery and other equipment (including construc-
      tion in progress of approximately $809,000 and
      $578,000 at December 31, 2000 and June 30, 2000)             19,566,211      18,808,002
   Capitalized lease equipment                                      4,721,355       4,734,653
                                                                 ------------    ------------
                                                                   25,557,702      24,898,024
   Less accumulated depreciation
      and amortization                                            (19,640,066)    (18,636,752)
                                                                 -------------   -------------
         TOTAL PROPERTY, PLANT AND EQUIPMENT                        5,917,636       6,261,272

Investments in EV Global, Innovative Transportation
      Systems and Rare Earth Ovonic-China (NOTE A)                  3,548,716       2,639,716

Long-Term Note Receivable - Bekaert ECD Solar Systems               9,938,897       9,631,495

JOINT VENTURES (NOTE D)
   Bekaert ECD Solar Systems                                       20,747,662      22,394,868
   Texaco Ovonic Fuel Cell Company                                      -               -
   Texaco Ovonic Hydrogen Systems                                       -               -
   GM Ovonic                                                            -               -
   Ovonyx                                                               -               -
   Ovonic Media                                                         -               -
   Sovlux - Russia                                                      -               -

OTHER ASSETS                                                        1,489,428       1,300,764
                                                                 ------------    ------------
         TOTAL ASSETS                                            $161,108,529    $148,905,642
                                                                 ============    ============

</TABLE>

See notes to consolidated financial statements.


                                       3
<PAGE>


                      ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                               CONSOLIDATED BALANCE SHEETS
                               ---------------------------
                          LIABILITIES AND STOCKHOLDERS' EQUITY
                          ------------------------------------
<TABLE>
<CAPTION>

                                                                  December 31,      June 30,
                                                                      2000            2000
                                                                ---------------- -------------
                                                                  (Unaudited)
<S>                                                              <C>             <C>
CURRENT LIABILITIES
   Accounts payable and accrued expenses                         $  8,161,293    $  6,151,372
   Salaries, wages and amounts withheld
      from employees                                                2,121,167       1,998,684
   Deferred revenues under business
      agreements (NOTE A)                                           8,114,897       6,537,975
   Current installments on long-term liabilities                    2,642,835       2,200,039
                                                                 ------------    ------------
         TOTAL CURRENT LIABILITIES                                 21,040,192      16,888,070

LONG-TERM LIABILITIES                                               8,933,752      10,427,858

LONG-TERM NOTES PAYABLE                                             9,938,897       9,631,495

DEFERRED GAIN                                                         448,542         669,072

NONREFUNDABLE ADVANCE ROYALTIES (NOTE C)                            3,922,776       3,938,667
                                                                 ------------    ------------
         TOTAL LIABILITIES                                         44,284,159      41,555,162

NEGATIVE GOODWILL (NOTE D)                                          2,915,210       3,148,426

MINORITY INTEREST (NOTE D)                                          4,970,547       5,425,494

STOCKHOLDERS' EQUITY
   Capital Stock
   Class A Convertible Common Stock,
      par value $0.01 per share:
         Authorized - 500,000 shares
         Issued & outstanding - 219,913 shares                          2,199           2,199
   Class B Convertible Common Stock,
      par value $0.01 per share
         Authorized, Issued and Outstanding - 430,000 shares            4,300           4,300
   Common Stock, par value $0.01 per share:
         Authorized - 30,000,000 shares Issued &
         Outstanding - 18,823,819 shares at December 31,
         2000 and 18,098,646 shares at June 30, 2000                  188,238         180,986
   Additional paid-in capital                                     335,789,490     324,293,312
   Accumulated deficit                                           (224,645,212)   (222,184,080)
   Accumulated other comprehensive income                             830,338          50,783
   Unearned Compensation on Class B Convertible
      Common Stock                                                 (3,230,740)     (3,570,940)
                                                                 -------------   -------------
         TOTAL STOCKHOLDERS' EQUITY                               108,938,613      98,776,560
                                                                 ------------    ------------

         TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                $161,108,529    $148,905,642
                                                                 ============    ============


</TABLE>


See notes to consolidated financial statements.


                                       4
<PAGE>


                    ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                          -------------------------------------
                                       (Unaudited)
<TABLE>
<CAPTION>

                                                                      Six Months Ended
                                                                         December 31,
                                                                -------------------------------
                                                                     2000            1999
                                                                --------------  ---------------
<S>                                                              <C>             <C>
OPERATING ACTIVITIES:
   Net loss                                                      $  (2,461,132)  $  (8,035,596)
   Adjustments to reconcile net loss to net cash
      used in operating activities:
         Depreciation and amortization                               1,164,305       1,082,777
         Equity loss in joint ventures                                 803,521       1,298,000
         Profit deferred on sales to Bekaert ECD Solar Systems         843,685           -
         Creditable royalties                                          (15,891)        (67,396)
         Stock options issued to executive for services rendered         -             113,250
         Stock issued for services rendered                            340,200         425,850
         Amortization of deferred gain                                (220,530)       (220,530)
         Negative goodwill amortization                               (233,216)          -
         Minority interest                                            (454,947)          -
         Loss on disposal of capital equipment                           7,825           4,958
   Changes in working capital
      Accounts receivable and amounts due from related parties      (8,196,774)        672,904
      Inventories                                                      (48,868)        217,035
      Other assets                                                    (806,519)         46,326
      Accounts payable and accrued expenses                          2,132,404        (461,512)
      Deferred revenues under business agreements                    1,576,922          82,522
                                                                 -------------   -------------
NET CASH USED IN OPERATIONS                                         (5,569,015)     (4,841,412)

INVESTING ACTIVITIES:
   Investment in United Solar                                            -            (900,000)
   Investment in Innovative Transportation                            (909,000)
   Purchases of capital equipment                                     (828,493)       (292,651)
   Purchase of investments                                         (19,493,060)          -
   Sale of investments                                               5,050,500           -
                                                                 -------------   -------------
NET CASH USED IN INVESTING ACTIVITIES                              (16,180,053)     (1,192,651)

FINANCING ACTIVITIES:
   Principal payments under short-term and long-term
      debt and capitalized lease obligations                        (1,051,310)       (653,892)
   Proceeds from sale of common stock upon exercise
      of stock option and warrants                                   7,708,870          30,050
   Proceeds from issuance of additional stock to Texaco              3,794,560           -
                                                                 -------------   -------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                 10,452,120        (623,842)

NET DECREASE IN CASH AND CASH EQUIVALENTS                          (11,296,948)     (6,657,905)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                    44,592,017      19,076,983
                                                                 -------------   -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                       $  33,295,069   $  12,419,078
                                                                 =============   =============


</TABLE>

See notes to consolidated financial statements.


                                       5

<PAGE>

                    ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                          -------------------------------------
                                       (Unaudited)


                                                      Six Months Ended
                                                         December 31,
                                                   -----------------------
                                                      2000         1999
                                                   ----------   ----------

      SUPPLEMENTAL DISCLOSURES OF
         CASH FLOW INFORMATION:

            Cash paid for interest                 $ 431,272    $ 216,256



































See notes to consolidated financial statements.


                                       6
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - DECEMBER 31, 2000
          --------------------------------------------------------------

NOTE A - Basis of Presentation
------------------------------

      Information for the three months and six months ended December 31, 2000
(fiscal 2001) and 1999 (fiscal 2000) is unaudited, but includes all adjustments
which Energy Conversion Devices, Inc. (ECD) considers necessary for a fair
presentation of financial condition, cash flows and results of operations.

      In accordance with the instructions for the completion of the Quarterly
Report on Form 10-Q, certain information and footnotes necessary to comply with
Generally Accepted Accounting Principles in the United States (GAAP) for annual
financial statements have been condensed or omitted. These financial statements
should be read in conjunction with ECD's 2000 Annual Report on Form 10-K, which
contains a summary of ECD's accounting principles and other footnote
information.

      The consolidated financial statements include the accounts of ECD; its
91.4%-owned subsidiary Ovonic Battery Company, Inc. (Ovonic Battery), a company
formed to develop and commercialize ECD's Ovonic NiMH battery technology; and,
effective April 11, 2000, its 81%-owned subsidiary United Solar Systems Corp.
(United Solar) (see Note D) (collectively "the Company"). The remaining shares
of Ovonic Battery are owned by Honda Motor Company, Ltd., Sanoh Industrial
Company, Ltd. and Sanyo Electric Co., Ltd. The remaining shares of United Solar
are owned by N.V. Bekaert S.A. and its U.S.-based subsidiary (Bekaert). No
minority interest related to Ovonic Battery is recorded in the consolidated
financial statements because there is no additional funding requirement by the
minority shareholders. See Note D for discussion of these ventures.

      The Company has a number of strategic alliances and has, as of December
31, 2000, six major investments accounted for by the equity method: (i) Bekaert
ECD Solar Systems LLC (Bekaert ECD Solar Systems), United Solar's 40% joint
venture with Bekaert; (ii) GM Ovonic LLC (GM Ovonic), Ovonic Battery's 40%
joint venture with General Motors Corporation (GM) to manufacture and sell the
Company's proprietary NiMH batteries for electric, hybrid electric and fuel cell
electric vehicle applications. On October 12, 2000, ECD and Texaco jointly
announced that Texaco Inc. (Texaco) and Ovonic Battery signed a Memorandum of
Understanding (MOU) to continue the business of GM Ovonic in a new entity, to be
renamed Texaco Ovonic Battery, LLC (Texaco Ovonic Battery), in which GM's
interest is to be converted and restructured so that ECD and Texaco each will
have a 50% interest in the joint venture. The MOU was signed in conjunction with
an MOU signed between Texaco and GM on October 10, 2000; (iii) Texaco Ovonic
Fuel Cell Company LLC (Texaco Ovonic Fuel Cell Company), a 50%-owned joint
venture with Texaco to further develop and commercialize Ovonic Regenerative
Fuel Cells(TM) technology; (iv) Texaco Ovonic Hydrogen Systems LLC (Texaco
Ovonic Hydrogen Systems), a 50%-owned joint venture with Texaco to further
develop Ovonic hydrogen storage technology; (v)Ovonyx, Inc. (Ovonyx), a
41.7%-owned joint venture with Mr. Tyler Lowrey, Intel Corporation (Intel)
and other investors, to commercialize ECD's Ovonic Unified
Memory (OUM) technology;


                                       7
<PAGE>


               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE A - Basis of Presentation (Continued)
------------------------------------------

and (vi) Ovonic Media L.L.C. (Ovonic Media), a joint venture owned 51% by
General Electric (GE) through its GE Plastics business unit and 49% by ECD.
In addition, ECD has a 50%-owned joint venture in Russia, Sovlux Co., Ltd.
(Sovlux). See Note D for discussion of all of ECD's ventures.

      Upon consolidation, all intercompany accounts and transactions are
eliminated.

      Certain items for the three months and six months ended December 31, 1999
and as of June 30, 2000 have been reclassified to be consistent with the
classification of items as of and for the three months and six months ended
December 31, 2000.

      In preparing financial statements in conformity with GAAP, management is
required to make estimates and assumptions that affect the reported amount of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and revenues and expenses during the
reported period. Actual results could differ from those estimates. The Company
is impacted by other factors such as the continued receipt of contracts from its
industrial partners and the U.S. government, its ability to protect and maintain
the proprietary nature of its technology, its continued product and
technological advances and the strength and ability of the Company's licensees
and joint venture partners to commercialize the Company's products and
technologies.

      In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
(SAB 101), which clarifies certain existing accounting principles for the timing
of revenue recognition and its classification in the financial statements. The
SEC delayed the required implementation date of SAB 101 by issuing Staff
Accounting Bulletins No. 101A, "Amendment: Revenue Recognition in Financial
Statements," and No. 101B, "Second Amendment: Revenue Recognition in Financial
Statements," in March and June 2000, respectively. As a result, SAB 101 will not
be effective for the Company until the quarter ending June 30, 2001. The Company
believes the adoption of SAB 101 will not be material to the earnings and
financial position of the Company.

      In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," amended by SFAS No. 138, "Accounting for
Derivative Instruments and Hedging Activities, an amendment to SFAS No. 133."
The Company adopted SFAS 133 on July 1, 2000. The Statement requires the Company
to recognize all derivatives on the balance sheet at fair value. Derivatives
that are not hedges must be adjusted to fair value through income. If the
derivative is a hedge, depending on the nature of the hedge, changes in the fair
value of derivatives will either be offset against the change in fair value of
the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings.  The ineffective portion of a derivative's change in fair value will
be immediately recognized


                                       8
<PAGE>


               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE A - Basis of Presentation (Continued)
------------------------------------------

in earnings. The adoption of SFAS 133 had no impact on the earnings or the
financial position of the Company.

Other Comprehensive Income (Loss)
---------------------------------

      The Company's total comprehensive loss was as follows:

<TABLE>
<CAPTION>

                                        Three Months Ended          Six Months Ended
                                           December 31,                December 31,
                                    --------------------------  --------------------------
                                        2000          1999          2000          1999
                                    ------------  ------------  ------------  ------------
                                    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)


<S>                                 <C>           <C>           <C>           <C>
Net Loss                            $  (716,168)  $(4,290,456)  $(2,461,132)  $(8,035,596)
OTHER COMPREHENSIVE INCOME:
Unrealized gains on securities          587,425         -           779,555         -
                                    ------------  ------------  ------------  ------------
COMPREHENSIVE INCOME (LOSS)         $  (128,743)  $(4,290,456)  $(1,681,577)  $(8,035,596)
                                    ============  ============  ============  ============
</TABLE>


Investments in EV Global Motors Company (EV Global), Innovative Transportation
------------------------------------------------------------------------------
Systems A.G. (Innovative Transportation) and Rare Earth Ovonic - China
----------------------------------------------------------------------

      The Company accounts for its investments in EV Global and Innovative
Transportation on the cost method of accounting. On October 3, 2000, ECD
invested an additional amount of $909,000 in Innovative Transportation,
increasing its ownership interest to 19%. The Company has three joint ventures
with Rare Earth High-Tech Co. Ltd. (Rare Earth High-Tech) of Baotou Steel
Company of Inner Mongolia, China, for the manufacturing and licensing of its
battery and other technologies. The Company accounts for its 19% interest in
these joint ventures on the cost method of accounting.

Financial Instruments
---------------------

      The Company considers the carrying value of its financial instruments to
be a reasonable estimate of fair value.

Translation Gains and Losses
----------------------------

      Since most of the Company's contracts and transactions are denominated and
settled in U.S. dollars, there are no significant foreign currency gains or
losses.


                                       9
<PAGE>



               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE A - Basis of Presentation (Continued)
------------------------------------------

Accounts Receivable and Amounts Due from Related Parties
--------------------------------------------------------

      The following tabulation shows the component elements of accounts
receivable from long-term contracts, royalties and other programs:


                                                  December 31,       June 30,
                                                      2000             2000
                                                 --------------   --------------
      U.S. Government:
         Amounts billed                           $   937,400      $   758,930
         Unbilled                                     523,269          750,131
                                                  -----------      -----------
               Total                                1,460,669        1,509,061
                                                  -----------      -----------
      Commercial Customers:
         Amounts billed                             1,512,436        2,974,176
         Related party billed
               - Bekaert ECD Solar Systems         10,425,496          939,854
               - Ovonyx                                 4,975          128,865
               - GM Ovonic                            832,182          433,760
         Royalties                                  1,850,835        1,847,485
         Due per contracts                              -               11,400
         Related party unbilled
               - GM Ovonic                                743            1,688
               - Ovonyx                               222,889          352,668
               - Bekaert ECD Solar Systems          1,997,400        7,144,030
               - Rare Earth Ovonic joint ventures   1,625,315          149,077
               - Texaco Ovonic Fuel Cell Company    1,272,939            -
               - Texaco Ovonic Hydrogen Systems     1,308,120            -
         Other unbilled                             1,051,175          212,745
                                                  -----------      -----------
            Total                                  22,104,505       14,195,748
                                                  -----------      -----------
      Other                                         1,276,120          939,711
                                                  -----------      -----------
      Allowance for Uncollectible Accounts           (579,000)        (579,000)
                                                  -----------      -----------
               TOTAL                              $24,262,294      $16,065,520
                                                  ===========      ===========

      Amounts due per contracts, related party unbilled, and other unbilled from
commercial customers represent revenues recognized on the percentage-of-
completion method of accounting related to machine-building contracts and
amounts earned under certain commercial contracts, for which amounts are billed
in subsequent months.

      Certain contracts with the U.S. government require a retention that is
paid upon completion of audit of the Company's indirect rates. There are no
material retentions at December 31, 2000 and June 30, 2000. Certain U.S.
government contracts remain subject to audit. Management believes that
adjustments, if any, which may result from an audit would not be material to the
financial position or results of operations of the Company.


                                       10
<PAGE>


              ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE A - Basis of Presentation (Continued)
------------------------------------------

Inventories
-----------

      Inventories of raw materials, work in process and finished goods for the
manufacture of electrodes, battery packs and other products, together with
supplies, are valued at the lower of cost (moving average) or market. Cost
elements included in inventory are materials, direct labor and manufacturing
overhead. Cost of sales is removed from inventory based on actual costs of items
shipped to customers.

      Inventories (principally those of Ovonic Battery and United Solar) are as
follows:

                                               December 31,      June 30,
                                                   2000            2000
                                               ------------    ------------

              Finished products                 $    46,590     $   37,785
              Work in process                       552,691        557,732
              Raw materials                         443,664        398,560
                                                -----------     ----------
                                                $ 1,042,945     $  994,077
                                                ===========     ==========

Product Sales
-------------

      Product sales include photovoltaics (after April 11, 2000), machine
building, battery pack and battery electrode revenues. Revenues related to
machine-building contracts are recognized on the percentage-of-completion method
of accounting using the costs incurred to date as a percentage of the total
expected costs. All other product sales are recognized when the product is
shipped.

Royalties
---------

      Most license agreements provide for the Company to receive royalties from
the sale of products which utilize the licensed technology. Typically, the
royalties are incremental to and distinct from the license fee and are
recognized as revenue upon the sale of the respective licensed product. In
several instances, the Company has received cash payments for nonrefundable
advance royalty payments which are creditable against future royalties under the
licenses. Advance royalty payments are deferred and recognized in revenues as
the creditable sales occur, the underlying agreement expires, or when the
Company has demonstrable evidence that no additional royalties will be
creditable and, accordingly, the earnings process is completed.

      Ovonic Battery had a contingent fee arrangement with a law firm which
required Ovonic Battery to pay the law firm 25% of royalties received relative
to consumer battery licenses entered into in 1995 in settlement of an
International Trade Commission action. In December 2000, the Company paid the
law firm $1,300,000 ($977,000 of which had been accrued through December 31,
2000 and an additional $323,000 was expensed) in full


                                       11
<PAGE>


               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE A - Basis of Presentation (Continued)
------------------------------------------

settlement for all current and future payments. No additional contingent
fee payments will be required.

      ECD has a royalty trust arrangement whereby the Company is obligated to
pay a trust 25% of optical memory royalties received.

Product Development, Patents and Technology
-------------------------------------------

      Product development and research costs are expensed as they are incurred
and, as such, the Company's investments in its technologies and patents are
recorded at zero in its financial statements, regardless of their values. The
technology investments are the bases by which the Company is able to enter into
license and joint venture agreements.

Business Agreements
-------------------

      A substantial portion of revenues is derived through business agreements
for the development and/or commercialization of products based upon the
Company's proprietary technologies. The following describes two types of such
agreements.

      The first type of business agreement relates to licensing the Company's
proprietary technology. Licensing activities are tailored to provide each
licensee with the right to use the Company's technology, most of which is
patented, for a specific product application or, in some instances, for further
exploration of new product applications of such technologies. The terms of such
licenses, accordingly, are tailored to address a number of circumstances
relating to the use of such technology which have been negotiated between the
Company and the licensee. Such terms generally address whether the license will
be exclusive or nonexclusive, whether the licensee is limited to very narrowly
defined applications or to broader-based product manufacture or sale of products
using such technologies, whether the license will provide royalties for products
sold which employ such licensed technology and how such royalties will be
measured, as well as other factors specific to each negotiated arrangement. In
some cases, licenses relate directly to product development that the Company has
undertaken pursuant to product development agreements; in other cases, they
relate to product development and commercialization efforts of the licensee; and
other agreements combine the efforts of the Company with those of the licensee.

      License agreement fees are generally recognized as revenue at the time the
agreements are consummated, which is the completion of the earnings process.
Typically, such fees are nonrefundable, do not obligate the Company to incur any
future costs or require future performance by the Company, and are not related
to future production or earnings of the licensee. License fees payable in
installments are recorded at the present value of the amounts to be received,
taking into account the collectibility of the license fee. In some instances, a
portion of such license fees is contingent upon the commencement of production
or other uncertainties. In these cases, license fee revenues are not recognized


                                       12
<PAGE>


               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE A - Basis of Presentation (Continued)
------------------------------------------

until commencement of production or the resolution of uncertainties. Generally,
there are no current or future direct costs associated with license fees.

      In the second type of agreement, product development agreements, the
Company conducts specified product development projects related to one of its
principal technology specializations for an agreed-upon fee. Some of these
projects have stipulated performance criteria and deliverables whereas others
require "best efforts" with no specified performance criteria. Revenues from
product development agreements that contain specific performance criteria are
recognized on a percentage-of-completion basis which matches the contract
revenues to the costs incurred on a project based on the relationship of costs
incurred to estimated total project costs. Revenues from product development
agreements, where there are no specific performance terms, are recognized in
amounts equal to the amounts expended on the programs. Generally, the
agreed-upon fees for product development agreements contemplate reimbursing the
Company for costs considered associated with project activities including
expenses for direct product development and research, patents, operating,
general and administrative expenses and depreciation. Accordingly, expenses
related to product development agreements are recorded as cost of revenues from
product development agreements.

Overhead and General and Administrative Allocations
---------------------------------------------------

      The Company allocates overhead and general and administrative expenses to
product development research expenses and to cost of revenues from research and
development agreements based on a percentage of direct labor costs. For cost of
revenues from product development agreements, this allocation is limited to the
amount of revenues, after direct expenses, under the applicable agreements.
Overhead is allocated to cost of product sales through the application of
overhead to inventory costs.

Other Operating Revenues
------------------------

      Other operating revenues consist principally of revenues related to
services provided to certain related parties and third-party service revenue
realized by certain of the Company's service departments, including the
Production Technology and Machine Building Division and Central Analytical
Laboratory and changes in estimates of revenues recognized on certain customers
and contracts.

Other Nonoperating Income
-------------------------

      Other nonoperating income-net consists of the amortization of deferred
gains and rental income.


                                       13

<PAGE>

                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE B - Product Sales, Royalties, Revenues from Product Development Agreements
-------------------------------------------------------------------------------
and License and other Agreements
--------------------------------

      The Company has product sales and business agreements with third parties
for which royalties and revenues are included in the consolidated statements of
operations. A summary of all of the Company's revenues follows:

                                                      Six Months Ended
                                                         December 31,
                                               -------------------------------
                                                    2000             1999
                                               --------------   --------------
      Product Sales:
         Photovoltaics                          $  2,969,527     $      -
         Machine building                          3,414,241        1,122,680
         Battery packs                               448,603        1,004,762
         Negative and positive electrodes            128,141        1,119,953
                                                ------------     ------------
                                                $  6,960,512     $  3,247,395
                                                ============     ============
      Royalties:
         Battery technology                     $  1,597,034     $  1,676,424
         Optical Memory                               76,826           61,610
                                                ------------     ------------
                                                $  1,673,860     $  1,738,034
                                                ============     ============

      Revenues from product development
       agreements:
         Photovoltaics                          $  1,327,579     $    873,531
         Battery technology                        1,362,988        2,896,180
         Optical Memory                            1,859,377          686,541
         Hydrogen                                  5,094,472        1,345,999
         Fuel Cells                                3,217,288            -
         Other                                         -              107,498
                                                ------------     ------------
                                                $ 12,861,704     $  5,909,749
                                                ============     ============
      License agreements:
           Battery                              $  2,800,000     $  2,178,000
                                                ============     ============


      The following table presents revenues by country based on the location of
the customer:

                                                         Six Months Ended
                                                            December 31,
                                                   ----------------------------
                                                       2000           1999
                                                   ------------   ------------
         United States                             $15,625,487    $ 9,755,095
         China                                       4,868,079          -
         Germany                                        74,181          -
         Japan                                       1,516,580      3,638,752
         Hong Kong                                     108,616          -
         Netherlands                                    40,000        687,500
         Mexico                                      2,969,527          -
         Other countries                                19,520        268,644
                                                   -----------    -----------
                                                   $25,221,990    $14,349,991
                                                   ===========    ===========



                                       14
<PAGE>

                 ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                    Notes to Consolidated Financial Statements

NOTE C - Nonrefundable Advance Royalties
----------------------------------------

      At December 31, 2000 and June 30, 2000, the Company deferred recognition
of revenue relating to nonrefundable advance royalty payments. Nonrefundable
advance royalties consist of the following:

                                             December 31,       June 30,
                                                2000              2000
                                             ------------     ------------

        Battery                              $ 1,913,331      $ 1,913,331
        Optical memory                         2,009,445        2,025,336
                                             -----------      -----------
                                             $ 3,922,776      $ 3,938,667
                                             ===========      ===========

      During the three months and six months ended December 31, 2000 and 1999
$11,187, $15,891, $42,700 and $67,396, respectively, of creditable royalties
earned were recognized as revenue. There are no obligations in connection with
any of the advance royalty agreements which require the Company to incur any
additional costs.

NOTE D - Joint Ventures and Investments
---------------------------------------

Joint Ventures
--------------

      Intellectual property resulting from the Company's investments in its
technologies is valued at zero on the balance sheet. Intellectual property
provides the foundation for the creation of the important strategic alliances
whereby the Company provides intellectual property and joint venture partners
provide cash.

      The Company's investments in its joint ventures, other than Bekaert ECD
Solar Systems, are recorded at zero. The Company will continue to carry its
investment in each of these joint ventures at zero until the venture becomes
profitable (based upon the venture's history of sustainable profits), at which
time the Company will start to recognize over a period of years its share, if
any, of the then equity of each of the ventures, and will recognize its share of
each venture's profits or losses on the equity method of accounting.

      Based upon the opinion of legal counsel, the Company believes that it has
no obligation to fund any losses that its joint ventures incur beyond the
Company's investment. Additionally, the Company has no financial or other
guarantees with respect to liabilities incurred by its joint ventures.


                                       15
<PAGE>



                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE D - Joint Ventures and Investments (Continued)
---------------------------------------------------

United Solar/Bekaert ECD Solar Systems

      In April 2000, ECD and Bekaert entered into a strategic alliance in the
field of photovoltaic (solar) products. The joint venture entails an investment
by Bekaert in a new United Solar/Bekaert ECD Solar manufacturing plant with an
annual capacity of 25 megawatts (MW) to be designed and built by ECD, a sales
and marketing expansion program, and the purchase of Canon's interest in United
Solar for a total investment by Bekaert of $84,000,000.

      The new ECD-Bekaert strategic alliance operates through two related
companies: United Solar, which is owned 81% by ECD and 19% by Bekaert, and a new
assembly, marketing and sales company, Bekaert ECD Solar Systems, which is owned
60% by Bekaert and 40% by United Solar. In April 2000, at the closing of the
aforementioned transactions, ECD received a total of $7,000,000 from United
Solar and Bekaert ECD Solar Systems. Of this amount, $5,000,000 was an advance
on the 25 MW machine-building order and $2,000,000 was a repayment by United
Solar to ECD of previous loans made by ECD to United Solar. Effective April 11,
2000, ECD is consolidating United Solar in ECD's financial statements. Prior to
the transaction, United Solar's fiscal year-end was December 31.

      ECD valued the acquisition of Canon's interest in United Solar at
$13,214,630, which included the issuance of 700,000 shares of ECD Common Stock
valued at $12,758,000 plus the $456,630 balance in ECD's investment account for
United Solar on April 11, 2000. The acquisition resulted in ECD's ownership
interest in United Solar increasing from 49.98% to 81%. The Company recorded
the acquisition under the purchase method of accounting and allocated the
purchase price for this acquisition to the net assets of United Solar. The value
of the net assets acquired exceeded the purchase price, resulting in negative
goodwill. The Company allocated this negative goodwill to reduce United Solar's
long-term assets (capital equipment). The remaining negative goodwill
($3,300,000) is being amortized over seven years on a straight-line basis.


                                       16
<PAGE>

                      ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE D - Joint Ventures and Investments (Continued)
---------------------------------------------------

      The following sets forth certain financial data regarding Bekaert ECD
Solar Systems that are derived from Bekaert ECD Solar Systems' financial
statements.

                           BEKAERT ECD SOLAR SYSTEMS
                            STATEMENT OF OPERATIONS
                           -------------------------

                                          Three Months Ended   Six Months Ended
                                             December 31,        December 31,
                                               2000                  2000
                                          ------------------   ----------------
                                              (Unaudited)        (Unaudited)

         Revenues                           $  1,492,895       $  2,726,786

         Operating Expenses
            Cost of Sales                      2,191,689          3,340,096
            General and administrative         1,501,829          2,180,791
                                            ------------       ------------
            Total                              3,693,518          5,520,887
         Other Income (net)                       53,225            129,372
                                            ------------       ------------
         Net Loss                           $ (2,147,398)      $ (2,664,729)
                                            ============       ============


                           BEKAERT ECD SOLAR SYSTEMS
                                 BALANCE SHEET
                                 -------------

                                                         December 31,
                                                             2000
                                                      ------------------
                                                         (Unaudited)
      Current Assets:
         Cash and Cash Equivalents                       $ 10,923,569
         Inventory                                          7,817,222
         Other Current Assets                               6,130,363
                                                         ------------
              Total Current Assets                         24,871,154
      Property, Plant and Equipment (Net)                   6,986,129
      Other Assets                                         21,970,202
                                                         ------------
              Total Assets                               $ 53,827,485
                                                         ============
      Current Liabilities:
         Accounts Payable and Accrued Expenses           $ 12,486,659
      Note Payable-ECD                                      9,938,897
                                                         ------------
              Total Liabilities                            22,425,556
      Total Members' Equity                                31,401,929
                                                         ------------
              Total Liabilities and Members' Equity      $ 53,827,485
                                                         ============

                                       17
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE D - Joint Ventures and Investments (Continued)
---------------------------------------------------

GM Ovonic

      In 1994, Ovonic Battery and GM formed a joint venture, GM Ovonic, for the
manufacture and commercialization of Ovonic NiMH batteries for electric and
hybrid electric vehicles. GM has a 60% interest and Ovonic Battery has a 40%
interest in this joint venture. Ovonic Battery has contributed intellectual
property, licenses, production processes, know-how, personnel and engineering
services pertaining to Ovonic NiMH battery technology to the joint venture. The
contribution of GM consists of operating capital, plant, equipment and
management personnel necessary for the production of batteries. On October 12,
2000, ECD and Texaco jointly announced that Texaco and Ovonic Battery signed a
MOU to continue the business of GM Ovonic in a new entity, to be named Texaco
Ovonic Battery, in which GM's interest is to be converted and restructured so
that ECD and Texaco each will have a 50 percent interest in the joint venture.
The MOU was signed in conjunction with an MOU signed between Texaco and GM on
October 10, 2000.

      There are no financial statements currently available for GM Ovonic. GM
Ovonic is in its developmental stage and, as such, has a history of operating
losses.

Ovonyx

      In January 1999, ECD and Mr. Tyler Lowrey, the former vice chairman and
chief technology officer of Micron Technology, Inc., formed a strategic
alliance, Ovonyx (formed on June 23, 1999 and initially owned 50% by ECD, with
the balance owned by Mr. Lowrey and his affiliate), to commercialize ECD's OUM -
a unique thin-film, nonvolatile, solid-state memory. In February 2000, Ovonyx
formed a strategic alliance with Intel in which Intel Capital, and other
investors, made an equity investment in Ovonyx. Additionally, Ovonyx granted
Intel a nonexclusive royalty-bearing license and began a joint development
program utilizing one of Intel's wafer fabrication facilities. Presently, ECD
owns 41.7% of Ovonyx and Mr. Lowrey and his affiliate own 41.7% of Ovonyx.

      ECD recorded revenues from Ovonyx of $119,000 and $213,000 for the three
and six months ended December 31, 2000, for services performed for its
operations which commenced on January 15, 1999. There were no revenues from
Ovonyx in the three and six months ended December 31, 1999.


                                       18
<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE D - Joint Ventures and Investments (Continued)
---------------------------------------------------

      The following sets forth certain financial data regarding Ovonyx that are
derived from Ovonyx's financial statements.

                                 OVONYX, INC.
                             STATEMENT OF OPERATIONS
                             -----------------------

                                         Three Months Ended   Six Months Ended
                                            November 30,        November 30,
                                               2000                2000
                                         ------------------  -----------------
                                            (Unaudited)        (Unaudited)

          Revenues                          $  462,399          $ 1,487,567

          Operating Expenses
             Product development               564,336            1,015,236
             Patent                            109,359              122,799
             General and administrative        130,238              315,143
                                            ----------          -----------
                  Total                        803,933            1,453,178
          Other Income                         104,993              203,777
                                            ----------          -----------
          Net Income (Loss)                 $ (236,541)         $   238,166
                                            ==========          ===========


                                      OVONYX, INC.
                                     BALANCE SHEET
                                     -------------
                                                             November 30,
                                                                2000
                                                         ------------------
                                                            (Unaudited)
      Current Assets:
         Cash and Cash Equivalents                          $ 1,505,525
         Investments                                          4,729,765
         Accounts Receivable                                    424,915
         Other Current Assets                                    16,359
                                                            -----------
            Total Current Assets                              6,676,564
      Property, Plant and Equipment (Net)                         9,531
                                                            -----------
            Total Assets                                    $ 6,686,095
                                                            ===========

      Current Liabilities:
         Accounts Payable and Accrued Expenses              $   173,040
                                                            -----------
            Total Current Liabilities                           173,040
      Total Stockholders' Equity                              6,513,055
                                                            -----------
            Total Liabilities and Stockholders' Equity      $ 6,686,095
                                                            ===========


                                       19
<PAGE>


                 ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE D - Joint Ventures and Investments (Continued)
---------------------------------------------------

Ovonic Media

      In March 2000, ECD and General Electric formed a strategic alliance, the
first activity of which resulted in the creation of a joint venture, Ovonic
Media, to design, develop, demonstrate and commercialize ECD's proprietary
technology for DVDs. This joint venture is owned 51% by General Electric through
its GE Plastics business unit and 49% by ECD. ECD has contributed intellectual
property and licenses and will contribute other assets to the joint venture. GE
will make cash and other contributions to the joint venture.

      The following sets forth certain financial data regarding Ovonic Media
that are derived from Ovonic Media's financial statements.

                                  OVONIC MEDIA
                             STATEMENT OF OPERATIONS
                             -----------------------

                                         Three Months Ended   Six Months Ended
                                            December 31,        December 31,
                                               2000                2000
                                         ------------------  -----------------
                                           (Unaudited)          (Unaudited)
         Revenues                           $     -             $     -

         Operating expenses:
            Product development                 315,097             825,959
            General and administrative          100,824             201,648
                                            -----------         -----------
               Total expenses                   415,921           1,027,607
                                            -----------         -----------
         Loss from operations                  (415,921)         (1,027,607)
            Interest expense                     (2,177)             (5,099)
                                            -----------         -----------
         Net Loss                           $  (418,098)        $(1,032,706)
                                            ===========         ===========


                                  OVONIC MEDIA
                                  BALANCE SHEET
                                  -------------
                                                         December 31,
                                                             2000
                                                       --------------
                                                         (Unaudited)
         Current Assets:
            Advances to ECD                             $   420,861
                                                        -----------
               Total Current Assets                         420,861
            Property, Plant and Equipment (Net)             589,217
                                                        -----------
                  Total Assets                          $ 1,010,078
                                                        ===========

         Current Liabilities:
            Current Portion of Equipment Lease          $    22,646
                                                        -----------
               Total Liabilities                             22,646
                                                        -----------

         Capital Contributions                            2,569,302
         Accumulated Deficit                             (1,581,870)
                                                        -----------
               Total Members' Equity                        987,432
                                                        -----------
                Total Liabilities and Members' Equity   $ 1,010,078
                                                        ===========



                                       20
<PAGE>



               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE D - Joint Ventures and Investments (Continued)
---------------------------------------------------

Texaco Ovonic Fuel Cell Company

      In September 2000, ECD and Texaco Energy Systems, Inc. (TESI), a wholly
owned subsidiary of Texaco, formed Texaco Ovonic Fuel Cell Company. TESI will
fund initial product and market development. The primary use of this funding is
to fund a contract from Texaco Ovonic Fuel Cell to ECD to further develop Ovonic
Regenerative Fuel Cells(TM) technology. The joint venture is owned 50% by TESI
and 50% by ECD. ECD has contributed intellectual property and licenses.

Texaco Ovonic Hydrogen Systems

      In October 2000, ECD and TESI formed Texaco Ovonic Hydrogen Systems. TESI
will fund initial product and market development. The primary use of this
funding is to fund a contract from Texaco Hydrogen Systems to ECD to further
develop the Ovonic Hydrogen technology. The joint venture is owned 50% by TESI
and 50% by ECD. ECD has contributed intellectual property and licenses.

Sovlux

      In 1990, ECD formed Sovlux, a joint venture to manufacture the Company's
photovoltaic products in the countries of the former Soviet Union. Sovlux is
owned 50% by ECD and 50% by the State Research and Production Enterprise Kvant
and enterprises of the Russian Ministry of Atomic Energy (Minatom). Sovlux has
not been able to commence production of photovoltaic products due to current
economic conditions in Russia.

      In 1998, ECD formed Sovlux Battery to produce NiMH batteries, materials
and components for sale to Ovonic Battery and its licensees. Sovlux Battery is
owned 50% by ECD and 50% by the Chepetsky Mechanical Plant (Chepetsky), an
enterprise of Minatom. ECD's contribution to the ventures consists solely of
technology.

      There are no financial statements currently available for Sovlux or Sovlux
Battery. Sovlux and Sovlux Battery are in their developmental stage and, as
such, have a history of operating losses.

Investments in EV Global, Innovative Transportation and Rare Earth Ovonic-China

      In February 1998, the Company and EV Global, a Lee Iacocca company,
entered into a Stock Purchase Agreement (Agreement) which provided for the
transfer to EV Global of 146,924 shares of ECD Common Stock and warrants to
purchase 133,658 shares of ECD Common Stock. The Agreement also provided for the
transfer to ECD of 250,000 shares of EV Global Common Stock and 129,241 shares
of Unique Mobility, Inc. (Unique Mobility) Common Stock. Pursuant to the terms
of the warrant agreement, EV Global


                                       21
<PAGE>


               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE D - Joint Ventures and Investments (Continued)
---------------------------------------------------

elected to exchange, in March 2000, the warrants for 49,888 shares of ECD Common
Stock.

      Innovative Transportation, a German company formed to manufacture
battery-driven electric, hybrid-electric and fuel cell electric vehicles, was
initially capitalized with a minor amount of cash and a contribution of 625,000
shares of Unique Mobility Common Stock. Of the stock contribution, 208,333
shares (79,092 of which were acquired from EV Global in exchange for 34,723
shares of ECD) were contributed by ECD. At the inception of Innovative
Transportation, ECD's interest was 5.7%. ECD's interest increased to 11.7% as a
result of an additional investment of $400,000 on June 19, 2000. On October 3,
2000, ECD invested an additional amount of $909,000 in Innovative
Transportation, increasing its ownership interest to 19%.

      Innovative Transportation is in its formative stage and there are no
financial statements currently available.

      During the year ended June 30, 2000, ECD signed an agreement with Rare
Earth High-Tech of Baotou Steel Company of Inner Mongolia, China. Rare Earth
High-Tech is one of the principal suppliers of rare earth raw materials to NiMH
battery material manufacturers around the world and, together with its
affiliates, is believed to own approximately half of the world's reserves of
these rare earth materials. The agreement called for the creation of joint
ventures licensed by Ovonic Battery for manufacturing of advanced NiMH battery
technology, NiMH alloy powders, advanced Ovonic nickel hydroxide materials and
the acquisition of production equipment for NiMH batteries from Ovonic Battery.
Three of the contemplated five joint ventures have been formed. ECD's
subsidiary, Ovonic Battery, will contribute technology for its 19% interest in
each of these joint ventures.


                                       22
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE E - Net Loss Per Share
---------------------------

      Basic net loss per common share is computed by dividing the net loss by
the weighted average number of common shares outstanding. The Company uses the
treasury stock method to calculate diluted earnings per share. Potential
dilution exists from stock options and warrants. Weighted average number of
shares outstanding and basic and diluted earnings per share for the three months
and six months ended December 31 are computed as follows:

<TABLE>
<CAPTION>

                                         Three Months Ended              Six Months Ended
                                            December 31,                    December 31,
                                    ----------------------------    ----------------------------
                                        2000            1999            2000            1999
                                    ------------    ------------    ------------    ------------
                                    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)

     <S>                            <C>             <C>             <C>             <C>
     Weighted average number of
        shares outstanding           19,324,355      13,384,411      19,104,079      13,383,565

     Net loss                       $  (716,168)    $(4,290,456)    $(2,461,132)    $(8,035,596)

     BASIC NET LOSS PER SHARE       $   (.04)       $   (.32)       $   (.13)       $   (.60)
                                    ===========     ===========     ===========     ===========


     Weighted average number of
        shares outstanding           19,324,355      13,384,411      19,104,079      13,383,565

     Weighted average shares for
        dilutive securities               -              -                -               -
                                    -----------     -----------     -----------     -----------
     Average number of shares
        outstanding and potential
        dilutive shares              19,324,355      13,384,411      19,104,079      13,383,565

     Net loss                       $  (716,168)    $(4,290,456)    $(2,461,132)    $(8,035,596)

     DILUTED LOSS PER SHARE         $   (.04)       $   (.32)       $   (.13)       $   (.60)
                                    ===========     ===========     ===========     ===========
</TABLE>


       Due to the Company's net losses, the weighted average number of shares of
potentially dilutive securities for 2000 of 1,809,002 (three months) and
2,030,660 (six months) and for 1999 potentially dilutive securities of 129,085
(three months) and 167,974 (six months) were excluded from the calculations of
diluted loss per share as inclusion of these securities would have been
antidilutive to the net loss per share. Additional securities of 4,859,851 for
1999 (three months) and 4,559,851 (six months) and 0 for both 2000 periods were
excluded from the 1999 and 2000 calculations of weighted average number of
shares of potential dilutive securities. Because of the relationship between
the exercise prices and the average market price of ECD's Common Stock during
these periods, these securities would have been antidilutive regardless of the
Company's net loss.


                                       23
<PAGE>

                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements


NOTE F - Business Segments
--------------------------

      The Company has three business segments: its subsidiaries, Ovonic Battery
and United Solar, and the parent company, ECD. Ovonic Battery is involved in
developing and commercializing battery technology. United Solar is involved in
manufacturing, developing and commercializing photovoltaic technology. ECD is
involved in microelectronics, fuel cells, hydrogen storage technologies, machine
building and photovoltaics. Some general corporate expenses have been allocated
to Ovonic Battery.

      The Company's operations by business segment were as follows:


                                    Financial Data by Business Segment
                                    ----------------------------------
                                             (in thousands)
<TABLE>
<CAPTION>
                                                                            Consolidating
                          Ovonic Battery   United Solar*        ECD            Entries      Consolidated
                          --------------   ------------   ---------------   -------------   ------------

<S>                          <C>             <C>            <C>              <C>              <C>
Revenues
   Three months ended
      December 31, 2000      $  5,801        $  1,591       $  11,103        $  (3,407)       $ 15,088
      December 31, 1999         5,303             -             1,467              -             6,770

   Six months ended
      December 31, 2000      $  9,222        $  3,842       $  17,023        $  (4,865)       $ 25,222
      December 31, 1999        10,171             -             4,179              -            14,350

Interest Income**
   Three months ended
      December 31, 2000      $   -           $     10       $   1,623        $     -          $  1,633
      December 31, 1999          -                -               192              -               192

   Six months ended
      December 31, 2000      $   -           $     41       $   3,146        $     -          $  3,187
      December 31, 1999          -                -               419              -               419

Identifiable Assets
   Six months ended
      December 31, 2000      $ 10,374        $ 43,633       $ 134,874        $ (27,772)       $161,109
      December 31, 1999        11,267             -            19,754              -            31,021

Interest Expense**
   Three months ended
      December 31, 2000      $     64        $    146       $       1        $    -           $    211
      December 31, 1999           113             -                 4             -                117

   Six months ended
      December 31, 2000      $    137        $    293       $       1        $    -           $    431
      December 31, 1999           210             -                 6             -                216
</TABLE>


                                       24
<PAGE>


                 ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

NOTE F - Business Segments - (Continued)
----------------------------------------
<TABLE>
<CAPTION>
                                                                            Consolidating
                          Ovonic Battery   United Solar*        ECD            Entries      Consolidated
                          --------------   ------------   ---------------   -------------   ------------

<S>                          <C>             <C>            <C>              <C>             <C>
Operating Loss***
   Three months ended
      December 31, 2000      $ (3,058)       $   (911)      $   2,008        $     (78)      $  (2,039)
      December 31, 1999        (2,650)            -            (1,101)             -            (3,751)

   Six months ended
      December 31, 2000      $  (7,664)      $ (1,089)      $   3,429        $     193       $  (5,131)
      December 31, 1999         (5,677)           -            (1,508)             -            (7,185)

Equity in Net Loss of Investee
   Under Equity Method
   Three months ended
      December 31, 2000      $     -         $   (868)      $     -          $     271       $    (597)
      December 31, 1999            -              -              (738)             -              (738)

   Six months ended
      December 31, 2000      $     -         $ (1,075)      $     -          $     271       $    (804)
      December 31, 1999            -              -            (1,298)             -            (1,298)


Depreciation Expense
   Six months ended
      December 31, 2000      $     766       $    856       $     390        $    (848)      $   1,164
      December 31, 1999            711            -               372              -             1,083

Capital Expenditures
   Six months ended
      December 31, 2000      $     200       $    324       $     304        $     -         $     828
      December 31, 1999            220            -                73              -               293

Investments in Equity
  Method Investees
   Six months ended
      December 31, 2000      $     -         $ 20,748       $     -          $     -         $  20,748
      December 31, 1999            -              -               558              -               558

</TABLE>

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

*   No financial data for United Solar for the three and six months ended
    December 31, 1999 were included due to the fact that United Solar financial
    statements were not consolidated until after April 11, 2000.  Prior to
    April 11, 2000, ECD accounted for its investment in United Solar under the
    equity method.
**  Excludes intercompany interest.
*** Includes intercompany interest of $1,199 and $2,333 for the three and six
    months ended December 31, 2000, and $975 and $1,942 for the three and six
    months ended December 31, 1999 charged by ECD to Ovonic Battery in
    accordance with the agreements between the parties.


                                       25
<PAGE>





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

       The following discussion should be read in conjunction with the
accompanying Quarterly Financial Information and Notes thereto and the Company's
Annual Report on Form 10-K for the year ended June 30, 2000, and is qualified in
its entirety by the foregoing. The results of operations for the three months
and six months ended December 31, 2000 are not necessarily indicative of results
to be expected in future periods.

                           Forward-Looking Information

      This Quarterly Report on Form 10-Q contains forward-looking statements
about our financial condition, results of operations, plans, objectives, future
performance and business. In addition, from time to time we and our
representatives have made or may make forward-looking statements orally or in
writing. The words "may," "will," "believes," "expects," "intends,"
"anticipates," "estimates," and similar expressions have been used in this
Annual Report to identify forward-looking statements.

      We have based these forward-looking statements on our current views with
respect to future events and performance. Actual results may differ materially
from those predicted by the forward-looking statements. These forward-looking
statements involve risks, uncertainties and assumptions, such as the following:

      o  our  continued  ability to  protect  and  maintain  the  proprietary
nature of our technology;

      o  the willingness and ability of our licensees and joint venture partners
         to devote financial resources and manufacturing and marketing
         capabilities to commercialize products based on our technologies;

      o  whether we are unable to successfully execute our internal business
         plans;

      o  whether we experience performance problems with key suppliers or
         subcontractors;

      o  whether there are no  adverse changes in general economic conditions or
         in political or competitive forces;

      o  whether competition increases in our industry or markets;

      o  whether legal or regulatory proceedings reach unfavorable resolutions;

      o  whether there are adverse changes in the securities markets; and

      o  whether we suffer the loss of key personnel.

      There is also the risk that we incorrectly analyze these risks or that
strategies we develop to address them are unsuccessful.


                                       26
<PAGE>


      These forward-looking statements speak only as of the date of this
Quarterly Report. All subsequent written and oral forward-looking statements
attributable to us or any person acting on our behalf are qualified in their
entirety by the cautionary statements in this section. Because of these risks,
uncertainties and assumptions, you should not place undue reliance on these
forward-looking statements. We are not obligated to update or revise any
forward-looking statement, whether as a result of new information, future events
or otherwise.

                              Results of Operations

Three Months Ended December 31, 2000 Compared to Three Months Ended
-------------------------------------------------------------------
December 31, 1999
-----------------

      The  Company  has  continued  to invest to further  advance  its
technologies.  These investments in its technologies  have led to historic new
strategic alliances over the past year with Texaco Inc.,  N.V.  Bekaert S.A. and
its U.S.-based subsidiary (Bekaert), Intel Corporation (Intel), General Electric
Company (GE), Lockheed Martin Space Electronics and Communications (now BAE
Systems) and China's Rare Earth High-Tech Co. Ltd. of Baotou Steel Company
(Rare Earth High-Tech).

      The Company had a net loss in the three months ended December 31, 2000 of
$716,000 compared to a net loss of $4,290,000 for the three months ended
December 31, 1999 - an improvement of $3,574,000. The most significant factor
contributing to the improved earnings was the increase in the amount of funding
from our joint venture partners for our product and production development
efforts related to the commercialization of our products. During the quarter
ended December 31, 2000, we increased our expenditures for the development of
our products to $10,470,000 compared to $6,465,000 in the same quarter the
previous year. The net cost of product development to the Company decreased by
$1,771,000 because of the funding provided by our joint venture partners:

                                                         Three Months Ended
                                                             December 31,
                                                   -----------------------------
                                                        2000            1999
                                                   ------------    ------------

      Cost of revenues from
         product development agreements            $ 7,422,000     $ 2,260,000
      Product development and research               3,048,000       4,205,000
                                                   -----------     -----------
            Total cost of product development       10,470,000       6,465,000
      Revenues from
         product development agreements              7,768,000       1,992,000
                                                   -----------     -----------
            Net cost of product development        $ 2,702,000     $ 4,473,000
                                                   ===========     ===========


                                       27
<PAGE>

      Also contributing to the improved operating results were an increase of
$722,000 in license fees, an $893,000 lower loss on product sales to a near
breakeven level, a $1,441,000 increase in interest income and a $141,000
decrease in equity losses from joint ventures, partially offset by a $277,000
decrease in revenues from royalties, higher patent and patent defense expenses
($605,000) and higher operating, general and administrative expenses ($497,000).
The loss is primarily due to: (i) ongoing product development and continued
market development activities, (ii) fixed costs related to maintaining and
improving the Company's core competencies pertaining to materials and electrode
products, and (iii) ongoing protection of the Company's intellectual property.

      Product sales, consisting of photovoltaic products, machine building,
battery packs, and positive and negative battery electrodes, increased 174% to
$3,769,000 in the three months ended December 31, 2000 from $1,377,000 in the
three months ended December 31, 1999. Photovoltaic sales were $1,588,000 in 2000
versus zero in 1999 (United Solar Systems Corp. (United Solar) financial
statements were consolidated effective April 11, 2000).  Machine-building
revenues increased to $1,851,000 in 2000 compared to $395,000 in 1999. The
machine-building revenues in 2000 were applicable to contracts to supply and
build production equipment for Bekaert ECD Solar Systems LLC (Bekaert ECD Solar
Systems) having 25MW of annual capacity and the sale of equipment for the
manufacture of NiMH batteries to the Rare Earth Ovonic joint ventures. Sales of
negative and positive electrodes decreased $472,000, primarily due to one of the
Company's principal negative electrode licensees currently manufacturing its own
electrode products as allowed under its license from the Company. Because most
battery pack orders are being filled through GM Ovonic, LLC (GM Ovonic), the
Company's battery pack sales decreased to $271,000 in 2000 versus $452,000 in
1999.

      Revenues from product development agreements, which relate primarily to
joint ventures established for the commercialization of ECD's products,
increased 290% to $7,768,000 in the three months ended December 31, 2000 from
$1,992,000 in the three months ended December 31, 1999. There were total
increases in product development agreements of $6,757,000 which were due to
development programs in 2000 for Texaco Ovonic Fuel Cell Company LLC (Texaco
Ovonic Fuel Cell) ($2,320,000), Texaco Ovonic Hydrogen Systems LLC (Texaco
Ovonic Hydrogen Systems) ($3,132,000), Ovonic Media, LLC (Ovonic Media)
($775,000) (see discussion of these joint ventures under Liquidity and Capital
Resources) and United Solar contracts with Department of Energy (DOE) and Solar
Design Associates ($185,000), partially offset by decreases resulting from the
successful completion of the Shell Hydrogen program ($0 in 2000 compared to
$375,000 in 1999) and National Institute of Standards and Technology (NIST) in
the Company's battery and hydrogen technologies ($206,000 in 2000 compared to
$715,000 in 1999).

      Revenues from license agreements increased to $2,500,000 in the three
months ended December 31, 2000 from $1,778,000 in the three months ended
December 31, 1999. The 2000 revenues resulted from a license to Inner Mongolia
Rare Earth Ovonic Metal Hydride Co. Ltd., one of the three Rare Earth Ovonic
joint ventures. Royalties decreased 26% to $798,000 in the three months ended
December 31, 2000 from



                                       28
<PAGE>

$1,075,000 in the three months ended December 31, 1999, primarily due to a
change in estimate in the 1999 period which resulted in higher 1999 revenues.

      Other revenues decreased by $296,000 to $252,000 in the three months ended
December 31, 2000 from $548,000 in the three months ended December 31, 1999,
primarily due to decreased billings attributable to the transfer of certain ECD
employees to Ovonyx, Inc. (Ovonyx).

      The loss on product sales decreased from $911,000 to $18,000, primarily
due to the addition of profitable machine-building contracts. The continuing
losses related to low sales of electrode products were mostly offset by
profitable machine building and photovoltaic product sales.

      The Company incurred expenses of $10,470,000 ($7,422,000 funded and
$3,048,000 unfunded) in the three months ended December 31, 2000 for product
development compared to expenses of $6,465,000 ($2,260,000 funded and $4,205,000
unfunded) in the three months ended December 31, 1999. The expenditures were
related to all facets of the Company's technologies.

      Expenses were incurred in 2000 and 1999 in connection with the protection
of the Company's United States and foreign patents covering its proprietary
technology. These expenses increased to $1,024,000 in the three months ended
December 31, 2000 from $420,000 in the three months ended December 31, 1999.

      The increase in operating, general and administrative expenses to
$1,845,000 in the three months ended December 31, 2000 from $1,348,000 in the
three months ended December 31, 1999 was primarily related to the consolidation
of United Solar's expense in 2000, as well as costs associated with license fees
from Rare Earth, partially offset by increased allocation to cost of revenues
from product development agreements and the amortization of negative goodwill
in connection with United Solar.

      The $1,862,000 improvement in other income (net) of $1,323,000 in the
three months ended December 31, 2000, compared to other expense (net) of
$539,000 in the three months ended December 31, 1999, was due principally to
increased interest income ($1,633,000 in 2000 compared to $192,000 in 1999) in
the three months ended December 31, 2000.

Six Months Ended December 31, 2000 Compared to Six Months Ended
---------------------------------------------------------------
December 31, 1999
-----------------

      The Company had a net loss in the six months ended December 31, 2000 of
$2,461,000 compared to a net loss of $8,036,000 for the six months ended
December 31, 1999 - an improvement of $5,575,000. The most significant factor
contributing to the improved earnings was the increase in the amount of funding
from our joint venture partners for our product and production development
efforts related to the commercialization of our products. During the six
months ended December 31, 2000, we


                                       29
<PAGE>


increased our expenditures for the development of our products to $17,410,000
compared to $13,236,000 in the same quarter the previous year. The net cost of
product development to the Company decreased by $2,778,000 because of the
funding provided by our joint venture partners:

                                                        Six Months Ended
                                                           December 31,
                                                 -----------------------------
                                                       2000            1999
                                                 --------------   ------------
      Cost of revenues from
         product development agreements          $ 11,983,000     $  5,898,000
      Product development and research              5,427,000        7,338,000
                                                 ------------     ------------
           Total cost of product development       17,410,000       13,236,000
      Revenues from
         product development agreements            12,862,000        5,910,000
                                                 ------------     ------------
           Net cost of product development       $  4,548,000     $  7,326,000
                                                 =============    ============


      Also contributing to the improved operating results were an increase of
$622,000 in license fees, a $1,370,000 lower loss on product sales to a near
breakeven, a $2,768,000 increase in interest income and a $494,000 improvement
in equity losses from joint ventures, partially offset by a $64,000 decrease in
revenues from royalties, higher patent and patent defense expenses ($1,121,000)
and higher operating, general and administrative expenses ($1,180,000). The loss
is primarily due to: (i) ongoing product development and continued market
development activities, (ii) fixed costs related to maintaining and improving
the Company's core competencies pertaining to materials and electrode products,
and (iii) ongoing protection of the Company's intellectual property.

      Product sales, consisting of photovoltaic products, machine building,
battery packs, and positive and negative battery electrodes, increased 114% to
$6,961,000 in the six months ended December 31, 2000 from $3,247,000 in the six
months ended December 31, 1999. Photovoltaic sales were $2,970,000 in 2000
versus zero in 1999 (United Solar financial statements were consolidated
effective April 11, 2000). Machine-building revenues increased to $3,414,000 in
2000 compared to $1,123,000 in 1999. The machine-building revenues in 2000 were
applicable to contracts to build production equipment for Bekaert ECD Solar
Systems having 25MW of annual capacity and for equipment for the manufacture of
NiMH batteries for the Rare Earth Ovonic joint ventures. Sales of negative and
positive electrodes decreased $992,000, primarily due to one of the Company's
principal negative electrode licensees currently manufacturing its own electrode
products as allowed under its license from the Company. Because most battery
pack orders are being filled through GM Ovonic, the Company's battery pack sales
decreased to $449,000 in 2000 versus $1,005,000 in 1999.

      Revenues from product development agreements, which relate primarily to
joint ventures established for the commercialization of ECD's products,
increased 118% to $12,862,000 in the six


                                       30
<PAGE>

months ended December 31, 2000 from $5,910,000 in the six months ended December
31, 1999. There were total increases in product development agreements of
$10,363,000 which were due to development programs in 2000 for Texaco Ovonic
Fuel Cell Company ($3,217,000), Texaco Ovonic Hydrogen Systems ($4,572,000),
Ovonic Media ($1,442,000) (see discussion of these joint ventures under
Liquidity and Capital Resources) and United Solar contracts with DOE and Solar
Design Associates ($861,000), partially offset by the successful conclusion of
programs with GM to develop batteries for electric and hybrid electric vehicle
applications ($0 in 2000 compared to $1,002,000 in 1999), the Shell Hydrogen
program ($0 in 2000 compared to $688,000 in 1999) and decreases in programs with
DOE and National Renewable Energy Laboratory ($467,000 in 2000 compared to
$874,000 in 1999) and NIST in the Company's battery and hydrogen technologies
($789,000 in 2000 compared to $1,589,000 in 1999).

      Revenues  from license  agreements  increased to  $2,800,000  in the six
months  ended  December  31,  2000 from  $2,178,000  in the six  months  ended
December 31,  1999.  The 2000  revenues  consisted  of  agreements  with three
Chinese  companies (BYD Battery Co.,  Ltd.,  SANIK Battery Co., Ltd. and Inner
Mongolia  Rare Earth Ovonic Metal  Hydride  Co.,  Ltd.,  one of the three Rare
Earth Ovonic joint  ventures).  Royalties  decreased 4% to  $1,674,000  in the
six months  ended  December 31, 2000 from  $1,738,000  in the six months ended
December  31,  1999,   primarily  due  to  decreased  royalties  from  battery
technologies.

      Other revenues decreased by $351,000 to $926,000 in the six months ended
December 31, 2000 from $1,277,000 in the six months ended December 31, 1999,
primarily due to decreased billings attributable to the transfer of certain ECD
employees to Ovonyx.

      The loss on product sales decreased from $1,391,000 in 1999 to $21,000 in
2000 due to the addition of profitable machine-building contracts. The
continuing losses related to low sales of electrode products were mostly offset
by profitable machine building and photovoltaic product sales.

      The Company incurred expenses of $17,410,000 ($11,983,000 funded and
$5,427,000 unfunded) in the six months ended December 31, 2000 for product
development compared to expenses of $13,236,000 ($5,898,000 funded and
$7,338,000 unfunded) in the six months ended December 31, 1999. The expenditures
were related to all facets of the Company's technologies.

      Expenses were incurred in 2000 and 1999 in connection with the protection
of the Company's United States and foreign patents covering its proprietary
technology. These expenses increased to $2,015,000 in the six months ended
December 31, 2000 from $893,000 in the six months ended December 31, 1999.

      The increase in operating, general and administrative expenses to
$3,947,000 in the six months ended December 31, 2000 from $2,768,000 in the six
months ended December 31, 1999 was primarily related to consolidation of United
Solar's expense in 2000, as well as costs associated with license fees from Rare
Earth, partially offset by increased


                                       31
<PAGE>


allocations to cost of revenues from product development agreements and the
amortization of negative goodwill in connection with United Solar.

      The $3,520,000 improvement in other income (net) of $2,670,000 in the six
months ended December 31, 2000, compared to other expense (net) of $850,000 in
the six months ended December 31, 1999, was due principally to increased
interest income ($3,187,000 in 2000 compared to $419,000 in 1999) and reduced
equity losses ($804,000 in 2000 compared to $1,298,000 in 1999) in the six
months ended December 31, 2000.


                         Liquidity and Capital Resources

      As of December 31, 2000, the Company had unrestricted consolidated cash,
cash equivalents and accounts receivable of $117,503,000, an increase of
$12,122,000 from June 30, 2000. As of December 31, 2000, the Company had
consolidated working capital of $98,426,000 compared with a consolidated working
capital of $89,789,000 as of June 30, 2000.

      During the six months ended December 31, 2000, $5,569,000 of cash was used
in operations. The difference between the net loss of $2,461,000 and the net
cash used in operations was due to an increase of $8,197,000 in accounts
receivable, principally due to new programs with Bekaert ECD Solar Systems and
the new programs with the Texaco Ovonic joint ventures, partially offset by
depreciation expense of $1,164,000, an increase of $1,577,000 in deferred
revenue under business agreements, principally due to advance payments received
from the Rare Earth Ovonic joint ventures, and increases of $2,132,000 in
accounts payable and accrued expenses. In addition, $828,000 of machinery and
equipment was purchased during this period.

      The Company's strategy is to finance its operations and growth through
strategic alliances (joint ventures and license agreements) with third parties
who can provide financial resources and additional marketing expertise for the
Company's technologies and products. Over the past several months, the Company
has entered into a number of historic business agreements bringing the Company's
short-term cash reserves to approximately $90 million and having a significant
positive impact on future cash flows. As part of its long-standing strategy, the
Company has made investments in its technologies which have resulted in enabling
intellectual property and products. It has entered into strategic alliances and
joint ventures with some of the world's leading corporations listed below, which
form the basis of a fundamental restructuring of the Company.

      o  ECD provides the enabling technologies for a complete hydrogen system,
         from NiMH batteries to hydrogen storage systems to fuel cells and to
         the infrastructure -- the drivers of the hydrogen economy. ECD and
         Texaco Energy Systems, Inc. (TESI), a wholly owned subsidiary of
         Texaco, announced three important agreements which are expected to
         transform ECD's prior investments into commercial products:

                                       32
<PAGE>


         o  On September 21, 2000, ECD and TESI formed Texaco Ovonic Fuel Cell
            Company. TESI is funding Texaco Ovonic Fuel Cell in an amount
            estimated to exceed $40 million, including initial product and
            market development and a multimillion dollar contract from Texaco
            Ovonic Fuel Cell to ECD to further develop Ovonic Regenerative Fuel
            Cells(TM) technology, validate manufacturing methodologies and
            produce production-ready prototypes.

         o  On October 12, 2000, ECD and Texaco jointly announced that Texaco
            and Ovonic Battery signed a Memorandum of Understanding to continue
            the business of GM Ovonic in a new entity, to be renamed Texaco
            Ovonic Battery, in which GM's interest is to be converted and
            restructured so that ECD and Texaco each will have a 50 percent
            interest in the joint venture. The MOU was signed concurrent with an
            MOU signed between Texaco and GM on October 10, 2000.

         o  On October 31, 2000, ECD and TESI formed Texaco Ovonic Hydrogen
            Systems. TESI is funding Texaco Ovonic Hydrogen Systems in an amount
            estimated to exceed $46 million, including initial product and
            market development and a multimillion dollar contract from Texaco
            Ovonic Hydrogen Systems to ECD to further develop and advance the
            commercialization of ECD's technology to store hydrogen in metal
            hydrides.

      o  In April 2000, ECD and Bekaert entered into a strategic alliance
         whereby Bekaert invested $84 million in United Solar, which will result
         in a fivefold capacity expansion and a sales and marketing expansion
         program. The capacity expansion resulted in an order from Bekaert ECD
         Solar Systems to ECD for production equipment valued at approximately
         $50 million with an annual capacity of 25 megawatts.

      o  A strategic alliance was formed with General Electric, the first
         activity of which resulted in the creation of a joint venture, Ovonic
         Media, in March 2000. ECD received a multimillion dollar contract from
         Ovonic Media to design, develop, demonstrate and commercialize ECD's
         proprietary continuous web roll-to-roll technology for the
         ultra-high-speed manufacture of optical media products, primarily
         rewritable DVDs.

      o  Ovonyx formed a strategic alliance with Intel in February 2000, which
         entails an investment by Intel in Ovonyx, to commercialize ECD's
         proprietary nonvolatile semiconductor memory technology, OUM. OUM
         memory technology promises to enable significantly faster write and
         erase speeds and higher cycling endurance than conventional memory
         types. It has been used in rewritable CD and DVD disks and may have
         potential as a replacement for such memory types as FLASH, SRAM and
         DRAM. The alliance with Intel also includes the granting of a
         nonexclusive royalty-bearing license agreement and a joint development
         program utilizing Intel's wafer fabrication facilities.


                                       33
<PAGE>




      o  On December 21, 2000, Ovonyx and STMicroelectronics (ST) signed an
         agreement pursuant to which ST will license from Ovonyx the OUM
         technology, and the two companies will establish a joint development
         program. The license agreement permits ST to use Ovonyx memory
         technology on a nonexclusive, royalty-bearing basis in its
         microcontrollers, Flash memory, MOS logic and other applications. The
         joint development program will begin immediately and technical teams
         from both companies will work together to transfer Ovonyx memory
         technology and develop process technology to integrate the thin-film
         memory into the ST silicon fabrication process.

      o  On April 25, 2000, Ovonic Battery, after having received all necessary
         government approvals, officially started the first (total contract
         value is $25.2 million) in a series of NiMH projects in China. On June
         15, 2000, the second and third projects (total contract value is $38.4
         million) were started. These projects with Rare Earth Ovonic resulted
         in joint ventures, of which Ovonic Battery has a 19% interest, which
         provide an important entry for the Company into the vast Chinese market
         and have potential revenue to Ovonic Battery in excess of $100 million.

      These new business agreements have both near-term and long-term impact on
the Company's capital resources. The Texaco, Bekaert, Ovonyx and General
Electric agreements will all, in the near term, result in reduced cash
expenditures and increased product development revenues as the Company's
business partners assume the responsibility for funding operations, while, at
the same time, form the basis in the long term to commercialize the Company's
products.

      Accordingly, the Company expects significant revenues and cash flows
related to product development agreements, many of which already exist, that are
entered into by the Company with industry partners and U.S. government agencies
to develop the Company's products and production technology, thereby adding to
the Company's technological base.

      On May 1, 2000, Texaco purchased a 20% equity stake in ECD for
$67,400,000. As part of this agreement, Texaco has rights to purchase additional
shares of ECD Common Stock in order to maintain its 20% equity stake. In
connection with these rights, Texaco purchased 125,233 additional shares for
approximately $3,795,000 on October 26, 2000 and 39,805 additional shares for
approximately $1,078,000 on January 31, 2001.

      During the next 12 months, the Company expects to purchase approximately
$2,500,000 of machinery and equipment and leasehold improvements.

      As previously noted, the Company's strategy is to finance its operations
and growth through the formation of strategic alliances to further commercialize
its products. The agreements discussed above will provide significant
operational cash flows in the future, particularly from the building of
photovoltaic and NiMH battery production equipment and from funded product
development. While the Company is in negotiations related to its



                                       34
<PAGE>


technologies which could provide it with additional revenue under license and
other agreements in the coming year, it is unable to predict the amount, if any,
of such revenue.

      The Company is not aware of events or circumstances that would
significantly alter royalty revenues for the next 12 months.

      Based upon the above information, the amount of cash to be received under
existing product development agreements in the year ending June 30, 2001 is
anticipated to be approximately $25,600,000 compared to $15,654,000 received
from product development agreements in the year ended June 30, 2000. Based on
historical trends, the amount of cash from royalties to be received in the year
ending June 30, 2001 is expected to be approximately $3,900,000 compared to
$3,058,000 received in the year ended June 30, 2000.

      Due to the increase in its stock price, the Company has received, since
August 1, 1999, approximately $19,554,000 ($419,000 of which occurred after
December 31, 2000) in proceeds from the exercise of employee stock options and
the exercise of warrants. While there are additional employee stock options and
privately placed warrants, which may be exercised, the Company is unable to
predict the amount or the timing of such exercises.

      In connection with the 1998 limited public offering of units (consisting
of one share of ECD Common Stock and a warrant to purchase one share of ECD
Common Stock), ECD has outstanding warrants for the purchase of 1,748,500 shares
of Common Stock. These warrants, which trade on the NASDAQ National Market under
the symbol ENERW, are exercisable at $20.54 at any time on or prior to July 31,
2001, the expiration date of the warrants. Should all of these warrants be
exercised, the Company would receive proceeds of approximately $35,914,000.

      Management believes that funds generated from operations, new business
agreements and existing cash and cash equivalents will be adequate to support
and finance planned growth, capital expenditures and the company-sponsored
product development programs over the coming year.



                                       35
<PAGE>



                           PART II - OTHER INFORMATION
                           ---------------------------

Item 5.  Other Events
-------  ------------

      Pursuant to the Purchase Agreement dated May 1, 2000 between Texaco and
the Company whereby Texaco purchased 3,742,800 shares of ECD Common Stock,
Texaco has the right to purchase additional ECD Common Stock in order for Texaco
to maintain its 20% proportionate interest in ECD. Since May 1, 2000, the
Company has issued additional shares of ECD Common Stock due to stock option and
warrant exercises. So as to maintain its 20% proportionate interest in the
Company, Texaco purchased 125,233 shares of ECD Common Stock on October 26, 2000
for $3,795,000 and 39,805 additional shares for approximately $1,078,000 on
January 31, 2001.

      Texaco acquired the ECD Common Stock in a private transaction under
Regulation D, Rule 505 of the Securities Act of 1933.


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


      A.   Exhibits
           --------

            None.

      B.   Reports on Form 8-K
           -------------------

           The Company filed the following reports on Form 8-K:

           Report on Form 8-K, dated October 31, 2000 and filed on November 3,
           2000, under Item 5, Other Events, reporting the formation of a 50-50
           joint venture, Texaco Ovonic Hydrogen Systems LLC, with Texaco Energy
           Systems, Inc. to further develop and commercialize the Company's
           proprietary technology to store hydrogen in metal hydrides.













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<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.


                                    Energy Conversion Devices, Inc.
                                    -------------------------------
                                    (Registrant)



                          By:       /s/ Stephan W. Zumsteg
                                    -------------------------------------------
                                    Stephan W. Zumsteg
Date: February 14, 2001             Treasurer



                          By:       /s/ Stanford R. Ovshinsky
                                    -------------------------------------------
                                    Stanford R. Ovshinsky
Date: February 14, 2001             President and Chief Executive Officer












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