SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                         FORM 10Q/A (Amendment No. 2)

(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 40 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                               $  1,467,208   $   684,313    $  2,683,890   $ 1,740,482
   Product sales to related parties               2,301,740       692,915       4,276,622     1,506,913
                                               ------------   -----------    ------------   -----------
      Total 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                                  1,474,927     1,982,913       3,510,783     5,900,467
   Revenues from product development
      agreements with related parties             6,293,301         9,282       9,350,921         9,282
                                               ------------   -----------    ------------   -----------
      Total revenues from product
         development agreements                   7,768,228     1,992,195      12,861,704     5,909,749

   Revenues from license and other agreements     2,500,000     1,778,000       2,800,000     2,178,000

   Other                                            141,623        56,167         193,125       117,401
   Other revenues from related parties              110,857       491,450         732,789     1,159,412
                                               ------------   -----------    ------------   -----------
      Total other revenues                          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)                                           8,926,711       7,172,166
   Amounts due from related parties                              15,335,583       8,893,354
   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 (Note A)    9,938,897       9,631,495

JOINT VENTURES (NOTE D)
   Bekaert ECD Solar Systems                                     20,703,912      22,394,868
   Bekaert ECD Europa                                                43,750          -
   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                   $  8,157,576    $  6,133,826
   Accounts payable - related party                               3,717          17,546
   Salaries, wages and amounts withheld
      from employees                                          2,121,167       1,998,684
   Deferred revenues under business
      agreements                                              2,199,752         161,331
   Deferred revenues - related party                          5,915,145       6,376,644
   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 related parties                887,435          -
         Creditable royalties                                       (15,891)        (67,396)
         Stock and stock options issued for services rendered       340,200         539,100
         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                                        (1,754,545)        327,370
      Amounts due to related parties                             (6,442,229)        345,534
      Inventories                                                   (48,868)        217,035
      Other assets                                                 (806,519)         46,326
      Accounts payable and accrued expenses                       2,146,233        (607,145)
      Accounts payable - related party                              (13,829)        145,633
      Deferred revenues under business agreements                 2,038,421          82,522
      Deferred revenues from related parties                       (461,499)          -
                                                               ------------    ------------
NET CASH USED IN OPERATIONS                                      (5,525,265)     (4,841,412)

INVESTING ACTIVITIES:
   Investment in United Solar                                         -            (900,000)
   Investment in Bekaert ECD Europa                                 (43,750)         -
   Investment in Innovative Transportation Systems                 (909,000)         -
   Purchases of capital equipment                                  (828,493)       (292,651)
   Purchase of investments                                      (20,442,560)         -
   Sale of investments                                            6,000,000          -
                                                               ------------    ------------
NET CASH USED IN INVESTING ACTIVITIES                           (16,223,803)     (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                       4,432,310          30,050
   Proceeds from issuance of warrants                             3,276,560          -
   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


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, as
amended, 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 Inc. jointly
announced that 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; and (vi) Ovonic
Media LLC (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), and United Solar
and Bekaert

                                       7

<PAGE>
               ENERGY CONVERSION DEVICES, INC.and SUBSIDIARIES

                  Notes to Consolidated Financial Statements


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

ECD Solar Systems formed a joint venture in Belgium, N.V. Bekaert ECD Europa
(Bekaert ECD Europa) owned 10% by United Solar and 90% by Bekaert ECD Solar
Systems.  See Note D for discussion of all of ECD's ventures.

      Upon consolidation, all intercompany accounts and transactions are
eliminated. Any profits on intercompany transactions are eliminated to the
extent of our ownership percentage.

      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 Financial Accounting Standards Board (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 in earnings. The adoption of SFAS
133 had no impact on the earnings or the financial position of the Company.

                                       8

<PAGE>

              ENERGY CONVERSION DEVICES, INC.and SUBSIDIARIES

                  Notes to Consolidated Financial Statements


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

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 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 using the cost method of accounting. ECD's interest in EV Global
is less than 1% and ECD's interest in Innovative Transportation is 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 each of these joint ventures using the cost
method of accounting.

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

      Due to the short-term maturities of cash, cash equivalents, marketable
securities, accounts receivable and accounts payable, the Company believes 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

<TABLE>
<CAPTION>
                                                             December 31,     June 30,
                                                                 2000           2000
                                                             ------------   ------------
<S>                                                          <C>            <C>
Long-term contracts accounted for under percentage
  of completion accounting
    Revenues recognized but unbilled
      Commercial customers                                   $ 1,516,490    $   201,397
    Plus amounts billed to customers
      Commercial customers                                       708,000        638,369
                                                             -----------    -----------
            Sub-total                                          2,224,490        839,766

Long-term contracts not accounted for under percentage
  of completion accounting
    Amounts earned which are billed in the subsequent month
      U.S. Government                                            253,269        689,217
      Commercial customers                                        -             154,767
                                                             -----------    -----------
                                                                 253,269        843,984

   Amounts billed
      U.S. Government                                            995,345        786,585
      Commercial customers                                        52,054         -
                                                             -----------    -----------
                                                               1,047,399        786,585

   Plus retainages
      U.S. Government                                             74,497         74,497
                                                             -----------    -----------
            Sub-total                                          1,375,165      1,705,066

Amounts unbilled for other than long-term contracts
   Commercial customers                                          930,000      2,837,375

Amounts billed for other than long-term contracts
   U.S. Government                                                -               4,687
   Commercial customers                                        4,976,056      2,364,272
                                                             -----------    -----------
            Sub-total                                          4,976,056      2,368,959
                                                             -----------    -----------

Allowance for uncollectible accounts                            (579,000)      (579,000)
                                                             -----------    -----------

                 TOTAL                                       $ 8,926,711    $ 7,172,166
                                                             ===========    ===========
</TABLE>


     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)
------------------------------------------

Amounts Due from Related Parties
--------------------------------
<TABLE>
<CAPTION>

                                                                   December 31,       June 30,
                                                                      2000              2000
                                                                 ---------------  --------------
<S>                                                              <C>              <C>
Accounts receivable related to long-term contracts ac-
  counted for under percentage of completion accounting
    Revenues recognized but unbilled
      Bekaert ECD Solar Systems                                  $    670,463     $    393,426
    Amounts billed
      Bekaert ECD Solar Systems                                     3,104,095          939,854
                                                                 ------------     ------------
            Sub-total                                               3,774,558        1,333,280

Long-term contracts not accounted for under percentage
  of completion accounting
    Amounts earned which are billed in the subsequent month
      Bekaert ECD Solar Systems                                     1,707,008           -
      GM Ovonic                                                           744           -
      Texaco Ovonic Fuel Cell Company                               1,272,939           -
      Texaco Ovonic Hydrogen Systems                                1,308,120           -
                                                                 ------------     ------------
            Sub-total                                               4,288,811           -

    Amounts billed
      GM Ovonic                                                       196,911           22,097

Amounts unbilled for other than long-term contracts
      Bekaert ECD Solar Systems                                     6,398,894        6,728,194
      GM Ovonic                                                        -                13,087
      Ovonyx                                                          222,889          352,668
                                                                 ------------     ------------
            Sub-total                                               6,621,783        7,093,949

Amounts billed for other than long-term contracts
      GM Ovonic                                                       448,545          315,163
      Ovonyx                                                            4,975          128,865
                                                                 ------------     ------------
            Sub-total                                                 453,520          444,028
                                                                 ------------     ------------

            TOTAL                                                $ 15,335,583     $  8,893,354
                                                                 ============     ============
</TABLE>

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

      Photovoltaics, 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.

                                       11
<PAGE>


               ENERGY CONVERSION DEVICES, INC.and SUBSIDIARIES

                  Notes to Consolidated Financial Statements


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

      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 and sales related to other long-term 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. These products are shipped FOB
shipping point. In certain cases, low sales volumes related to negative
electrodes combined with high fixed costs result in losses.

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 as of that date) in full 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.

                                       12

<PAGE>

               ENERGY CONVERSION DEVICES, INC.and SUBSIDIARIES

                  Notes to Consolidated Financial Statements


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

Long-Term Note Receivable
-------------------------

      In connection with a license agreement between ECD and Bekaert ECD Solar
Systems, Bekaert ECD Solar Systems is required to pay ECD $12,000,000 no later
than January 1, 2004. This noninterest-bearing note receivable was recorded by
ECD at a discounted value of $9,500,000 (using a discount rate of 6.3%). In
connection with the acquisition of Canon's interest in United Solar, ECD is
required to pay Canon $12,000,000 no later than January 2004.

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
until

                                       13

<PAGE>

               ENERGY CONVERSION DEVICES, INC.and SUBSIDIARIES

                  Notes to Consolidated Financial Statements


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

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. Revenues related to services are recognized upon completion of
performance of the applicable service.

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

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

Stock Options
-------------

       The Company applies SFAS 123, Accounting for Stock-Based Compensation,
for any stock options or awards granted to nonemployees of the Company. The
amount of

                                       14

<PAGE>

                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements


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

compensation cost is determined based upon the fair value of the options at
the grant date and expense is amortized during the period over which the
options vest. The Company applies APB 25, Accounting for Stock Issued to
Employees, to its stock-based compensation awards to employees. These awards
are granted at the fair market value of the grant date in accordance with the
applicable plan. Accordingly, no compensation expense is recorded in connection
with the Company's stock options granted to employees.


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

      The Company has product sales and business agreements with related parties
and 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:
         Machine building                        $  2,279,971    $  1,120,136
         Battery packs                                342,109         613,180
         Negative and positive electrodes              61,810           7,166
                                                 ------------    ------------
                                                    2,683,890       1,740,482
      Product sales-related parties:
         Photovoltaics                              2,969,527          -
         Machine building                           1,134,270           2,544
         Battery packs                                106,494         391,582
         Negative and positive electrodes              66,331       1,112,787
                                                 ------------    ------------
                                                    4,276,622       1,506,913
                                                 ------------    ------------
            Total product sales                  $  6,960,512    $  3,247,395
                                                 ============    ============

-------------
  * United Solar is included in ECD's consolidated financial statements
    effective April 11, 2000.


                                       15

<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 (Continued)
--------------------------------------------

                                                      Six Months Ended
                                                         December 31,
                                                ----------------------------
                                                    2000*           1999
                                                ------------    ------------
      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                       1,244,165       2,886,898
          Optical memory                             416,929         686,541
          Hydrogen                                   522,110       1,345,999
          Other                                       -              107,498
                                                ------------    ------------
                                                   3,510,783       5,900,467
      Revenues from product development
        agreements - related parties
          Battery technology                         118,822           9,282
          Optical memory                           1,442,448          -
          Hydrogen                                 4,572,363          -
          Fuel cells                               3,217,288          -
                                                ------------    ------------
                                                   9,350,921           9,282
                                                ------------    ------------
      Total revenues from product
        development agreements                  $ 12,861,704    $  5,909,749
                                                ============    ============

      License and other agreements
          Battery technology                    $  2,800,000    $  2,178,000
                                                ============    ============

-------------
  * United Solar is included in ECD's consolidated financial statements
    effective April 11, 2000.

      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          -
           Mexico                                  2,969,527          -
           Japan                                   1,516,580       3,638,752
           Hong Kong                                 108,616          -
           Germany                                    74,181          -
           Netherlands                                40,000         687,500
           Other countries                            19,520         268,644
                                                ------------    ------------
                                                $ 25,221,990    $ 14,349,991
                                                ============    ============

                                       16
<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
                                            ===========    ===========


      Creditable royalties earned and recognized as revenue were:

                                            Periods ended December 31,
                                                2000           1999
                                            -----------    -----------

        Three months ended                   $ 11,187       $ 15,891
        Six months ended                       42,700         67,396

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 and patents resulting from the Company's product
development and research are valued at zero on the balance sheet. Intellectual
property and patents provide the foundation for the creation of the important
strategic alliances whereby the Company provides intellectual property and
patents and joint venture partners provide cash.

      The Company's investments in its joint ventures, other than Bekaert ECD
Solar Systems, Bekaert ECD Europa and Innovative Transportation Systems, are
recorded at zero. The Company will continue to carry its investment in each of
the other 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 (other than the lease guarantee in Note G) with respect to
liabilities incurred by its joint ventures.

                                       17

<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 Systems 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.

      The FASB has a current Exposure Draft (ED) on Business Combination and
Intangible Assets Accounting for Goodwill. This ED, if adopted as it is
currently drafted, would require the Company to recognize any unamortized
negative goodwill as an extraordinary gain and the Company would no longer
amortize negative goodwill. The proposed effective date for this new standard
would be the first quarter beginning after the adoption of a final statement
(with no early application or retroactive application permitted). The current
target date by the FASB for issuance of a final statement is June 2001, which
would mean the Company would adopt this new statement in the quarter ending
September 30, 2001.

                                       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 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
                                                        ============


                                       19

<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, hybrid
electric and fuel cell 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
an 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% interest in the joint venture. The MOU
was signed in conjunction with an MOU signed between Texaco and GM on October
10, 2000. The companies are currently negotiating the definitive agreements.

      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 at one of Intel's wafer fabrication facilities. Presently, ECD owns
41.7% of Ovonyx, Mr. Lowrey and his affiliate own 41.7% of Ovonyx, and Intel and
other investors own the remainder. ECD has contributed intellectual property and
licenses for its interest in 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.


                                       20

<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
                                                             ===========


                                       21

<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 in the form of tangible
personal property 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, 2000    December 31, 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)
                                           ============         ===========


                                       22


<PAGE>


                                  OVONIC MEDIA
                                  BALANCE SHEET
                                  -------------

                                                         December 30,
                                                             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
                                                         ===========


      During the three and six months ended December 31, 2000, the Company
recorded revenues of $775,000 and $1,442,000, respectively, for services
provided to this joint venture.

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.

      During the three and six months ended December 31, 2000, the Company
recorded revenues of $2,320,000 and $3,217,000, respectively, for services
provided to this joint venture.

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.


                                       23

<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements


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

      During the three and six months ended December 31, 2000, the Company
recorded revenues of $3,132,000 and $4,572,000, respectively, for services
provided to this joint venture.

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 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 elected to exchange, in March 2000, the
warrants for 49,888 shares of ECD Common Stock. ECD's interest in EV Global is
less than 1%.

      Innovative Transportation Systems, 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 Systems, 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 Systems, increasing its ownership interest to 19%.

      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


                                       24

<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements


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

the world. 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, is contributing technology for its 19% interest in each of these
joint ventures.

      During the three months and six months ended December 31, 2000, the
Company recorded revenues of $3,733,000 and $4,617,000, respectively, related to
machine-building and license agreements from the Rare Earth Ovonic joint
ventures.

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>


                                       25
<PAGE>


               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements


NOTE E - Net Loss Per Share (Continued)
---------------------------------------

       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.


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 and hydrogen storage technologies,
machine building and photovoltaics. Some general corporate expenses have been
allocated to Ovonic Battery.




                                       26

<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements


NOTE F - Business Segments (Continued)
--------------------------------------

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

<TABLE>
<CAPTION>
                             Financial Data by Business Segment
                             ----------------------------------
                                       (in thousands)

                                                                              Consolidating
                                    ECD      Ovonic Battery   United Solar*      Entries      Consolidated
                                 ---------   --------------   -------------   -------------   ------------
<S>                              <C>         <C>              <C>             <C>             <C>

Revenues
   Three months ended
      December 31, 2000          $ 11,106       $  5,798        $  1,591       $ (3,407)        $ 15,088
      December 31, 1999             1,559          5,211            -              -               6,770

   Six months ended
      December 31, 2000          $ 17,026       $  9,219        $  3,842       $ (4,865)        $ 25,222
      December 31, 1999             4,359          9,991            -              -              14,350

Operating Loss
   Three months ended
      December 31, 2000          $    899       $ (1,949)       $   (911)      $    (78)        $ (2,039)
      December 31, 1999            (2,099)        (1,652)           -              -              (3,751)

   Six months ended
      December 31, 2000          $  1,278       $ (5,513)       $ (1,089)      $    193         $ (5,131)
      December 31, 1999            (3,480)        (3,705)           -              -              (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)

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

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


</TABLE>

                                       27

<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements


NOTE F - Business Segments (Continued)
--------------------------------------
<TABLE>
<CAPTION>

                                                                              Consolidating
                                    ECD      Ovonic Battery   United Solar*      Entries      Consolidated
                                 ---------   --------------   -------------   -------------   ------------
<S>                              <C>         <C>              <C>             <C>             <C>


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

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

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

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

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


NOTE G - Commitments
--------------------

      On February 12, 2001, the Company signed an agreement with the landlord of
the Bekaert ECD Solar Systems' new facility guaranteeing 50% of the rent
obligation ($3,015,000) of Bekaert ECD Solar Systems due under the lease for
this facility for the first five years of the term of this lease agreement.
ECD's maximum exposure and liability under this guaranty is reduced by 50% of
monthly rental installments paid. In addition, Bekaert has guaranteed this rent
obligation to the same extent as the Company.


                                       28

<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, as amended, 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 expectations
with respect to future events and occurrences. Investors are cautioned that our
actual results in the future may differ materially from the expected results
reflected in our forward-looking statements. The expected results reflected in
our forward-looking statements are subject to various significant risks and
uncertainties, including the following:

      --   we may be unable to continue to protect and maintain the proprietary
      nature of our technology;

      --   other companies may be successful in asserting patent infringement
      or other claims against us which prevent us from commercializing products
      based on our technology or which force us to make royalty or other
      payments to competitors;

      --   other companies may develop competing technologies which cause our
      technology to become obsolete or non-competitive;

      --   our licensees and joint venture partners may be unwilling or unable
      to devote their financial resources and manufacturing and marketing
      capabilities to commercialize products based on our technologies;

      --   we may be unable to successfully execute our internal business plans;

      --   we may need to obtain additional debt or equity financing to
      continue to operate our business and financing may be unavailable or
      available only on disadvantageous terms;

      --   we may experience performance problems with key suppliers or
      subcontractors;

      --   adverse changes may occur in general economic conditions or in
      political or competitive forces affecting our business;

      --   competition may increase in our industry or markets;


                                       29

<PAGE>

      --   our government product development or research contracts may be
      terminated by unilateral government action or we may be unsuccessful in
      obtaining new government contracts to replace those which have been
      terminated or completed;

      --   we may become subject to legal or regulatory  proceedings  which may
      reach unfavorable resolutions;

      --   there may be adverse  changes in the  securities  markets which
      affect the price of our stock; or

      --   we may suffer the loss of key personnel or may be unable to attract
      and retain qualified personnel to maintain and expand our business.

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

      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). According to generally accepted accounting principles as
practiced in the United States (GAAP), the investments the Company makes in its
technologies are expensed as research and development expense in the periods in
which they are incurred and the value of these technologies are not carried as
assets in the Company's balance sheet.

      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 factors
contributing to the decreased loss were a $18,000 loss on product sales compared
to a $911,000 loss last year, an improvement in the net cost of product
development ($1,771,000), an increase in the interest income ($1,441,000), and
the $722,000 increase in license fees. Other factors contributing to the change
in profitability were a decrease in revenues from royalties ($277,000), higher
patent and patent defense expenses ($605,000), a decrease of $295,000 in other
revenues and higher interest expenses ($93,000).

                                       30

<PAGE>


      The net cost of product development to the Company decreased by $1,771,000
despite the increased expenditures for the development of products to
$10,470,000 compared to $6,465,000 in the same quarter the previous year.

                                                        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
                                                    ===========    ===========


      The loss results from (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's financial statements were not consolidated
with ECD until April 11, 2000. Machine-building revenues increased to $1,851,000
in 2000 compared to $395,000 in 1999. The machine-building revenues in 1999 were
applicable to contracts to supply and build production equipment for 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. Both
contracts, which are accounted for on the percentage of completion method of
accounting and currently have a total backlog of $62,742,000, will be
substantially completed during the third quarter of fiscal 2002. The
machine-building revenues in 2000 related to a contract to build large-area
deposition equipment. 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 development and commercialization of ECD's
technologies, 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
primarily 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 and the associated
development contracts under Liquidity and Capital Resources) and United Solar

                                       31

<PAGE>


contracts with Department of Energy (DOE) and Solar Design Associates
($185,000), partially offset by completing programs with Shell Hydrogen ($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 and other agreements were $2,500,000 in the three
months ended December 31, 2000 compared to $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. Revenues from license and other agreements depend on a small
number of new business arrangements, are sporadic and vary dramatically from
period to period. Royalties decreased 26% to $798,000 in the three months ended
December 31, 2000 from $1,075,000 in the three months ended December 31, 1999,
primarily due to a favorable change in estimate in the 1999 period which
resulted in higher 1999 revenues.

      Other revenues are primarily related to personnel, facilities, and
miscellaneous administrative and laboratory services provided to some of the
Company's joint ventures. 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. This decrease was due to lower billings to GM Ovonic offset
by higher revenues from Ovonyx of $119,000. The revenues from Ovonyx relate to
services provided beginning in January 1999. Revenues from GM Ovonic are lower
because we were leasing fewer of our employees to GM Ovonic.

      There was a negative margin of $18,000 on product sales in the three
months ended December 31, 2000 compared to a negative margin of $911,000 in
1999. Profitable machine-building contracts offset losses for electrode
production where low sales volumes were coupled with high fixed costs.

      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,
principally due to litigation costs ($516,000 in 2000 versus $5,000 in 1999) for
the protection of our NiMH battery patents and technology.

      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 related to the increased expenses for
both ECD ($528,000) and Ovonic Battery ($675,000), and the consolidation of
United Solar's expenses ($445,000) in 2000 offset by increased allocation of
costs ($1,034,000) to other cost elements due to increased volumes for product
development agreements and the amortization of negative goodwill ($117,000) 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 of $1,633,000 in the three months ended December 31,
2000 compared to $192,000 in the three months ended December 31, 1999.

                                       32

<PAGE>


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 lower losses was the increase in the amount of funding from
our joint venture partners for our product and production technology development
efforts related to the commercialization of our products. During the six months
ended December 31, 2000, we increased expenditures for the development of our
products to $17,410,000 compared to $13,236,000 in the same period the previous
year. Despite the more than $4,174,000 increase in expenditures, 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 a loss of $21,000
in the six months ended December 31, 2000 on product sales compared to a loss of
$1,391,000 in 1999, 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) in the six months ended December 31, 2000. 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 not consolidated
until 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. Both contracts, which
are accounted for on the percentage of completion method of accounting and
currently have a total backlog of $62,742,000, will be substantially completed
during the third quarter of fiscal 2002. Sales of

                                       33

<PAGE>


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 development and commercialization of ECD's
technologies, increased 118% to $12,862,000 in the six 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
primarily 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 completing programs with GM to develop batteries
for electric and hybrid electric vehicle applications ($0 in 2000 compared to
$1,002,000 in 1999), Shell Hydrogen ($0 in 2000 compared to $688,000 in 1999)
and decreases in revenues from 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 licensees.

      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 the aforementioned decreased billings attributable to GM
Ovonic.

      There was a negative margin on product sales in the six months ended
December 31, 2000 of $21,000 compared to a negative margin of $1,391,000 in
1999. Profitable machine-building contracts offset losses for electrode
production where low sales volume were coupled with high fixed costs.

      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,
principally due to litigation costs ($949,000 in 2000 versus $39,000 in 1999)
for protection of our NiMH battery patent and technology.

      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 related to increased expenses at ECD
($748,000), at Ovonic Battery ($606,000) and consolidation of United Solar's
expenses ($758,000) in 2000, partially offset by increased allocations of costs
($701,000) to other cost elements due to increased volume for product

                                       34

<PAGE>


development agreements, and the amortization of negative goodwill ($233,000) 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 of $804,000 in the six months ended December 31, 2000 compared to
$1,298,000 in the six months ended December 31, 1999.

                         Liquidity and Capital Resources

      As of December 31, 2000, the Company had unrestricted consolidated cash,
cash equivalents and accounts receivable (including $15,336,000 of amounts due
from related parties) 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.

      Of the Company's $93,241,000 cash, cash equivalents and investments, the
Company purchased $20,443,000 of investments during the six months ended
December 31, 2000 consisting of commercial paper, classified as available for
sale, maturing from 91 days to 33 months. It is the Company's policy that
investments shall be rated "A" or higher by Moody's or Standard and Poor's, no
single investment shall represent more than 10% of the portfolio and at least
20% of the total portfolio shall have maturities of less than 90 days.

      During the six months ended December 31, 2000, $5,525,000 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 a $50 million contract with Bekaert ECD Solar
Systems to build production equipment expected to be completed in 2002 and
contracts from the Texaco Ovonic joint ventures (see below for details) that
will provide the Company revenues in excess of $80 million that will last up to
three years, partially offset by depreciation expense of $1,164,000 and
increases of $2,132,000 in accounts payable and accrued expenses due to
increased purchases relating to aforementioned new programs. 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 14 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.


                                       35
<PAGE>


      -  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:

         -  On September 21, 2000, ECD and TESI formed Texaco Ovonic Fuel Cell
            Company. TESI is funding Texaco Ovonic Fuel Cell in an initial
            amount of approximately $40 million, including initial product and
            market development. The principal use of the funds is to fund a
            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.
            The contract will last from one to three years, and may be cancelled
            if mutually agreed-upon milestones are not achieved.

         -  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. The companies
            are currently negotiating the definitive agreements.

         -  On October 31, 2000, ECD and TESI formed Texaco Ovonic Hydrogen
            Systems. TESI is funding Texaco Ovonic Hydrogen Systems in an
            initial amount of approximately $46 million, including initial
            product and market development. The principal use of the funds is
            to fund a 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. The contract will
            last from one to three years, and may be cancelled if mutually
            agreed-upon milestones are not achieved.

      -  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 over $50
         million with an annual capacity of 25 megawatts.

      -  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 $3 million 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.

      -  On April 25, 2000, Ovonic Battery, after having received all necessary
         Chinese government approvals, officially started the first in a series
         of NiMH projects in China and, on June 15, 2000, the second and third
         projects were started. These contracts


                                       36

<PAGE>


         will provide Ovonic Battery with $63.6 million of contract revenue.
         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.  The agreements
         contemplate two additional projects that, if orders are received,
         will result in total revenue to Ovonic Battery for all projects of
         more than $100 million.

      These new business agreements, such as those with Texaco, Bekaert and
General Electric, will have both near-term and long-term impact on the Company's
capital resources and will, 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
$5,000,000 of machinery and equipment and leasehold improvements.

      The Company is not aware of events or circumstances that would
significantly alter royalty revenues for the next 12 months. However,
approximately 80% of the royalties the Company receives are based on the
Japanese Yen and, therefore, changes in exchange rates can significantly alter
royalty revenues.

      Primarily due to the new product development agreements with Texaco, 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. The amount of royalties we receive each year is dependent on the
production volumes of our licensees, the sales price of their products and,
because much of our royalty revenues are based on the Japanese Yen, the effect
of Yen-to-Dollar currency translations. Licensees may not terminate royalty
payments to us without also terminating the licensee's rights to manufacture
products under our patents. The failure of licensees to pay royalties would
constitute a material breach of the license agreement for which we could
terminate the license or seek damages.

      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

                                       37

<PAGE>

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. As the Company's joint
ventures expand beyond the initial product and market development stages, the
Company will need additional sources of cash to fund the Company's share of the
capital required. The Company is exploring many alternatives, including, but not
limited to, debt financing through third parties, debt financing from our joint
venture partners, additional equity partners and investment of additional
intellectual property in exchange for the Company's share of funding.


                                       38

<PAGE>

                           PART II - OTHER INFORMATION
                           ---------------------------
Item 2.  Changes in Securities and Use of Proceeds
-------  -----------------------------------------

      So long as Texaco owns more than 5% of ECD Stock and in the event ECD
issues additional ECD Stock other than to Texaco, Texaco has the right to
purchase additional ECD Stock in order for Texaco to maintain its same
proportionate interest in ECD Stock as Texaco held prior to the issuance of the
additional ECD Stock. If Texaco elects to purchase ECD Common Stock, the
purchase price shall be the average of the closing price on NASDAQ of the ECD
Common Stock as reported in The Wall Street Journal for the five trading days
prior to the closing date of the sale multiplied by the number of shares of the
ECD Common Stock which Texaco is entitled to purchase.

      If Texaco does not exercise its right to purchase additional ECD Stock
within 15 days after delivery of a Rights Notice from ECD, Texaco's right to
purchase such additional ECD Stock which are the subject of the Rights Notice
shall terminate.

      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 shares for
approximately $1,078,000 on January 31, 2001.

      Texaco acquired the ECD Common Stock in a private transaction and had
access to all material information relating to ECD. We claim exemption from the
registration requirements of Section 5 of the Securities Act of 1933 pursuant to
Section 4(2) of that Act, no public offering having been involved.


                                       39

<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: August 16, 2001              Vice President and Chief Financial Officer
                                   (Principal financial and accounting officer)



                             By:   /s/ Stanford R. Ovshinsky
                                   --------------------------------------------
                                   Stanford R. Ovshinsky
Date: August 16, 2001              President and Chief Executive Officer







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