SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10Q

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

For  the  period  ended         SEPTEMBER 30, 2001
                       -------------------------------------------------------

                                       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)

    2956 WATERVIEW DRIVE, ROCHESTER HILLS, MICHIGAN                    48309
-------------------------------------------------------------------------------
  (Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code         (248) 293-0440
                                                  -----------------------------

    1675 West Maple Road, Troy, Michigan 48084
-------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days.  Yes X .  No   .
                                              ---     ---
      As of November 9, 2001, there were 219,913 shares of Class A Common Stock,
430,000 shares of Class B Common Stock and 21,233,251 shares of Common Stock
outstanding.


                              Page 1 of 41 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
                                                                     September 30,
                                                             ----------------------------
                                                                 2001            2000
                                                             ------------    ------------
<S>                                                          <C>             <C>
REVENUES
   Product sales                                             $  8,663,358    $  1,228,146
   Product sales to related parties                             2,496,294       1,963,418
                                                             ------------    ------------
         Total product sales                                   11,159,652       3,191,564

   Royalties                                                      602,227         875,636
   Royalties - related parties                                      6,617          -
                                                             ------------    ------------
         Total royalties                                          608,844         875,636

   Revenues from product development agreements                 1,774,531       1,957,206
   Revenues from product development
      agreements with related parties                           8,769,000       3,136,270
                                                             ------------    ------------
         Total revenues from product development agreements    10,543,531       5,093,476

   Revenues from license and other agreements                      -              300,000

   Other                                                           44,290          51,502
   Other revenues from related parties                            102,262         621,932
                                                             ------------    ------------
         Total other revenues                                     146,552         673,434
                                                             ------------    ------------
         TOTAL REVENUES                                        22,458,579      10,134,110

EXPENSES
   Cost of product sales                                       10,704,457       3,194,559
   Cost of revenues from product development
      agreements                                               10,320,129       4,560,600
   Product development and research                             1,916,245       2,379,340
   Patent defense                                                 605,501         387,206
   Patents                                                        743,150         603,401
   Operating, general and administrative                        2,065,851       2,101,699
                                                             ------------    ------------
         TOTAL EXPENSES                                        26,355,333      13,226,805
                                                             ------------    ------------
LOSS FROM OPERATIONS                                           (3,896,754)     (3,092,695)

OTHER INCOME (EXPENSE):
   Interest income                                              1,356,557       1,554,012
   Interest expense                                              (154,574)       (220,693)
   Equity loss in joint ventures                                 (773,019)       (206,502)
   Minority interest share of losses                              353,497          94,900
   Other non-operating income (net)                               349,675         126,014
                                                             ------------    ------------
   TOTAL OTHER INCOME (EXPENSE)                                 1,132,136       1,347,731
                                                             ------------    ------------
   NET LOSS                                                  $ (2,764,618)   $ (1,744,964)
                                                             ============    ============
   BASIC NET LOSS PER SHARE                                  $       (.13)   $       (.09)
                                                             ============    ============
   DILUTED NET LOSS PER SHARE                                $       (.13)   $       (.09)
                                                             ============    ============
</TABLE>

See notes to consolidated financial statements.

                                       2
<PAGE>

              ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS
                        ---------------------------
                                 ASSETS
                                 ------
<TABLE>
<CAPTION>

                                                              September 30,      June 30,
                                                                  2001             2001
                                                              -------------    ------------
                                                              (Unaudited)
<S>                                                           <C>              <C>

CURRENT ASSETS (NOTE A)
   Cash, including cash equivalents of $44,955,000 at
      September 30, 2001 and $33,047,000 at June 30, 2001     $ 44,983,795      $ 33,055,399
   Short-term investments                                       74,443,727        48,908,662
   Accounts receivable (net of allowance for uncollectible
      accounts of approximately $548,000 at September 30,
      2001, and $583,000 at June 30, 2001)                      14,935,942        18,809,094
   Amounts due from related parties                             21,473,029        16,003,632
   Inventories                                                   1,393,899         1,333,542
   Other                                                           424,228           542,930
                                                              ------------      ------------
         TOTAL CURRENT ASSETS                                  157,654,620       118,653,259

PROPERTY, PLANT AND EQUIPMENT
   Land and land improvements                                      267,000           267,000
   Buildings and improvements                                    2,258,165         1,214,625
   Machinery and other equipment (including construction
      in progress of approximately $1,198,000 and $1,010,000
      at September 30, 2001 and June 30, 2001, respectively)    23,140,329        22,261,322
   Capitalized lease equipment                                   3,056,060         3,056,060
                                                              ------------      ------------
                                                                28,721,554        26,799,007
   Less accumulated depreciation and amortization              (21,132,387)      (20,660,619)
                                                              ------------      ------------
         TOTAL PROPERTY, PLANT AND EQUIPMENT                     7,589,167         6,138,388

Investments in EV Global and Rare Earth
   Ovonic-China (NOTE A)                                         1,000,000         1,000,000

Long-Term Note Receivable - Bekaert ECD Solar
   Systems (NOTE A)                                             10,418,493        10,256,110

Deferred tax assets                                                864,999           864,999

JOINT VENTURES (NOTE D)
   Bekaert ECD Solar Systems                                    21,941,455        23,421,156
   Bekaert ECD Europa                                               29,438            28,347
   Texaco Ovonic Fuel Cell Company                                  -                 -
   Texaco Ovonic Hydrogen Systems                                   -                 -
   Texaco Ovonic Battery Systems                                    -                 -
   Ovonyx                                                           -                 -
   Ovonic Media                                                     -                 -
   Innovation Transportation Systems                             3,871,329         4,000,206
   Sovlux                                                           -                 -

OTHER ASSETS                                                     2,288,507         1,742,922
                                                              ------------      ------------
      TOTAL ASSETS                                            $205,658,008      $166,105,387
                                                              ============      ============
</TABLE>
See notes to consolidated financial statements.

                                       3
<PAGE>


               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS
                         ---------------------------
                     LIABILITIES AND STOCKHOLDERS' EQUITY
                     ------------------------------------

<TABLE>
<CAPTION>

                                                               September 30,     June 30,
                                                                   2001            2001
                                                               -------------    ------------
                                                               (Unaudited)
<S>                                                            <C>              <C>
    CURRENT LIABILITIES
      Accounts payable and accrued expenses                    $ 18,707,080     $ 18,413,708
      Accounts payable - related parties                             26,719           10,533
      Salaries, wages and amounts withheld from employees         1,796,185        2,366,673
      Deferred revenues under business agreements                    75,000          222,730
      Deferred revenues - related parties                         1,067,794        2,346,054
      Current installments on long-term liabilities               2,786,683        2,716,072
                                                               ------------     ------------
            TOTAL CURRENT LIABILITIES                            24,459,461       26,075,770

    LONG-TERM LIABILITIES                                         7,316,960        7,898,011

    LONG-TERM NOTES PAYABLE                                      10,418,493       10,256,110

    DEFERRED GAIN                                                   243,537          278,328

    NONREFUNDABLE ADVANCE ROYALTIES (NOTE C)                      3,766,493        3,818,488
                                                               ------------     ------------
            TOTAL LIABILITIES                                    46,204,944       48,326,707

    NEGATIVE GOODWILL (NOTE D)                                    2,565,385        2,681,993

    MINORITY INTEREST (NOTE D)                                    4,002,479        4,355,976

    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 - 21,233,251 shares at
              September 30, 2001 and 19,053,026 shares at
              June 30, 2001                                         212,333          190,530
      Additional paid-in capital                                384,381,773      339,858,798
      Accumulated deficit                                      (230,070,536)    (227,305,918)
      Accumulated other comprehensive income                      1,075,571          881,342
      Unearned Compensation on Class B Convertible
        Common Stock                                             (2,720,440)      (2,890,540)
                                                               ------------     ------------
          TOTAL STOCKHOLDERS' EQUITY                            152,885,200      110,740,711
                                                               ------------     ------------
          TOTAL LIABILITIES & STOCKHOLDERS' EQUITY             $205,658,008     $166,105,387
                                                               ============     ============
</TABLE>
    See notes to consolidated financial statements.

                                       4
<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                    -------------------------------------
                                (Unaudited)
<TABLE>
<CAPTION>
                                                                  Three Months Ended
                                                                     September 30,
                                                             ----------------------------
                                                                 2001            2000
                                                             ------------    ------------
<S>                                                          <C>             <C>
OPERATING ACTIVITIES:
   Net loss                                                  $ (2,764,618)   $ (1,744,964)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
       Depreciation and amortization                              496,569         553,617
       Equity loss in joint ventures                              773,019         206,502
       Profit deferred on sales to Bekaert ECD Solar Systems      908,572         282,354
       Creditable royalties                                       (51,995)         (4,704)
       Stock and stock options issued for services rendered       248,700         170,100
       Amortization of deferred gain                              (34,791)       (110,265)
       Amortization of negative goodwill                         (116,608)       (116,608)
       Minority interest                                         (353,497)        (94,900)
       Other                                                       (2,260)         -

   Changes in working capital:
       Accounts receivable                                      3,873,152       1,086,558
       Amounts due from related parties                        (5,469,397)     (4,375,192)
       Inventories                                                (60,357)          3,663
       Other assets                                              (426,883)       (396,676)
       Accounts payable and accrued expenses                     (277,116)      1,452,318
       Accounts payable - related parties                          16,186             503
       Deferred revenues under business agreements               (147,730)      3,164,979
       Deferred revenues - related parties                     (1,278,260)         59,192
                                                             ------------    ------------
NET CASH PROVIDED BY (USED IN) OPERATIONS                      (4,667,314)        136,477

INVESTING ACTIVITIES:
       Purchases of capital equipment                          (1,958,648)       (298,644)
       Investment in Bekaert ECD Solar Systems                    (45,758)         -
       Investment in N.V. Bekaert Europa                          (28,346)        (43,750)
       Purchase of investments                                (35,622,315)     (2,091,298)
       Sales of investments                                    10,281,479          -
       Proceeds from sale of capital equipment                     13,560          -
                                                             ------------    ------------
NET CASH (USED IN) INVESTING ACTIVITIES                       (27,360,028)     (2,433,692)

FINANCING ACTIVITIES:
       Principal payments under short-term and long-term
         debt obligations and capitalized lease obligations      (510,440)       (547,327)
       Proceeds from sale of stock to Texaco                    8,893,629          -
       Proceeds from sale of stock upon exercise
         of stock options and warrants                         35,572,549       4,934,178
                                                             ------------    ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                      43,955,738       4,386,851
                                                             ------------    ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                      11,928,396       2,089,636

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD               33,055,399      44,592,017
                                                             ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                   $ 44,983,795    $ 46,681,653
                                                             ============    ============

</TABLE>
See notes to consolidated financial statements.

                                       5

<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

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

                                                                     Three Months Ended
                                                                        September 30,
                                                                ----------------------------
                                                                    2001            2000
                                                                ------------    ------------
<S>                                                             <C>             <C>

     SUPPLEMENTAL DISCLOSURES OF
          CASH FLOW INFORMATION:

     Cash paid for interest                                       $ 154,574       $ 220,693

     The Company's noncash investing and
        financing activities were as follows:

        Accretion of interest - long-term note receivable -
           Bekaert ECD Solar Systems                                162,383         152,493

        Accretion of interest - long-term note payable - Canon     (162,383)       (152,493)




</TABLE>








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 ended September 30, 2001 (fiscal 2002)
and 2000 (fiscal 2001) 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 2001 Annual Report on Form 10-K which
contains a summary of ECD's accounting principles and other footnote
information.

      ECD is a technology and manufacturing company engaged in the invention,
engineering, development and commercialization of new materials, products and
production technology based on its atomically engineered amorphous and
disordered materials.  ECD's core business is energy and information, with
enabling proprietary technologies in energy generation, energy storage and in
the field of information.

      The consolidated financial statements include the accounts of ECD; its
approximately 91%-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) (collectively the "Company").  The
remaining shares of Ovonic Battery are owned by Honda Motor Company, Ltd.
(Honda), Sanoh Industrial Company, Ltd. (Sanoh) and Sanyo Electric Co., Ltd.
(Sanyo).  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 September
30, 2001, seven major investments accounted for by the equity method: (i) Texaco
Ovonic Battery Systems LLC, Ovonic Battery's 50% joint venture with Texaco
Energy Systems Inc., a subsidiary of ChevronTexaco, (TESI) to manufacture and
sell the Company's proprietary NiMH batteries for electric, hybrid electric and
fuel cell electric vehicle applications, uninterruptible power supplies and
telecommunication applications; (ii) Texaco Ovonic Fuel Cell Company LLC, a
50%-owned joint venture with TESI to further develop and commercialize
Ovonic(TM) Regenerative Fuel Cells technology; (iii) Texaco Ovonic Hydrogen
Systems LLC, a 50%-owned joint venture with TESI to further develop Ovonic(TM)
hydrogen storage technology; (iv) Ovonic Media, LLC, a joint venture owned 51%
by General Electric (GE) through its GE Plastics business unit and 49% by ECD;
(v) Ovonyx, Inc., a 41.7%-owned joint venture with Mr. Tyler Lowrey, Intel
Capital and other investors, to commercialize ECD's Ovonic Unified Memory (OUM)
technology; (vi) Bekaert ECD Solar Systems LLC, United Solar's 40% joint venture
with Bekaert; and (vii) Innovative Transportation Systems AG, a German company
owned 26% by ECD and 8% by Texaco Ovonic Battery Systems. In addition, ECD has a
50%-owned joint venture in Russia, Sovlux Co., Ltd., and United Solar and
Bekaert ECD Solar Systems formed


                                      7
<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements

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

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 the Company's ventures.

      Intellectual property and patents resulting from the Company's investments
in its technologies are valued at zero in the balance sheet. Intellectual
property provides 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, Innovative Transportation Systems and Bekaert ECD Europa, are
recorded at zero. The Company will continue to carry its investment in each of
these joint ventures at zero until the venture becomes profitable (based upon
the venture's history of sustainable profits), at which time the Company will
start to recognize over a period of years its share, if any, of the then equity
of each of the ventures, and will recognize its share of each venture's profits
or losses on the equity method of accounting.

      To the extent that the Company has made cash contributions, it recognizes
its proportionate share of any losses until the investment reaches zero.

      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.

      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 ended September 30, 2000 and as of
June 30, 2001 have been reclassified to be consistent with the classification
of items as of and for the three months ended September 30, 2001.

      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 the
U.S. government and industrial partners, 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.

      The Company entered into foreign currency forward contracts ("forward
contracts") on March 30, 2001 for $5,267,000 to hedge the foreign currency
exposure on Japanese Yen in anticipation of purchases of machinery related to a
machine-building contract. Expected amounts and payment dates for the purchase
of the machinery as stated in the purchase


                                       8
<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements

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

orders match the terms within the forward contracts. Thus, the forward contracts
have been treated as cash flow hedges under Statement of Financial Accounting
Standards (SFAS) 133. The payment dates for both the machinery purchases and
forward contracts extend from the period April 23, 2001 to May 15, 2002. As of
September 30, 2001, the cash flow hedge was 100% effective. The Company believes
that it remains probable that the payment dates for the machinery will take
place within 60 days of the scheduled machinery payment dates.

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

      The Company's total comprehensive loss was as follows:

                                               Three Months Ended
                                                  September 30,
                                          ----------------------------
                                              2001            2000
                                          ------------    ------------
                                          (Unaudited)     (Unaudited)

       Net Loss                           $(2,764,618)    $(1,744,964)
       OTHER COMPREHENSIVE INCOME:
       Unrealized gains on securities         194,229         192,130
                                          ------------    ------------
       COMPREHENSIVE LOSS                 $(2,570,389)    $(1,552,834)
                                          ============    ============

Cash Equivalents
----------------

      Cash equivalents consist of investments in short-term, highly liquid
securities having a maturity of three months or less from the date of
acquisition.

Short-Term Investments
----------------------

      Short-term investments consist of commercial paper, classified as
available for sale, maturing in 91 days to 32 months from date of acquisition
and are stated at cost, which approximates fair market value.

Investments in EV Global Motors Company (EV Global) and Rare Earth Ovonic-China
-------------------------------------------------------------------------------

      The Company accounts for its investment in EV Global using the cost
method of accounting. ECD's interest in EV Global is less than 1%. 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.

                                       9
<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements

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

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.

Accounts Receivable
-------------------
<TABLE>
<CAPTION>

                                                      September 30,     June 30,
                                                          2001            2001
                                                      -------------   ------------
<S>                                                   <C>             <C>

Long-term contracts accounted for under percentage-
  of-completion accounting
      Revenues recognized but unbilled
          Commercial customers                        $  6,057,157    $ 11,604,014

      Amounts billed to customers
          Commercial customers                           4,476,738       1,215,328
                                                      ------------    ------------
               Sub-total                                10,533,895      12,819,342

Long-term contracts not accounted for under percentage-
  of-completion accounting
      Amounts earned which are billed in the
        subsequent month
          U.S. Government                                  525,206         844,720
          Commercial customers                             436,108          72,970
                                                      ------------    ------------
                                                           961,314         917,690
      Amounts billed
          U.S. Government                                1,176,483       2,545,250
          Commercial customers                              51,020          51,020
                                                      ------------    ------------
                                                         1,227,503       2,596,270
      Retainages
          U.S. Government                                   10,500          40,500
                                                      ------------    ------------
               Sub-total                                 2,199,317       3,554,460

Amounts unbilled for other than long-term contracts
          Commercial customers                           1,853,569       2,164,631

Amounts billed for other than long-term contracts
          Commercial customers                             897,161         853,661

Allowance for uncollectible accounts                      (548,000)       (583,000)
                                                      ------------    ------------
               TOTAL                                  $ 14,935,942    $ 18,809,094
                                                      ============    ============
</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 September 30, 2001 and June 30, 2001.  Certain U.S.
government contracts remain subject to audit.

      Included in accounts receivable at September 30, 2001, is $9,953,802 due
from Rare Earth Ovonic joint ventures in China (see Note D).


                                       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>
                                                      September 30,      June 30,
                                                          2001             2001
                                                      -------------    ------------
<S>                                                   <C>              <C>
Long-term contracts accounted for under percentage-
   of-completion accounting
      Revenues recognized but unbilled
          Bekaert ECD Solar Systems                    $   560,806     $ 1,229,324
          Texaco Ovonic Battery Systems                    101,860          -
                                                       -----------     -----------
                                                           662,666       1,229,324
                                                       -----------     -----------
      Amounts billed
          Bekaert ECD Solar Systems                     10,269,348       5,637,611
          Texaco Ovonic Battery Systems                    161,000          -
                                                       -----------     -----------
                                                        10,430,348       5,637,611
                                                       -----------     -----------
              Sub-total                                 11,093,014       6,866,935

Long-term contracts not accounted for under percentage-
   of-completion accounting
      Amounts earned which are billed in the
        subsequent month
          Bekaert-ECD Solar Systems                        130,000         130,000
          Ovonic Media                                     423,103          16,748
          Texaco Ovonic Battery Systems (formerly GM
            Ovonic)                                      1,695,668       6,432,859
          Texaco Ovonic Fuel Cell Company                  664,582         932,323
          Texaco Ovonic Hydrogen Systems                 1,123,799         777,441
                                                       -----------     -----------
              Sub-total                                  4,037,152       8,289,371

      Amounts billed
          Texaco Ovonic Battery Systems (formerly GM
            Ovonic                                       2,249,476         185,830
          Texaco Ovonic Fuel Cell Company                1,090,624          -
          Texaco Ovonic Hydrogen Systems                 1,917,699          -
                                                       -----------     -----------
                                                         5,257,799         185,830

      Amounts unbilled for other than long-term contracts
          Texaco Ovonic Battery Systems (formerly
            GM Ovonic)                                      -               20,714
          Innovative Transportation Systems                500,000          -
          Ovonyx                                            40,023          30,875
                                                       -----------     -----------
              Sub-total                                    540,023          51,589

      Amounts billed for other than long-term contracts
          Bekaert ECD Solar Systems                        400,532         396,912
          Texaco Ovonic Battery Systems (formerly
            GM Ovonic)                                      41,009         187,132
          Ovonyx                                           103,500          25,863
                                                       -----------     -----------
              Sub-total                                    545,041         609,907
                                                       -----------     -----------
              TOTAL                                    $21,473,029     $16,003,632
                                                       ===========     ===========

</TABLE>

                                       11

<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements

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

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

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

      Inventories for United Solar and Ovonic Battery are as follows:

                                      September 30,      June 30,
                                          2001             2001
                                      -------------    ------------

           Finished products           $   61,980       $  109,500
           Work in process                819,171          809,829
           Raw materials                  512,748          414,213
                                       ----------       ----------
                                       $1,393,899       $1,333,542
                                       ==========       ==========


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

      In connection with Bekaert's investment in United Solar and Bekaert ECD
Solar Systems, Bekaert ECD Solar Systems is required to pay ECD $12,000,000 no
later than January 1, 2004. This non-interest-bearing note receivable was
recorded on April 11, 2000 by ECD at a discounted value of $9,500,000 (using a
discount rate of 6.3%). ECD is required to pay Canon Inc. of Japan (Canon)
$12,000,000 no later than January 2004 in connection with the acquisition of
Canon's interest in United Solar (see Note D).

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.

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

      Product sales include photovoltaics, metal hydride materials, revenues
related to building of battery packs, and revenues related to machine-building
contracts. 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 metal hydride materials combined with high fixed costs
result in losses.

                                       12

<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements

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

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.

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

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

                                       13


<PAGE>
               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements

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

or other uncertainties. In these cases, license fee revenues are not recognized
until commencement of production or the resolution of uncertainties. Generally,
there are no current or future direct costs associated with license fees.

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

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

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

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

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


                                       14

<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements

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

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 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 on 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.





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

      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:

                                                         Three Months Ended
                                                            September 30,
                                                    ----------------------------
                                                        2001           2000
                                                    ------------   ------------
        Product sales:
            Machine building                         $ 8,412,455    $ 1,024,031
            Battery packs                                121,693        178,075
            Metal hydride materials                      129,210         26,040
                                                     -----------    -----------
                                                       8,663,358      1,228,146
                                                     -----------    -----------
        Product sales-related parties:
            Photovoltaics                              1,229,545      1,381,043
            Machine building                           1,141,041        538,846
            Battery packs                                 52,860         -
            Metal hydride materials                       72,848         43,529
                                                     -----------    -----------
                                                       2,496,294      1,963,418
                                                     -----------    -----------
        Total product sales                          $11,159,652    $ 3,191,564
                                                     ===========    ===========

        Royalties
            Battery technology                       $   567,811    $   848,997
            Optical memory                                34,416         26,639
                                                     -----------    -----------
                                                         602,227        875,636
                                                     -----------    -----------
        Royalties-related parties
            Optical memory                                 6,617         -
                                                     -----------    -----------
                                                           6,617        -
                                                     -----------    -----------
        Total royalties                              $   608,844    $   875,636
                                                     ===========    ===========

        Revenues from product development agreements:
            Photovoltaics                            $ 1,016,835    $   870,443
            Battery technology                           481,661        662,227
            Optical memory                               111,978         77,596
            Hydrogen                                     164,057        346,940
                                                     -----------    -----------
                                                       1,774,531      1,957,206
                                                     -----------    -----------
        Revenues from product development
          agreements - related parties:
            Battery technology                         3,129,029        132,001
            Optical memory                               406,355        667,269
            Hydrogen                                   3,297,638      1,440,000
            Fuel cells                                 1,935,978        897,000
                                                     -----------    -----------
                                                       8,769,000      3,136,270
                                                     -----------    -----------
        Total revenues from product development
          agreements                                 $10,543,531    $ 5,093,476
                                                     ===========    ===========

        License and other agreements:
            Battery technology                       $    -         $   300,000
                                                     -----------    -----------
                                                     $    -         $   300,000
                                                     ===========    ===========

                                       16
<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)
--------------------------------------------

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


                                             Three Months Ended
                                                September 30,
                                        ----------------------------
                                            2001            2000
                                        ------------    ------------

              United States             $12,302,218     $ 6,748,955
              Mexico                      1,229,545       1,381,403
              China                       8,423,846       1,198,037
              Australia                      -              735,783
              Germany                        37,575          38,001
              Japan                         440,777          17,355
              Hong Kong                      24,618          14,576
                                        -----------     -----------
                                        $22,458,579     $10,134,110
                                        ===========     ===========

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

      At September 30, 2001 and June 30, 2001, the Company deferred recognition
of revenue relating to nonrefundable advance royalty payments.  Nonrefundable
advance royalties consist of the following:

                                        September 30,     June 30,
                                            2001            2001
                                        ------------    ------------
              Battery                   $ 1,785,974     $ 1,819,416
              Optical memory              1,980,519       1,999,072
                                        -----------     -----------
                                        $ 3,766,493     $ 3,818,488
                                        ===========     ===========


      During the three months ended September 30, 2001 and 2000, $51,995 and
$4,704, respectively, of creditable royalties earned were recognized as revenue.
There are no obligations in connection with any of the advance royalty
agreements which require the Company to incur any additional costs.


                                       17
<PAGE>

              ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                 Notes to Consolidated Financial Statements

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

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

United Solar/Bekaert ECD Solar Systems

      Immediately prior to the April 11, 2000 transaction described below,
United Solar was owned 49.98% by ECD, 49.98% by Canon, and the remainder by a
minority shareholder. United Solar repurchased the shares of the minority
shareholder, bringing the ownership of United Solar for both ECD and Canon to
50%.

      On April 11, 2000, ECD and Bekaert entered into a strategic alliance in
the field of photovoltaic (solar) products. The joint venture entails an
investment in a new manufacturing plant with an annual capacity of 25 megawatts
(MW) that has been designed and is being 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.

      This transaction involved the following:

        -   Bekaert invested $72,000,000 for 1,372,015 newly issued shares of
            United Solar stock and its 60% share of Bekaert ECD Solar Systems
            ($42,000,000 in cash and $30,000,000 in the form of a note, payable
            on an as-needed basis).

        -   Bekaert ECD Solar Systems paid to ECD $12,000,000 in cash (paid at
            the closing of the transaction), and will pay to ECD $12,000,000 (to
            be paid no later than January 1, 2004).

        -   ECD paid to Canon for all of Canon's shares in United Solar stock
            (1) $12,000,000 in cash, (2) a note, guaranteed by Bekaert, for
            $12,000,000 to be paid to Canon no later than January 1, 2004 and
            (3) 700,000 shares of ECD Common Stock.

        -   United Solar invested $28,000,000 for its 40% interest in Bekaert
            ECD Solar Systems, consisting of (1) $23,056,000 in cash, (2)
            $5,000,000 in the form of a note, payable on an as-needed basis, but
            no later than April 11, 2003, and (3) the stock of United Solar de
            Mexico with a negative book value of $56,000.

      As a result of this transaction, United Solar is owned 81% by ECD and 19%
by Bekaert. Bekaert ECD Solar Systems is owned 40% by United Solar and 60% by
Bekaert.

      At the close of this transaction, 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 25MW machine-building order and $2,000,000 was a repayment by
United Solar to ECD of previous loans made by ECD to United Solar.

                                       18
<PAGE>

              ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                 Notes to Consolidated Financial Statements

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

      Effective April 11, 2000, ECD has consolidated United Solar in ECD's
financial statements. Prior to the transaction, United Solar's fiscal year end
was December 31. United Solar's year end has been changed to June 30 to coincide
with ECD's year end.

      ECD valued its acquisition of Canon's interest in United Solar at
$13,214,630, which included the issuance of 700,000 shares of ECD Common Stock
which was valued at $12,758,000 and the $456,630 balance in ECD-United Solar's
joint venture account on April 11, 2000. The acquisition, which resulted in
ECD's ownership in United Solar increasing from 49.98% to 81%, has been recorded
under the purchase method of accounting. The Company 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,
which results in a reduction of consolidated expenses. The Company allocated
this negative goodwill to reduce United Solar's long-term assets (capital
equipment) and applicable depreciation expense. The resulting negative goodwill
($3,265,000) is being amortized over seven years on a straight-line basis.

      The Financial Accounting Standards Board (FASB) has issued SFAS 142,
"Goodwill and Other Intangible Assets." This would require the Company to
recognize any unamortized negative goodwill as an extraordinary gain no later
than July 1, 2002. The Company does not plan to implement this new standard
before that date, but will continue to amortize negative goodwill through June
30, 2002 and will recognize the balance of approximately $2,216,000 as an
extraordinary gain at July 1, 2002.

      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 LLC
                           STATEMENT OF OPERATIONS
                           -----------------------

                                                   Three Months Ended
                                                      September 30,
                                              -----------------------------
                                                  2001             2000
                                              ------------     ------------
                                              (Unaudited)      (Unaudited)

          Revenues                            $ 4,009,815      $ 1,233,891

          Operating Expenses:
              Cost of Sales                     4,498,503        1,148,407
              General and Administrative        1,290,397          678,962
                                              ------------     ------------
                  Total Expenses                5,788,900        1,827,369
          Other Income (Expense)                 (143,209)          76,147
                                              ------------     ------------
          Net Loss                            $(1,922,294)     $  (517,331)
                                              ============     ============

                                       19

<PAGE>

              ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                 Notes to Consolidated Financial Statements

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

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

                                                       September 30, 2001
                                                       ------------------
                                                          (Unaudited)
          Current Assets:
              Cash and Cash Equivalents                   $ 11,571,574
              Inventory                                      7,737,499
              Other Current Assets                           4,836,075
                                                          ------------
                  Total Current Assets                      24,145,148
          Property, Plant and Equipment (Net)               40,809,012
          Other Assets                                      20,517,811
                                                          ------------
                  Total Assets                            $ 85,471,971
                                                          ============

          Current Liabilities:
              Accounts Payable and Accrued Expenses       $ 14,774,212
                                                          ------------
                  Total Current Liabilities                 14,774,212
          Long-term Liabilities:
              Note Payable - ECD                            10,418,493
              Note Payable - United Solar                    4,597,946
              Other                                             88,453
                                                          ------------
                  Total Long-term Liabilities               15,104,892
                                                          ------------
          Members' Equity                                   55,592,867
                                                          ------------
                  Total Liabilities and Members' Equity   $ 85,471,971
                                                          ============

Texaco Ovonic Battery Systems

      On July 17, 2001, TESI bought General Motors Corporation's interest in GM
Ovonic, LLC. GM Ovonic had been previously formed as a joint venture between
Ovonic Battery and General Motors for the manufacture and commercialization of
Ovonic NiMH batteries for electric, hybrid electric and fuel cell electric
vehicles. As of June 30, 2001, General Motors had a 60% interest and Ovonic
Battery had a 40% interest in this joint venture. Ovonic Battery 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 General Motors consisted of operating capital,
plant, equipment and management personnel necessary for the volume production of
batteries.

      Texaco Ovonic Battery Systems is owned 50% by Ovonic Battery and 50% by
TESI. The joint venture plans to increase production capacity, engage in market
development activities and implement an advanced product development program.
These activities will be funded by TESI and include a contract from Texaco
Ovonic Battery Systems to Ovonic Battery for advanced product development work.
Ovonic Battery contributed additional technology to

                                       20

<PAGE>

              ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                 Notes to Consolidated Financial Statements

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

the joint venture to allow it to expand the application of Ovonic nickel metal
hydride battery technology to include telecommunications and uninterruptible
power supply (UPS).

      There are no financial statements currently available for Texaco Ovonic
Battery Systems.

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
(a corporation was formed on June 23, 1999), Ovonyx (initially owned 50% by ECD
and the balance owned by Mr. Lowrey together with an affiliate of Mr. Lowrey),
to commercialize ECD's Ovonic Unified Memory. In February 2000, Ovonyx formed a
strategic alliance with Intel Corporation in which Intel Capital, and other
investors, made an equity investment in Ovonyx. Additionally, Ovonyx granted
Intel a nonexclusive royalty-bearing license and began a joint development
program utilizing one of Intel's wafer fabrication facilities. Presently, ECD
owns 41.7% of Ovonyx, 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 $101,000 and $94,000 for the three
months ended September 30, 2001 and 2000, respectively, representing services
performed for its operations which commenced on January 15, 1999.

Texaco Ovonic Fuel Cell

      In September 2000, ECD and TESI, a wholly owned subsidiary of Texaco,
formed Texaco Ovonic Fuel Cell. 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(TM) Regenerative Fuel Cells
technology. The joint venture is owned 50% by TESI and 50% by ECD. ECD has
contributed intellectual property and licenses.

                                       21

<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 Texaco Ovonic
Fuel Cell that are derived from Texaco Ovonic Fuel Cell's financial statements.

                      TEXACO OVONIC FUEL CELL COMPANY LLC
                            STATEMENT OF OPERATIONS
                            -----------------------

                                                        Three Months Ended
                                                        September 30, 2001
                                                        ------------------
                                                            (Unaudited)
          Revenues
              Dividend Income                               $     1,433

          Expenses:
              Product Development - Paid or Payable to ECD    1,511,776
              Product Development - Paid or Payable to TESI     338,236
              Depreciation Expense                               74,584
                                                            -----------
                  Total Expenses                              1,924,596
                                                            -----------
          Net Loss                                          $(1,923,163)
                                                            ===========

                      TEXACO OVONIC FUEL CELL COMPANY LLC
                                 BALANCE SHEET
                                 -------------

                                                        September 30, 2001
                                                        ------------------
                                                           (Unaudited)
          Current Assets:
              Cash and Cash Equivalents                     $ 1,107,970
                                                            -----------
                  Total Current Assets                        1,107,970
          Fixed Assets:
              Leasehold Improvements                            866,845
              Machinery and Other Equipment                     863,113
              Construction in Progress                          319,091
                                                            -----------
                  Total Fixed Assets                          2,049,049
          Less Accumulated Depreciation and Amortization       (129,713)
                                                            -----------
              Net Fixed Assets                                1,919,336
                                                            -----------
                  Total Assets                              $ 3,027,306
                                                            ===========

          Current Liabilities:
              Amount Due ECD                                $ 1,755,206
              Amount Due TESI                                   338,236
                                                            -----------
                  Total Current Liabilities                   2,093,442

          Members' Equity:
              Capital Contributions                          10,550,000
              Cumulative Deficit                             (9,616,136)
                                                            -----------
                  Total Members' Equity                         933,864
                                                            -----------
                  Total Liabilities and Members' Equity     $ 3,027,306
                                                            ===========

                                       22
<PAGE>

              ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                 Notes to Consolidated Financial Statements

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

      During the three months ended September 30, 2001 and 2000, the Company
recorded revenues of $1,936,000 and $897,000, 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 Ovonic Hydrogen Systems to ECD to
further develop the Ovonic(TM) hydrogen technology. The joint venture is owned
50% by TESI and 50% by ECD. ECD has contributed intellectual property and
licenses.

      The following sets forth certain financial data regarding Texaco Ovonic
Hydrogen Systems that are derived from Texaco Ovonic Hydrogen Systems' financial
statements.


                   TEXACO OVONIC HYDROGEN SYSTEMS LLC
                        STATEMENT OF OPERATIONS
                        -----------------------


                                                             Three Months Ended
                                                             September 30, 2001
                                                             ------------------
                                                                (Unaudited)
          Revenues
              Dividend Income                                   $     1,472

          Expenses:
              Product Development - Paid or Payable to ECD        2,804,189
              Product Development - Paid or Payable to TESI         425,728
              Depreciation Expense                                   87,126
                                                                -----------
                  Total Expenses                                  3,317,043
                                                                -----------

          Net Loss                                              $(3,315,571)
                                                                ===========


                                       23

<PAGE>

              ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                 Notes to Consolidated Financial Statements

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

                   TEXACO OVONIC HYDROGEN SYSTEMS LLC
                            BALANCE SHEET
                            -------------
                                                         September 30, 2001
                                                         -----------------
                                                            (Unaudited)
          Current Assets:
              Cash and Cash Equivalents                     $    185,152
                                                            ------------
                  Total Current Assets                           185,152
          Fixed Assets:
              Leasehold Improvements                             910,410
              Machinery and Other Equipment                      896,729
              Construction in Progress                           582,365
                                                            ------------
                  Total Fixed Assets                           2,389,504
          Less Accumulated Depreciation and Amortization        (156,221)
                                                            ------------
              Net Fixed Assets                                 2,233,283
                                                            ------------
                  Total Assets                              $  2,418,435
                                                            ============

          Current Liabilities:
              Amount Due ECD                                $  3,041,498
              Amount Due TESI                                    425,728
                                                            ------------
                  Total Current Liabilities                    3,467,226

          Members' Equity:
              Capital Contributions                           12,827,000
              Cumulative Deficit                             (13,875,791)
                                                            ------------
                  Total Members' Equity                       (1,048,791)
                                                            ------------
                  Total Liabilities and Members' Equity     $  2,418,435
                                                            ============

      During the three months ended September 30, 2001 and 2000, the Company
recorded revenues of $3,298,000 and $1,440,000, respectively, for services
provided to this joint venture.

Innovative Transportation Systems

      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, Inc. Common Stock. At the inception of Innovative
Transportation Systems, ECD's interest was 5.7%. ECD's interest increased to 30%
as of March 8, 2001 as a result of additional investments. As of March 8, 2001,
ECD is using the equity method to account for its investment in Innovative
Transportation Systems. In October 2001, Texaco Ovonic Battery Systems invested
$4,000,000 in Innovative Transportation Systems for an 8% investment, reducing
ECD's ownership to 26%.

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


                                       24
<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 GE formed a strategic alliance, the first activity
of which resulted in the creation of a joint venture, Ovonic Media. This joint
venture is owned 51% by GE 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.

      For the three months ended September 30, 2001 and 2000, the Company had
revenues of $406,000 and $667,000, respectively, from Ovonic Media for providing
services.

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

                             OVONIC MEDIA, LLC
                          STATEMENT OF OPERATIONS
                          -----------------------

                                                   Three Months Ended
                                                      September 30,
                                              -----------------------------
                                                  2001             2000
                                              ------------     ------------
                                              (Unaudited)      (Unaudited)

          Revenues                             $    -          $    -

          Operating Expenses:
              Product Development                 290,369         510,862
              General and Administrative           90,878         100,824
                                               ----------      ----------
                  Total Expenses                  381,247         611,686
                                               ----------      ----------
          Loss From Operations                   (381,247)       (611,686)
              Interest Expense                      -              (2,922)
                                               ----------      ----------
          Net Loss                             $ (381,247)     $ (614,608)
                                               ==========      ==========



                                       25

<PAGE>

               ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                  Notes to Consolidated Financial Statements

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

                              OVONIC MEDIA, LLC
                                BALANCE SHEET
                                -------------

                                                          September 30, 2001
                                                          ------------------
                                                             (Unaudited)

          Current Assets                                   $     -
          Property, Plant and Equipment (Net)                   594,687
                                                           ------------
                 Total Assets                              $    594,687
                                                           ============

          Current Liabilities:
              Accounts Payable to ECD                      $    423,696
                                                           ------------
                  Total Liabilities                             423,696

          Members' Equity:
              Capital Contributions                           3,080,584
              Accumulated Deficit                            (2,909,593)
                                                           ------------
                  Total Members' Equity                         170,991
                                                           ------------

                  Total Liabilities and Members' Equity    $    594,687
                                                           ============

Investment in EV Global and Rare Earth Ovonic

      In February 1998, ECD 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 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%.

      During the year ended June 30, 2000, ECD and Ovonic Battery signed an
agreement with Rare Earth High-Tech of Inner Mongolia, China. The agreement
called for the creation of joint ventures for manufacturing and licensing of
advanced NiMH battery technology, hydrogen storage alloy powders, advanced
Ovonic nickel hydroxide materials and production equipment for NiMH batteries.
As of September 30, 2001, three of the contemplated five joint ventures have
been started. ECD and Ovonic Battery contributed technology for their 19%
interest in each of these joint ventures. All of these joint ventures are being
accounted for using the cost method of accounting.

      Ovonic Battery has three contracts to supply equipment and technology
totaling $63.6 million to its Rare Earth Ovonic joint ventures in China. To
ensure payments from China, Ovonic Battery has received Letters of Credit
totaling $49.1 million from the Bank of Communications of Baotou, China, and has
received payment guarantees from LaSalle Bank that cover all risks of nonpayment
or dishonor of these Letters of Credit, including and not

                                       26
<PAGE>

              ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                 Notes to Consolidated Financial Statements

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

limited to, nonpayment due to force majeure, acts of war, or other political or
economic events. Of the total Letters of Credit of $49.1 million, LaSalle Bank
has accepted the risk of nonpayment due to nonconforming documents for payments
totaling $18.5 million.  To date, Ovonic Battery has received payments totaling
$16.5 million under the three contracts, $7.1 million for amounts not covered
by Letters of Credit and $9.4 million for amounts covered by Letters of Credit.
The $9.4 million received under the Letters of Credit was paid to Ovonic Battery
by LaSalle Bank under the guarantees related to conforming documents. To date,
LaSalle Bank has not been paid by the Bank of Communications based on the
contention that the documents presented were nonconforming. The Company is in
discussions with its joint venture partner in China to resolve the issues. The
Company has outstanding accounts receivable of approximately $10 million at
September 30, 2001. It is not possible to estimate the impact, if any, on the
Company's financial statements.

Sovlux

      In 1990, ECD formed Sovlux, a joint venture to manufacture ECD'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 continue production of photovoltaic products due to current
economic conditions in Russia.

      In 1998, ECD formed Sovlux Battery to produce NiMH batteries 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.

                                       27
<PAGE>

              ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                 Notes to Consolidated Financial Statements

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

      Basic net loss per common share is computed by dividing the net loss by
the weighted average number of common shares outstanding. ECD 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 ended September 30
are computed as follows:

                                                        2001            2000
                                                    ------------    ------------

  Weighted average number of shares outstanding      20,972,923      18,883,836

  Net loss                                          $(2,764,618)    $(1,744,964)

  BASIC NET LOSS PER SHARE                          $      (.13)    $      (.09)
                                                    ===========     ===========

  Weighted average number of shares outstanding      20,972,923      18,883,836

  Weighted average shares for dilutive securities        0               0
                                                    -----------     -----------
  Average number of shares outstanding and
     potential dilutive shares                       20,972,923      18,883,836

  Net loss                                          $(2,764,618)    $(1,744,964)

  DILUTED NET LOSS PER SHARE                        $      (.13)    $      (.09)
                                                    ===========     ===========

      Due to the Company's net losses, 2001 and 2000 weighted average shares of
potential dilutive securities of 994,318 and 2,272,395, respectively, 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. There were an
additional 39,034 potentially dilutive securities which were excluded from the
2001 calculations of the weighted average shares due to their antidilutive
effect to the net loss per share because of the relationship between the
exercise prices and the average market price of ECD's Common Stock during these
periods.


                                       28

<PAGE>

              ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                 Notes to Consolidated Financial Statements

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

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

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

                       Financial Data by Business Segment
                       ----------------------------------
                                 (in thousands)

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

Revenues
    Three months ended
      September 30, 2001       $ 19,811       $ 12,969        $  1,648       $(11,969)       $ 22,459
      September 30, 2000          5,920          3,421           2,251         (1,458)         10,134


Interest Income
    Three months ended
      September 30, 2001       $  1,279       $   -           $     78       $   -           $  1,357
      September 30, 2000          1,523           -                 31           -              1,554

Interest Expense*
    Three months ended
      September 30, 2001       $   -          $     35        $    120       $   -           $    155
      September 30, 2000           -                74             147           -                221

Operating Loss
    Three months ended
      September 30, 2001       $   (458)      $ (2,006)       $ (1,050)      $   (383)       $ (3,897)
      September 30, 2000            379         (3,564)           (178)           270          (3,093)


Equity in Net Loss of Investees
  Under Equity Method
    Three months ended
      September 30, 2001       $   (129)      $   -           $   (769)      $    125        $   (773)
      September 30, 2000           -              -               (206)          -               (206)

Depreciation and
  Amortization Expense
    Three months ended
      September 30, 2001       $    189       $    284        $    433       $   (409)       $    497
      September 30, 2000            161            391             439           (437)            554


</TABLE>

                                       29

<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>
Capital Expenditures
    Three months ended
      September 30, 2001       $  1,662       $     89        $    208       $   -           $  1,959
      September 30, 2000             54             74             171           -                299

Investments in Equity
  Method Investees
    Three months ended
      September 30, 2001       $   -          $   -           $ 21,971       $   -           $ 21,971
      September 30, 2000           -              -             21,950           -             21,950

Identifiable Assets
    Three months ended
      September 30, 2001       $175,177       $ 21,185        $ 37,122       $(27,826)       $205,658
      September 30, 2000        130,798          7,608          45,793        (27,786)        156,413


</TABLE>

----------
    * 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.

Note H - Contingent Liabilities
-------------------------------

      The Company's contracts with the U.S. government and its agencies are
subject to the audits by the Defense Contract Audit Agency (DCAA). DCAA is in
the process of auditing the Company's indirect rates, including its methodology
of computing these rates, for the year ended June 30, 1999. In its draft report,
DCAA has questioned the allowability, and the allocability, of certain costs. In
addition, DCAA has stated that there could be penalties imposed. The Company is,
together with its government consultants, in the process of discussing each of
these items in detail with DCAA. Management believes that some of these DCAA
assertions are without merit. It is not possible to estimate the effect of the
resolution of all of the issues, but management believes the range of additional
cost to be from zero dollars to $2,200,000.


                                       30

<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, 2001 and is qualified in
its entirety by the foregoing. The results of operations for the three months
ended September 30, 2001 are not necessarily indicative of results to be
expected in future periods.

      CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
           OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

      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
Quarterly 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, or to convince others of the necessity of
     licensing our technology without litigation;

  -  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 meet their commitments or 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;

                                       31

<page>

  -  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;

  -  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 September 30, 2001 Compared to Three Months Ended
--------------------------------------------------------------------
September 30, 2000
------------------

      The Company has continued to invest to further advance its technologies.
These investments in its technologies have led to strategic alliances with
ChevronTexaco, Bekaert, Intel, General Electric and China's Rare Earth High-Tech
Co., Ltd. of Baotou Steel Company. According to generally accepted accounting
principles as practiced in the United States, 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 of $2,765,000 on revenues of $22,459,000 in the
three months ended September 30, 2001 compared to a net loss of $1,745,000 on
revenues of $10,134,000 for the three months ended September 30, 2000. The
$1,020,000 increase in the net loss resulted primarily from higher cost of
patent defense and the maintenance of core

                                       32

<page>

competency in manufacture of materials in the Ovonic Battery segment and higher
costs at the United Solar segment related to its move to its Auburn Hills
facility, together with costs at United Solar associated with its expansion in
connection with the 25MW production capacity scheduled to be on line in 2002.

      The increased loss resulted from an $837,000 decrease for the ECD segment
(operating loss of $458,000 in 2001 versus operating income of $379,000 in 2000)
and an increased operating loss of $872,000 for United Solar (operating loss of
$1,050,000 in 2001 versus operating loss of $178,000 in 2000), partially offset
by a $1,558,000 improvement for Ovonic Battery (operating loss of $2,006,000 in
2001 versus operating loss of $3,564,000 in 2000).

      The ECD/Ovonic Battery programs in the Ovonic nickel metal hydride battery
technology have led to a family of batteries not only for hybrid electric
vehicles, electric vehicles and fuel cell electric vehicles, but also for a new
universal battery platform that has included a much-needed 36/42 volt battery to
meet the emerging requirements for higher voltages, power and energy of
next-generation vehicle applications. Expenses related to metal hydride
materials production and the ongoing protection of the Company's intellectual
property also contributed to the 2001 losses. Partially offsetting the loss from
operations in the three months ended September 30, 2001 was other income (net)
of $1,132,000 compared to other income (net) of $1,348,000 in the prior year.

      The increase in revenues primarily resulted from higher revenues from
product development agreements ($5,450,000) and higher product sales
($7,968,000), partially offset by lower royalties ($267,000) and license and
other agreements (zero in 2001 and $300,000 in 2000). The ECD segment's revenues
increased to $19,811,000 in 2001 from $5,920,000 in 2000 due to increased
revenues from product development agreements of $2,968,000, primarily resulting
from the advanced product development agreements with Texaco Ovonic Hydrogen
Systems and Texaco Ovonic Fuel Cell and due to machine-building sales to Bekaert
ECD Solar Systems to build manufacturing equipment to make solar panels capable
of producing 25MW of electrical power on an annual basis. The $9,548,000
increase in Ovonic Battery's revenues was primarily due to higher
machine-building sales to Rare Earth Ovonic ($8,412,000 in 2001 versus $884,000
in 2000), increased revenues from product development agreements ($3,611,000 in
2001 versus $794,000 in 2000), as work was begun on the advanced product
development agreement for Texaco Ovonic Battery Systems, and decreased revenues
from license and other agreements (zero in 2001 versus $300,000 in 2000). United
Solar's 2001 revenues decreased to $1,648,000 in 2001 versus $2,251,000 in 2000.

      Product sales, consisting of machine building, photovoltaic products,
metal hydride materials and battery packs, increased 250% to $11,160,000 in the
three months ended September 30, 2001 from $3,192,000 in the three months ended
September 30, 2000. Machine-building revenues increased 511% to $9,553,000 in
2001 from $1,563,000 in 2000. The increase in machine-building revenues in 2001
relate primarily to Ovonic Battery's contracts with Rare Earth Ovonic to provide
battery-making equipment ($8,412,000 in 2001 compared to $884,000 in 2000) and
ECD's contract with Bekaert ECD Solar Systems to design and build equipment
making solar panels capable of producing annually 25MW of electrical power
($1,141,000 in 2001 compared to $538,000 in 2000). All machine-building
contracts are accounted for using percentage-of-completion accounting.
Photovoltaic sales, which are sales of semi-finished products to an affiliate,
Bekaert ECD Solar Systems, were $1,381,000 for 2000 and $1,230,000 for 2001 (see
Note D). Sales of metal hydride materials were $202,000 in

                                       33

<page>

2001 compared to $70,000 in 2000. The Company currently has a product sales
backlog of $39,733,000, $32,983,000 of which is expected to be recognized as
revenues in Fiscal 2002.

      Royalties decreased 30% to $609,000 in the three months ended September
30, 2001 from $876,000 in the three months ended September 30, 2000. The
royalties the Company receives continue to reflect increased production
efficiencies of its licensees which have resulted in lower prices as licensees
move aggressively to increase market share.

      Revenues from product development agreements increased 107% to $10,544,000
in the three months ended September 30, 2001 from $5,093,000 in the three months
ended September 30, 2000. The increase was primarily a result of agreements with
Texaco Ovonic Hydrogen Systems ($3,298,000 for 2001 compared to $1,440,000 for
2000), Texaco Ovonic Fuel Cell ($1,936,000 for 2001 compared to $897,000 for
2000) and Texaco Ovonic Battery Systems ($3,064,000 for 2001 compared to zero in
2000) for advanced product development services, all of which began in Fiscal
2001. Partially offsetting these increases were the completion of programs with
National Institute of Standards and Technology, which advanced the Company's
hydrogen storage and optical memory technologies ($112,000 in 2001 versus
$660,000 in 2000), contracts with Ovonic Media ($406,000 in 2001 versus $667,000
in 2000) and Partnership for a New Generation of Vehicles (zero in 2001 versus
$71,000 in 2000).

      Revenues from license and other agreements decreased to zero in the three
months ended September 30, 2001 from $300,000 in the three months ended
September 30, 2000. The 2000 license fees included $250,000 from BYD Battery
Co., Ltd. and $50,000 from SANIK Battery Co., Ltd. Revenues from license and
other agreements depend on a small number of new business arrangements, are
sporadic and vary dramatically from period to period.

      Other revenues are primarily related to personnel, facilities and
miscellaneous administrative and laboratory services provided to some of the
Company's joint ventures. Other revenues decreased to $147,000 in the three
months ended September 30, 2001 from $673,000 in the three months ended
September 30, 2000. This decrease was due to decreases in Texaco Ovonic Battery
Systems (formerly GM Ovonic) (zero in 2001 versus $335,000 in 2000) and Bekaert
ECD Solar Systems ($3,000 in 2001 versus $193,000 in 2000). Revenues from Texaco
Ovonic Battery Systems were lower due to reduced activity. Revenues from Bekaert
ECD Solar Systems were lower due to lower management fees in 2001.

      The $7,510,000 increase in cost of product sales in the three months ended
September 30, 2001 results from the $7,968,000 increase in product sales. The
$455,000 gross profit on product sales in 2001 is an improvement of $458,000
compared to 2000. The improvement primarily results from machine-building
contracts with positive margins. Partially offsetting the profitability of the
machine-building contracts is the continued loss on the sales of metal hydride
materials which resulted from the Company maintaining its production capacity to
produce hydride powders to meet the future needs of Texaco Ovonic Battery
Systems and Texaco Ovonic Hydrogen Systems. Low sales volumes for metal hydride
materials, combined with high fixed costs, result in the loss on product sales
for these products.

                                       34

<PAGE>

      For the three months ended September 30, 2001, compared to the three
months ended September 30, 2000, the net cost of product development to the
Company decreased by $155,000 despite an increase in expenditures for the
development products by $5,296,000 because the amount of funding received by
customers increased by $5,451,000.

                                                         Three Months Ended
                                                            September 30,
                                                    ----------------------------
                                                        2001           2000
                                                    ------------   ------------
     Cost of revenues from product development
       agreements                                   $ 10,320,000   $ 4,561,000
     Product development and research                  1,916,000     2,379,000
                                                    ------------   -----------
            Total cost of product development         12,236,000     6,940,000
     Revenues from product development
       agreements                                     10,544,000     5,093,000
                                                    ------------   -----------
            Net cost of product development         $  1,692,000   $ 1,847,000


The expenditures continued the development of the Company's core technologies in
energy storage, energy generation and information technology.

      Expenses were incurred in 2001 and 2000 in connection with the protection
of the Company's United States and foreign patents covering its proprietary
technologies. Total patent expenses increased to $1,349,000 in the three months
ended September 30, 2001 from $991,000 in the three months ended September 30,
2000, principally due to litigation costs ($606,000 in 2001 versus $387,000 in
2000) for the protection of the Company's NiMH battery patents and technology.
In March 2001, Ovonic Battery filed suit against Matsushita Battery Industrial
Co., Ltd., Toyota Motor Corporation, Panasonic EV Energy Co., Ltd. and several
related entities for infringement of patents held by Ovonic Battery.

      The decrease in operating, general and administrative expenses from
$2,102,000 in the three months ended September 30, 2000 to $2,066,000 in the
three months ended September 30, 2001 was due to increased allocations to
product development research expenses and to cost of revenues from product
development agreements ($2,073,000), partially offset by increased spending
($1,930,000) due to personnel additions and other expenses associated with the
Company's growth and $107,000 due to the inclusion of United Solar expenses for
2001.

      The $216,000 decrease in other income (net) ($1,132,000 income in 2001
compared to $1,348,000 income in 2000) resulted primarily from lower interest
income ($1,357,000 in 2001 compared to $1,554,000 in 2000) because of lower
interest rates on its investments and from higher equity losses ($773,000 in
2001 compared to $207,000 in 2000) partially offset by higher minority interest
share of losses relating to Bekaert's 19% ownership of United Solar ($353,000 in
2001 versus $95,000 in 2000).

      The Company does business in many different parts of the world and its
royalty revenues are affected by changes in foreign currencies and their
exchange rates relative to the U.S. dollar. However, the vast majority of the
Company's business agreements are denominated in U.S. dollars and, as such, the
Company has minimized its exposure to currency rate fluctuations.

                                       35

<PAGE>


                        Liquidity and Capital Resources

      As of September 30, 2001, the Company had unrestricted consolidated cash,
cash equivalents, short-term investments and accounts receivable (including
$21,473,000 of amounts due from related parties) of $155,836,000, an increase of
$39,060,000 from June 30, 2001. As of September 30, 2001, the Company had
consolidated working capital of $133,195,000 compared with a consolidated
working capital of $92,577,000 as of June 30, 2001. Since June 30, 2001, ECD has
received approximately $44,466,000 from the exercise of warrants and from
additional shares purchased by Texaco to maintain its 20% ownership.

      The Company expects the amount of cash to be received under existing
product development agreements in the year ending June 30, 2002 to increase to
approximately $51,565,000, compared to $27,508,000 received from product
development agreements in the year ended June 30, 2001. Certain of the Company's
product development and product purchase agreements contain provisions allowing
for the termination of such agreements for failure of the Company to meet
agreement milestones or for breach of material contractual provisions.
Generally, the termination provisions allow for the Company to recover any costs
incurred through the termination date.

      During the three months ended September 30, 2001, of the Company's
$119,428,000 cash, cash equivalents and short-term investments, the Company
purchased $35,622,000 of short-term investments consisting of commercial paper,
classified as available for sale, maturing from 91 days to 32 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. As of September 30, 2001, there were two investments which, at
that time, did not comply with this policy. The Company believes that this was
only a temporary situation and, based on advice from its bank, has continued to
hold these investments.

      During the three months ended September 30, 2001, $4,667,000 of cash was
used in operations. The difference between the net loss of $2,765,000 and the
net cash used in operations was principally due to increases in amounts due from
related parties and in deferred revenues, partially offset by increases in
accounts receivable. In addition, $1,959,000 of machinery and equipment was
purchased or constructed, principally for ECD's expansion and for United Solar,
during this period.

      Ovonic Battery has three contracts to supply equipment and technology
totaling $63.6 million to its Rare Earth Ovonic joint ventures in China. To
ensure payments from China, Ovonic Battery has received Letters of Credit
totaling $49.1 million from the Bank of Communications of Baotou, China, and has
received payment guarantees from LaSalle Bank that cover all risks of nonpayment
or dishonor of these Letters of Credit, including and not limited to, nonpayment
due to force majeure, acts of war, or other political or economic events. Of the
total Letters of Credit of $49.1 million, LaSalle Bank has accepted the risk of
nonpayment due to nonconforming documents for payments totaling $18.5 million.
To date, Ovonic Battery has received payments totaling $16.5 million under the
three contracts, $7.1 million for amounts not covered by Letters of Credit and
$9.4 million for amounts covered by Letters of Credit. The $9.4 million received
under the Letters of Credit was paid to Ovonic Battery by LaSalle Bank under the
guarantees related to conforming documents. To date, LaSalle Bank has not been
paid by the Bank of Communications based on the contention that

                                       36

<PAGE>

the documents presented were nonconforming. The Company is in discussions with
its joint venture partner in China to resolve the issues. The Company has
outstanding accounts receivable of approximately $10 million at September 30,
2001. It is not possible to estimate the impact, if any, on the Company's
financial statements.

      As part of its long-standing strategy, the Company has made investments in
its technologies, which have resulted in enabling intellectual property and
products. This has allowed the Company to finance its operations and growth
through strategic alliances (joint ventures and license agreements) with third
parties who can provide financial resources and marketing expertise for the
Company's technologies and products.

      The resultant strategic alliances and joint ventures with some of the
world's leading corporations listed below form the basis for the
commercialization of the Company's technologies and products. Highlights are:

      -    Texaco Ovonic Battery Systems LLC - a 50/50 joint venture between
           Ovonic Battery and TESI formed to bring advanced NiMH batteries into
           widespread commercial production for hybrid and electric vehicles as
           well as to further develop them for non-automotive applications. TESI
           will fund approximately $150,000,000 to increase the manufacturing
           capacity at Texaco Ovonic Battery Systems' facilities in Troy,
           Michigan, and in Kettering, Ohio, and for market development and
           advanced product development. The advanced product development will
           be accomplished through a $48,000,000 product development contract
           from Texaco Ovonic Battery Systems to Ovonic Battery. The contract,
           which began October 1, 2000, will last up to three years and may be
           cancelled if mutually agreed-upon milestones are not achieved. The
           Company received $3,064,000 for work performed under the contract in
           the three months ended September 30, 2001 and is budgeted to receive
           approximately $17,000,000 in 2002.

      -    Texaco Ovonic Hydrogen Systems LLC - a 50/50 joint venture between
           ECD and TESI formed to further develop and advance the
           commercialization of ECD's technology to store hydrogen in metal
           hydrides. TESI will fund an initial amount of up to $104,000,000,
           including product and market development. The principal use of the
           funds is to fund a product development contract from Texaco Ovonic
           Hydrogen Systems to ECD. The contract, which began July 1, 2000, will
           last up to three years and may be cancelled if mutually agreed-upon
           milestones are not achieved. The Company received $3,298,000 for work
           performed under the contract in the three months ended September 30,
           2001 and is budgeted to receive approximately $16,000,000 in 2002.

      -    Texaco Ovonic Fuel Cell Company LLC - a 50/50 joint venture between
           ECD and TESI formed whose initial mission is to further develop
           Ovonic regenerative fuel cell technology to validate manufacturing
           methodologies and produce production-ready prototypes. TESI will fund
           initial product and market development of up to $70,000,000. The
           primary use of this funding is to fund a product development contract
           from Texaco Ovonic Fuel Cell to ECD. The contract, which began July
           1, 2000, will last up to three years, and may be cancelled if
           mutually agreed-upon milestones are not achieved. The Company
           received $1,936,000 for work


                                       37
<PAGE>



           performed under the contract in the three months ended September 30,
           2001 and is budgeted to receive approximately $14,000,000 in 2002.

      -    Bekaert ECD Solar Systems/United Solar - ECD and Bekaert have
           formed a strategic alliance whereby Bekaert invested $84,000,000 in
           the combined businesses ($24,000,000 of which is being used as
           partial payment to buy out United Solar's previous joint venture
           partner). The remaining funds will be used to fund a fivefold
           capacity expansion, and a sales and marketing expansion program. The
           capacity expansion resulted in an order from Bekaert ECD Solar
           Systems to ECD for production equipment valued at approximately
           $55,000,000 with an annual capacity of 25MW. Bekaert ECD Solar
           Systems/United Solar require approximately $40,000,000 in financing
           to fund capital equipment, start up, increased working capital
           requirements and operating losses. The Company and Bekaert are
           considering various funding mechanisms that could result in Bekaert
           and ECD guaranteeing debt of Bekaert ECD Solar Systems.

      -    Ovonic Media, LLC - a strategic alliance formed with General
           Electric, the first activity of which resulted in the creation of a
           joint venture, Ovonic Media. ECD received a $3,000,000 contract from
           Ovonic Media to design, develop and demonstrate ECD's proprietary
           continuous web roll-to-roll technology for the ultra-high-speed
           manufacture of optical media products, primarily rewritable DVDs.
           Following a successful demonstration, the partners are currently
           developing a commercialization and financing plan.

      -    Ovonyx, Inc. - a joint venture owned 41.7% by ECD and the remainder
           by Tyler Lowrey, Intel and others with a purpose to commercialize
           ECD's proprietary nonvolatile semiconductor memory technology, OUM.
           OUM memory technology promises to enable significantly faster write
           and erase speeds and higher cycling endurance than conventional
           memory types. It has been used in rewritable CD and DVD disks and may
           have potential as a replacement for such memory types as FLASH, SRAM
           and DRAM. Ovonyx has granted nonexclusive royalty-bearing licenses to
           Intel, STMicroelectronics and BAE Systems. In addition, ECD receives
           royalties from Ovonyx equal to .5% of Ovonyx's revenues.

      These strategic alliances and new business agreements have both near-term
and long-term impacts on the Company's capital resources. The ChevronTexaco,
Bekaert, Ovonyx and General Electric agreements have resulted in reduced cash
expenditures as the Company's business partners have assumed the responsibility
for funding operations, while, at the same time, form the basis in the long term
to commercialize the Company's products.


                                       38

<PAGE>


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

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

      On October 9, 2001, the shareholders of Texaco Inc. and Chevron Corp.
voted on the merger of Texaco and Chevron. The combined companies have been
renamed ChevronTexaco Corporation and TRMI Holdings is a wholly owned subsidiary
of ChevronTexaco.

      So long as ChevronTexaco owns more than 5% of ECD Stock and in the event
ECD issues additional ECD Stock other than to ChevronTexaco, ChevronTexaco has
the right to purchase additional ECD Stock in order for ChevronTexaco to
maintain its same proportionate interest in ECD Stock as ChevronTexaco held
prior to the issuance of the additional ECD Stock. If ChevronTexaco 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 ChevronTexaco
is entitled to purchase.

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

      ChevronTexaco purchased 448,358 shares of ECD Common Stock on August 29,
2001 for $8,894,000 to maintain its 20% proportionate interest in the Company.
Previously, ChevronTexaco purchased 125,233 shares of ECD Common Stock on
October 26, 2000 for $3,795,000, 39,805 shares for approximately $1,078,000 on
January 31, 2001 and 20,437 additional shares for approximately $572,000 on May
8, 2001.

      ChevronTexaco 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>


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

      The following discussion about our exposure to market risk of financial
instruments contains forward-looking statements. Actual results may differ
materially from those described.

      Our holdings of financial instruments are comprised of debt securities and
time deposits. All such instruments are classified as securities available for
sale. We do not invest in portfolio equity securities, or commodities, or use
financial derivatives for trading purposes. Our debt security portfolio
represents funds held temporarily, pending use in our business and operations.
The Company had $119,428,000 and $81,956,000 of these investments on September
30, 2001 and June 30, 2001, respectively. On September 30, 2001, the investments
had an average maturity of 292 days, $74,444,000 of which had maturities of 91
days to 32 months. On June 30, 2001, the investments had an average maturity of
224 days, $48,909,000 of which had maturities of 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. As of September 30, 2001, there were two investments which, at
that time, did not comply with this policy. The Company believes that this was
only a temporary situation and, based on advice from its bank, has continued to
hold these investments. Our market risk exposure consists of exposure to changes
in interest rates and to the risks of changes in the credit quality of issuers.
An interest rate change of 1% would result in a change in the value of our
September 30, 2001 portfolio of approximately $915,000.

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

      A.    Exhibits
            --------

      10.1  Amended and Restated Operating Agreement of Texaco Ovonic Battery
            Systems LLC (f/k/a GM Ovonic L.L.C.) dated as of July 17, 2001 by
            and between Texaco Energy Systems Inc. and Ovonic Battery Company,
            Inc.

       3.1  Amendment to Article VIII of the Bylaws effective as of November 8,
            2001


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

            None


                                       40

<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: November 14, 2001             Vice President and Chief Financial Officer
                                    (Principal financial and accounting officer)



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










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