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                       MARCH  31, 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
incorporation or organization)                          Identification No.)



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



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


--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report

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

      As of May 11, 2001, there were 219,913 shares of Class A Common Stock,
430,000 shares of Class B Common Stock and 18,993,961 shares of Common Stock
outstanding.



                               Page 1 of 40 Pages


<PAGE>


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

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


                                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                     -------------------------------------
                                                 (Unaudited)

<TABLE>
<CAPTION>

                                                  Three Months Ended               Nine Months Ended
                                                       March 31,                        March 31,
                                              ----------------------------    ----------------------------
                                                  2001            2000            2001            2000
                                              ------------    ------------    ------------    ------------
    <S>                                       <C>             <C>             <C>             <C>
    REVENUES
      Product sales                           $  4,572,535    $    690,532    $  7,254,156    $  2,824,370
      Product sales to related parties           2,781,178          99,656       7,060,068       1,213,213
                                              ------------    ------------    ------------    ------------
          Total product sales                    7,353,713         790,188      14,314,224       4,037,583

      Royalties                                    730,467         795,820       2,404,327       2,533,854

      Revenues from product development
        agreements                               1,546,012       1,632,195       5,056,796       7,532,662
      Revenues from product development
        agreements with related parties          7,698,972          87,167      17,049,892          96,449
                                              ------------    ------------    ------------    ------------
          Total revenues from product
            development agreements               9,244,984       1,719,362      22,106,688       7,629,111

     Revenues from license agreements               -            1,000,000       2,800,000       3,178,000

     Other                                          53,750         209,302         216,912         326,703
     Other revenues from related parties           339,277       2,962,749       1,102,030       4,122,161
                                              ------------    ------------    ------------    ------------
          Total other revenues                     393,027       3,172,051       1,318,942       4,448,864

            TOTAL REVENUES                      17,722,191       7,477,421      42,944,181      21,827,412

    EXPENSES
      Cost of product sales                      7,316,282       1,936,503      14,297,463       6,574,991
      Cost of revenues from product
        development agreements                   9,107,526       1,816,234      21,090,406       7,714,197
      Product development and research           3,356,281       4,225,171       8,783,787      11,562,991
      Patents, including patent defense            825,207         356,800       2,839,974       1,250,159
      Operating, general and administrative      2,097,333       2,210,692       6,044,394       4,978,196
                                              ------------    ------------    ------------    ------------
            TOTAL EXPENSES                      22,702,629      10,545,400      53,056,024      32,080,534
                                              ------------    ------------    ------------    ------------
    LOSS FROM OPERATIONS                        (4,980,438)     (3,067,979)    (10,111,843)    (10,253,122)

    OTHER INCOME (EXPENSE)
      Interest income                            1,476,915         366,640       4,664,127         785,542
      Interest expense                            (184,396)        (88,396)       (615,668)       (304,652)
      Equity loss in joint ventures               (740,776)       (658,000)     (1,544,297)     (1,956,000)
      Minority interest share of losses            241,112            -            696,059            -
      Other nonoperating income (expense) (net)    (83,986)        132,967         178,921         377,868
                                              -------------   -------------   ------------    ------------
            TOTAL OTHER INCOME (EXPENSE)           708,869        (246,789)      3,379,142      (1,097,242)
                                              -------------   -------------   ------------    -------------
    NET LOSS                                  $ (4,271,569)   $ (3,314,768)   $ (6,732,701)   $(11,350,364)
                                              =============   =============   =============   =============

    BASIC NET LOSS PER SHARE                  $       (.22)   $       (.24)   $       (.35)   $       (.84)
                                              =============   =============   =============   =============

    DILUTED NET LOSS PER SHARE                $       (.22)   $       (.24)   $       (.35)   $       (.84)
                                              =============   =============   =============   =============

</TABLE>


See notes to consolidated financial statements.

                                        2

<PAGE>

<TABLE>
<CAPTION>

                            ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                                      CONSOLIDATED BALANCE SHEETS
                                      ---------------------------

                                               ASSETS
                                               ------

                                                                    March 31,       June 30,
                                                                      2001            2000
                                                                 -------------   -------------
                                                                  (Unaudited)
<S>                                                              <C>             <C>
CURRENT ASSETS (NOTE A)
   Cash, including cash equivalents of
      $30,792,000 at March 31, 2001 and
      $44,386,000 at June 30, 2000                               $ 30,919,054    $ 44,592,017
   Investments                                                     56,774,254      44,723,500
   Accounts receivable (net of allowance for
      uncollectible accounts of approximately
      $579,000 at March 31, 2001, and
      at June 30, 2000)                                            11,379,094       7,172,166
   Amounts due from related parties                                16,485,530       8,893,354
   Inventories                                                      1,412,927         994,077
   Other                                                            1,431,722         302,413
                                                                 ------------    ------------
         TOTAL CURRENT ASSETS                                     118,402,581     106,677,527

PROPERTY, PLANT AND EQUIPMENT
   Land and land improvements                                         267,000         312,588
   Buildings and improvements                                       1,046,300       1,042,781
   Machinery and other equipment (including construc-
      tion in progress of approximately $754,000 and
      $578,000 at March 31, 2001 and June 30, 2000)                19,845,655      18,808,002
   Capitalized lease equipment                                      4,718,353       4,734,653
                                                                 ------------   -------------
                                                                   25,877,308      24,898,024
   Less accumulated depreciation and amortization                 (20,196,416)    (18,636,752)
                                                                 -------------  -------------
         TOTAL PROPERTY, PLANT AND EQUIPMENT                        5,680,892       6,261,272

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)     10,096,258       9,631,495

JOINT VENTURES (NOTE D)
   Bekaert ECD Solar Systems                                       20,139,268      22,394,868
   Bekaert ECD Europa                                                  13,218           -
   Texaco Ovonic Fuel Cell Company                                      -               -
   Texaco Ovonic Hydrogen Systems                                       -               -
   GM Ovonic                                                            -               -
   Ovonyx                                                               -               -
   Ovonic Media                                                         -               -
   Innovative Transportation Systems                                4,048,716       1,639,716
   Sovlux - Russia                                                      -               -

OTHER ASSETS                                                        1,373,886       1,300,764
                                                                -------------   -------------

         TOTAL ASSETS                                           $ 160,754,819   $ 148,905,642
                                                                =============   =============
</TABLE>

See notes to consolidated financial statements.

                                      3
<PAGE>

<TABLE>
<CAPTION>
                      ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

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

                                                         March 31,         June 30,
                                                           2001              2000
                                                        -------------   -------------
                                                        (Unaudited)
<S>                                                     <C>             <C>
CURRENT LIABILITIES
   Accounts payable and accrued expenses                $ 11,930,203    $  6,133,826
   Accounts payable - related party                            5,709          17,546
   Salaries, wages and amounts withheld
      from employees                                       1,503,893       1,998,684
   Deferred revenues under business
      agreements                                           2,207,236         161,331
   Deferred revenues - related parties                     4,405,473       6,376,644
   Current installments on long-term liabilities           2,737,244       2,200,039
                                                        ------------    ------------
         TOTAL CURRENT LIABILITIES                        22,789,758      16,888,070

LONG-TERM LIABILITIES                                      8,428,321      10,427,858

LONG-TERM NOTES PAYABLE                                   10,096,258       9,631,495

DEFERRED GAIN                                                338,277         669,072

NONREFUNDABLE ADVANCE ROYALTIES (NOTE C)                   3,911,002       3,938,667
                                                        ------------    ------------
         TOTAL LIABILITIES                                45,563,616      41,555,162

NEGATIVE GOODWILL (NOTE D)                                 2,798,601       3,148,426

MINORITY INTEREST (NOTE D)                                 4,729,435       5,425,494

STOCKHOLDERS' EQUITY
   Capital Stock
   Class A Convertible Common Stock,
      par value $0.01 per share:
         Authorized - 500,000 shares
         Issued & outstanding - 219,913 shares                 2,199           2,199
   Class B Convertible Common Stock,
      par value $0.01 per share
         Authorized, Issued and Outstanding - 430,000 shares   4,300           4,300
   Common Stock, par value $0.01 per share:
         Authorized - 30,000,000 shares Issued and
         Outstanding - 18,971,024 shares at March 31,
         2001 and 18,098,646 shares at June 30, 2000         189,710         180,986
   Additional paid-in capital                            338,102,666     324,293,312
   Accumulated deficit                                  (228,916,781)   (222,184,080)
   Accumulated other comprehensive income                  1,341,713          50,783
   Unearned Compensation on Class B Convertible
      Common Stock                                        (3,060,640)     (3,570,940)
                                                        -------------    ------------
         TOTAL STOCKHOLDERS' EQUITY                      107,663,167      98,776,560
                                                        -------------    ------------

         TOTAL LIABILITIES & STOCKHOLDERS' EQUITY       $160,754,819    $148,905,642
                                                        ============    ============
</TABLE>

See notes to consolidated financial statements.


                                      4
<PAGE>

<TABLE>
<CAPTION>

                    ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
                                   (Unaudited)
                                                               Nine Months Ended
                                                                    March 31,
                                                         -----------------------------
                                                             2001            2000
                                                         -------------  --------------
<S>                                                      <C>            <C>
OPERATING ACTIVITIES:
   Net loss                                              $ (6,732,701)  $(11,350,364)
   Adjustments to reconcile net loss to net cash
      used in operating activities:
         Depreciation and amortization                      1,808,327      1,640,615
         Equity loss in joint ventures                      1,544,297      1,956,000
         Profit deferred on sales to related parties          741,835           -
         Creditable royalties                                 (27,665)       (92,098)
         Stock and stock options issued for services
           rendered                                           566,956        787,002
         Amortization of deferred gain                       (330,795)      (330,795)
         Negative goodwill amortization                      (349,825)          -
         Minority interest                                   (696,059)          -
         Loss on disposal of capital equipment                 54,824          4,958
   Changes in working capital:
      Accounts receivable                                  (4,206,928)       (94,877)
      Amounts due to related parties                       (7,592,176)      (677,922)
      Inventories                                            (418,850)       179,679
      Other assets                                         (1,202,431)        64,396
      Accounts payable and accrued expenses                 5,301,586       (476,906)
      Accounts payable - related party                        (11,837)       130,966
      Deferred revenues under business agreements           2,045,905       (990,603)
      Deferred revenues from related parties               (1,971,171)     1,052,337
                                                         -------------  ------------

NET CASH USED IN OPERATIONS                               (11,476,708)    (8,197,612)

INVESTING ACTIVITIES:
   Investment in United Solar                                  -            (999,589)
   Investment in Bekaert ECD Europa                           (43,750)          -
   Investment in Innovative Transportation Systems         (2,409,000)          -
   Purchases of capital equipment                          (1,282,771)      (455,485)
   Purchase of investments                                (17,759,824)          -
   Sale of investments                                      7,000,000           -
                                                        ----------------------------

NET CASH USED IN INVESTING ACTIVITIES                     (14,495,345)    (1,455,074)

FINANCING ACTIVITIES:
   Principal payments under short-term and long-term
      debt and capitalized lease obligations               (1,462,332)      (967,797)
   Proceeds from sale of common stock upon
      exercise of stock options and warrants                8,889,134     10,712,917
   Proceeds from issuance of warrants                          -             400,000
   Proceeds from issuance of stock to Texaco                4,872,288           -
                                                         ------------   -------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                  12,299,090     10,145,120

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      (13,672,963)       492,434

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD           44,592,017     19,076,983
                                                         ------------   ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD               $ 30,919,054   $ 19,569,417
                                                         ============   ============

</TABLE>

See notes to consolidated financial statements.

                                      5

<PAGE>


                      ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

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


                                                      Nine Months Ended
                                                          March 31,
                                                  -----------------------
                                                    2001          2000
                                                  ----------   ----------

      SUPPLEMENTAL DISCLOSURES OF
           CASH FLOW INFORMATION:

            Cash paid for interest                $  615,668   $  304,652




























See notes to consolidated financial statements.



                                     6

<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - MARCH 31, 2001
         -----------------------------------------------------------

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

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

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

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

      The Company has a number of strategic alliances and has, as of March 31,
2001, seven major investments accounted for by the equity method: (i) Bekaert
ECD Solar Systems LLC (Bekaert ECD Solar Systems), United Solar's 40% joint
venture with Bekaert; (ii) GM Ovonic LLC (GM Ovonic), Ovonic Battery's 40% joint
venture with General Motors Corporation (GM) to manufacture and sell the
Company's proprietary NiMH batteries for electric, hybrid electric and fuel cell
electric vehicle applications (on October 12, 2000, ECD and Texaco Inc. jointly
announced that Texaco and Ovonic Battery signed a Memorandum of Understanding
(MOU) to continue the business of GM Ovonic in a new entity, to be renamed
Texaco Ovonic Battery, LLC (Texaco Ovonic Battery), in which GM's interest is to
be converted and restructured so that ECD and Texaco each will have a 50%
interest in the joint venture. The MOU was signed in conjunction with an MOU
signed between Texaco and GM on October 10, 2000); (iii) Texaco Ovonic Fuel Cell
Company LLC (Texaco Ovonic Fuel Cell Company), a 50%-owned joint venture with
Texaco to further develop and commercialize Ovonic Regenerative Fuel Cells(TM)
technology; (iv) Texaco Ovonic Hydrogen Systems LLC (Texaco Ovonic Hydrogen
Systems), a 50%-owned joint venture with Texaco to further develop Ovonic
hydrogen storage technology; (v) Ovonyx, Inc. (Ovonyx), a 41.7%-owned joint
venture with Mr. Tyler Lowrey, Intel Corporation (Intel) and other investors, to
commercialize ECD's Ovonic Unified Memory (OUM) technology; (vi) Ovonic Media
LLC (Ovonic Media), a joint venture owned 51% by

                                      7

<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

General Electric (GE) through its GE Plastics business unit and 49% by ECD; and
(vii) Innovative Transportation Systems AG (Innovative Transportation Systems),
a German company owned 30% by ECD. In addition, ECD has a 50%-owned joint
venture in Russia, Sovlux Co., Ltd. (Sovlux), and United Solar and Bekaert ECD
Solar Systems formed a joint venture in Belgium, N.V. Bekaert ECD Europa
(Bekaert ECD Europa) owned 10% by United Solar and 90% by Bekaert ECD Solar
Systems. See Note D for discussion of all of ECD's ventures.

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

      Certain items for the three months and nine months ended March 31, 2000
and as of June 30, 2000 have been reclassified to be consistent with the
classification of items as of and for the three months and nine months ended
March 31, 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 its
industrial partners and the U.S. government, its ability to protect and maintain
the proprietary nature of its technology, its continued product and
technological advances and the strength and ability of the Company's licensees
and joint venture partners to commercialize the Company's products and
technologies.

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

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

                                      8

<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will
be immediately recognized in earnings. The adoption of SFAS 133 had no impact
on the earnings or the financial position of the Company.

      The Company entered into foreign currency forward contracts ("forward
contracts") on March 30, 2001 of $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 orders match the terms
within the forward contracts.  Thus, the forward contracts have been treated as
cash flow hedges under 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 March 31, 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 machinery payment dates.

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

      The Company's total comprehensive loss was as follows:

<TABLE>
<CAPTION>

                                          Three Months Ended                Nine Months Ended
                                               March 31,                         March 31,
                                     ----------------------------    -------------------------------
                                         2001            2000            2001            2000
                                     -------------   -------------   -------------   -------------
                                      (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
   <S>                               <C>             <C>             <C>             <C>

   Net Loss                          $ (4,271,569)   $ (3,314,768)   $ (6,732,701)   $(11,350,364)
   OTHER COMPREHENSIVE INCOME:
   Unrealized gains on securities         511,375           -           1,290,930          -
                                     -------------   -------------   -------------   -------------
   COMPREHENSIVE INCOME (LOSS)       $ (3,760,194)   $ (3,314,768)   $ (5,441,771)   $(11,350,364)
                                     =============   =============   =============   =============

</TABLE>

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.



                                      9
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

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

      Due to the short-term maturities of cash, cash equivalents, marketable
securities, accounts receivable and accounts payable, the Company believes
the carrying value of its financial instruments to be a reasonable estimate of
fair value.

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

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


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

                                                                   March 31,     June 30,
                                                                     2001          2000
                                                                 ------------  ----------

<S>                                                             <C>           <C>
Long-term contracts accounted for under percentage
  of completion accounting
   Revenues recognized but unbilled
      Commercial customers                                      $ 5,378,879   $   201,397
   Plus amounts billed to customers
      Commercial customers                                          866,375       638,369
                                                                -----------   -----------
            Sub-total                                             6,245,254       839,766

Long-term contracts not accounted for under percentage-
  of completion accounting
   Amounts earned which are billed in the subsequent month
      U.S. Government                                             1,205,843       689,217
      Commercial customers                                            -           154,767
                                                                -----------   -----------
                                                                  1,205,843       843,984
   Amounts billed
      U.S. Government                                             1,048,705       786,585
      Commercial customers                                           51,020          -
                                                                -----------   -----------
                                                                  1,099,725       786,585
   Plus retainages
      U.S. Government                                               104,497        74,497
                                                                -----------   -----------
            Sub-total                                             2,410,065     1,705,066

Amounts unbilled for other than long-term contracts
   Commercial customers                                           2,634,028     2,836,375

Amounts billed for other than long-term contracts
   U.S. Government                                                    -             4,687
   Commercial customers                                             668,747     2,365,272
                                                                -----------   -----------
            Sub-total                                               668,747     2,369,959

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

                 TOTAL                                          $11,379,094   $ 7,172,166
                                                                ===========   ===========
</TABLE>


                                      10
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

      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 March 31, 2001 and June 30, 2000. Certain U.S. government
contracts remain subject to audit. Management believes that adjustments, if any,
which may result from an audit would not be material to the financial position
or results of operations of the Company.

Amounts Due from Related Parties
--------------------------------
<TABLE>
<CAPTION>
                                                             March 31,        June 30,
                                                               2001             2000
                                                           ------------     ------------
<S>                                                        <C>              <C>
Accounts receivable related to long-term contracts ac-
  counted for under percentage of completion accounting
   Revenues recognized but unbilled
      Bekaert ECD Solar Systems                            $ 1,184,172     $   393,426
   Amounts billed
      Bekaert ECD Solar Systems                              4,067,998         939,854
                                                           -----------     -----------
         Sub-total                                           5,252,170       1,333,280


Long-term contracts not accounted for under percentage
  of completion accounting
   Amounts earned which are billed in the subsequent month
      Bekaert ECD Solar Systems                                108,694           -
      GM Ovonic                                                  7,295           -
      Texaco Ovonic Fuel Cell Company                        1,355,945           -
      Texaco Ovonic Hydrogen Systems                         1,530,146           -
      Ovonic Media                                              65,526           -
                                                           -----------     -----------
         Sub-total                                           3,067,606           -


   Amounts billed
      GM Ovonic                                                274,879          22,097

Amounts unbilled for other than long-term contracts
      Bekaert ECD Solar Systems                              5,848,052       6,728,194
      GM Ovonic                                                  -              13,087
      Ovonyx                                                    31,163         352,668
                                                           -----------     -----------
         Sub-total                                           5,879,215       7,093,949

Amounts billed for other than long-term contracts
      Bekaert ECD Solar Systems                              1,632,354           -
      GM Ovonic                                                340,489         315,163
      Ovonyx                                                    38,817         128,865
                                                           -----------     -----------
         Sub-total                                           2,011,660         444,028
                                                           -----------     -----------

         TOTAL                                             $16,485,530     $ 8,893,354
                                                           ===========     ===========


</TABLE>
                                      11
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

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

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

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

                                                 March 31,      June 30,
                                                   2001           2000
                                              ------------    -----------
              Finished products               $   13,000      $   37,785
              Work in process                    946,678         557,732
              Raw materials                      453,249         398,560
                                              ----------      ----------
                                              $1,412,927      $  994,077
                                              ==========      ==========

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

      Product sales include photovoltaics (after April 11, 2000), machine
building, battery pack and battery electrode revenues. Revenues related to
machine-building contracts and sales related to other long-term contracts are
recognized on the percentage-of-completion method of accounting using the costs
incurred to date as a percentage of the total expected costs. All other product
sales are recognized when the product is shipped. These products are shipped FOB
shipping point. In certain cases, low sales volumes related to negative
electrodes combined with high fixed costs result in losses.

Royalties
---------

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

      Ovonic Battery had a contingent fee arrangement with a law firm which
required Ovonic Battery to pay the law firm 25% of royalties received relative
to consumer battery licenses entered into in 1995 in settlement of an
International Trade Commission action. In December

                                      12

<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

2000, the Company paid the law firm $1,300,000 ($977,000 of which had been
accrued through December 31, 2000 and an additional $323,000 was expensed as of
that date) in full settlement for all current and future payments. No additional
contingent fee payments will be required.

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

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

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

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

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

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

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

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

                                      13

<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

      License agreement fees are generally recognized as revenue at the time the
agreements are consummated, which is the completion of the earnings process.
Typically, such fees are nonrefundable, do not obligate the Company to incur any
future costs or require future performance by the Company, and are not related
to future production or earnings of the licensee. License fees payable in
installments are recorded at the present value of the amounts to be received,
taking into account the collectibility of the license fee. In some instances, a
portion of such license fees is contingent upon the commencement of production
or other uncertainties. In these cases, license fee revenues are not recognized
until commencement of production or the resolution of uncertainties. Generally,
there are no current or future direct costs associated with license fees.

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

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

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

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

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


                                      14
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

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

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

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

      Compensation expense is recorded in accordance with SFAS 123, "Accounting
for Stock-Based Compensation," for any stock options or awards granted to
nonemployees of the Company. The Company applies APB25, "Accounting for Stock
Issued to Employees," to its stock-based compensation awards to employees.


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

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


                                                     Nine Months Ended
                                                         March 31,
                                               -----------------------------
                                                   2001*            2000
                                               ------------     ------------
      Product Sales:
         Machine building                      $ 6,400,998      $  1,445,337
         Battery packs                             746,433         1,378,217
         Negative and positive electrodes          106,725               816
                                               -----------      ------------
                                                 7,254,156         2,824,370

      Product sales-related parties:
         Photovoltaics                           4,555,941             -
         Machine building                        2,218,409             2,544
         Battery packs                             108,694           (13,418)
         Negative and positive electrodes          177,024         1,224,087
                                               -----------       -----------
                                                 7,060,068         1,213,213
                                               -----------       -----------
            Total product sales                $14,314,224       $ 4,037,583
                                               ===========       ===========


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



                                      15
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

                                                     Nine Months Ended
                                                         March 31,
                                               ---------------------------
                                                   2001*          2000
                                               ------------   ------------


      Royalties
         Battery technology                    $  2,299,349   $  2,430,335
         Optical memory                             104,978        103,519
                                               ------------   ------------
                                               $  2,404,327   $  2,533,854
                                               ============   ============

      Revenues from product development
        agreements:
         Photovoltaics                         $  2,063,813   $  1,172,193
         Battery technology                       1,904,487      3,796,808
         Optical memory                             504,752        859,583
         Hydrogen                                   583,744      1,596,580
         Other                                        -            107,498
                                               ------------   ------------
                                                  5,056,796      7,532,662


      Revenues from product development
        agreements - related parties
         Battery technology                         600,869         50,449
         Optical memory                           1,835,473         46,000
         Hydrogen                                 8,460,663          -
         Fuel cells                               6,152,887          -
                                               ------------   ------------
                                                 17,049,892         96,449
                                               ------------   ------------
      Total revenues from product
        development agreements                 $ 22,106,688   $  7,629,111
                                               ============   ============

      License and other agreements
         Battery technology                    $  2,800,000   $  3,178,000
                                               ============   ============
-------------
  * United Solar is included in ECD's consolidated financial statements
    effective April 11, 2000.


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

                                                     Nine Months Ended
                                                          March 31,
                                               --------------------------
                                                   2001           2000
                                               ------------   -----------

         United States                         $ 26,941,542   $ 15,426,582
         China                                    8,985,750         -
         Germany                                    113,525         -
         Japan                                    2,134,019      5,207,603
         Hong Kong                                  148,976         -
         Netherlands                                 40,000        750,000
         Mexico                                   4,555,941         -
         Other countries                             24,428        443,227
                                               ------------   ------------
                                               $ 42,944,181   $ 21,827,412
                                               ============   ============



                                      16

<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

      At March 31, 2001 and June 30, 2000, the Company deferred recognition of
revenue relating to nonrefundable advance royalty payments. Nonrefundable
advance royalties consist of the following:

                                               March 31,        June 30,
                                                 2001             2000
                                             ------------     ------------

         Battery                              $ 1,913,331      $ 1,913,331
         Optical memory                         1,997,671        2,025,336
                                              -----------      -----------
                                              $ 3,911,002      $ 3,938,667
                                              ===========      ===========


      Creditable royalties earned and recognized as revenue were:

                                                Periods ended March 31,
                                                  2001             2000
                                              ------------     ------------
         Three months ended                     $ 11,774         $ 24,702
         Nine months ended                        27,665           92,098


There are no obligations in connection with any of the advance royalty
agreements which require the Company to incur any additional costs.

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

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

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

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

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

                                      17

<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

United Solar/Bekaert ECD Solar Systems

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

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

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

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


                                      18

<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

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



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

                                         Three Months Ended   Nine Months Ended
                                           March 31, 2001       March 31, 2001
                                        --------------------  ------------------
                                             (Unaudited)        (Unaudited)

         Revenues                           $  2,257,375       $  4,984,161
         Operating Expenses
            Cost of Sales                      3,217,147          6,557,243
            General and administrative           978,932          3,159,723
                                            ------------       ------------
            Total                              4,196,079          9,716,966
         Other Income (Loss) net                 (80,657)            48,715
                                            -------------      ------------
         Net Loss                           $ (2,019,361)      $ (4,684,090)
                                            =============      =============


                            BEKAERT ECD SOLAR SYSTEMS
                                  BALANCE SHEET
                                  -------------
                                                            March 31,
                                                              2001
                                                        --------------
                                                          (Unaudited)
      Current Assets:
         Cash and Cash Equivalents                       $  4,740,039
         Inventory                                          7,686,715
         Other Current Assets                               5,286,112
                                                         ------------
              Total Current Assets                         17,712,866
      Property, Plant and Equipment (Net)                  14,118,008
      Other Assets                                         21,899,683
                                                         ------------
              Total Assets                               $ 53,730,557
                                                         ============

      Current Liabilities:
         Accounts Payable and Accrued Expenses           $ 14,242,354
      Note Payable-ECD                                     10,096,258
                                                         ------------
              Total Liabilities                            24,338,612
      Total Members' Equity                                29,391,945
                                                         ------------
              Total Liabilities and Members' Equity      $ 53,730,557
                                                         ============


                                      19
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

GM Ovonic

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

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

Ovonyx

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

      ECD recorded revenues from Ovonyx of $87,000 and $299,000 for the three
and nine months ended March 31, 2001 and $681,000 and $2,521,000 for the three
months and nine months ended March 31, 2000, for services performed for its
operations which commenced on January 15, 1999.

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


                                      20
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

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

                                       Three Months Ended     Nine Months Ended
                                       February 28, 2001      February 28, 2001
                                      --------------------   -------------------
                                           (Unaudited)           (Unaudited)

            Revenues                        $ 2,624,359          $ 4,111,926

            Operating Expenses
               Product development              479,962            1,495,198
               Patent                            50,554              173,353
               General and administrative       399,562              714,705
                                            -----------          -----------
                    Total                       930,078            2,383,256
            Other Income                         84,911              288,688
                                            -----------          -----------
            Net Income                      $ 1,779,192          $ 2,017,358
                                            ===========          ===========


                                   OVONYX, INC.
                                  BALANCE SHEET
                                  -------------

                                                          February 28,
                                                              2001
                                                         --------------
                                                           (Unaudited)
      Current Assets:
         Cash and Cash Equivalents                        $ 5,359,063
         Investments                                        3,257,225
         Accounts Receivable                                   50,638
         Other Current Assets                                  22,551
                                                          -----------
            Total Current Assets                            8,689,477
      Property, Plant and Equipment (Net)                      26,918
                                                          -----------
            Total Assets                                  $ 8,716,395
                                                          ===========

      Current Liabilities:
         Accounts Payable and Accrued Expenses            $   213,915
                                                          -----------
            Total Current Liabilities                         213,915
      Total Stockholders' Equity                            8,502,480
                                                          -----------
Total Liabilities and Stockholders' Equity                $ 8,716,395
                                                          ===========

Ovonic Media

      In March 2000, ECD and General Electric formed a strategic alliance, the
first activity of which resulted in the creation of a joint venture, Ovonic
Media, to design, develop, demonstrate
                                      21
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

and commercialize ECD's proprietary technology for DVDs. This joint venture is
owned 51% by General Electric through its GE Plastics business unit and 49%
by ECD. ECD has contributed intellectual property and licenses and will
contribute other assets in the form of tangible personal property to the joint
venture. GE will make cash and other contributions to the joint venture.

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

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

                                         Three Months Ended   Nine Months Ended
                                           March 31, 2001       March 31, 2001
                                        -------------------- -------------------
                                             (Unaudited)         (Unaudited)

         Revenues                           $     -            $     -

         Operating expenses:
            Product development                 382,707           1,208,666
            General and administrative          100,820             302,468
                                            ------------        --------------
               Total expenses                   483,527           1,511,134
                                            ------------        -------------
         Loss from operations                  (483,527)         (1,511,134)
            Interest expense                     (1,485)             (6,584)
                                            ------------        -------------
         Net Loss                           $  (485,012)        $ (1,517,718)
                                            ============        =============


                                  OVONIC MEDIA
                                  BALANCE SHEET
                                  -------------
                                                            March 31,
                                                              2001
                                                        --------------
                                                          (Unaudited)
         Assets:
            Property, Plant and Equipment (Net)               567,749
                                                           ----------
                  Total Assets                             $  567,749
                                                           ==========

         Current Liabilities:
            Accounts payable to ECD                        $   65,329
                                                           ----------
               Total Liabilities                               65,329
         Capital Contributions                              2,569,302
         Accumulated Deficit                               (2,066,882)
                                                           -----------
               Total Members' Equity                          502,420
                                                           ----------
                  Total Liabilities and Members' Equity    $  567,749
                                                           ==========


                                      22

<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

      During the three and nine months ended March 31, 2001, the Company
recorded revenues of $393,000 and $1,835,000, respectively, for services
provided to this joint venture.

Texaco Ovonic Fuel Cell Company

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

      During the three and nine months ended March 31, 2001, the Company
recorded revenues of $2,936,000 and $6,153,000, respectively, for services
provided to this joint venture.

Texaco Ovonic Hydrogen Systems

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

      During the three and nine months ended March 31, 2001, the Company
recorded revenues of $3,888,000 and $8,461,000, 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 Common Stock. Of the stock contribution, 208,333
shares (79,092 of which were acquired from EV Global in exchange for 34,723
shares of ECD) were contributed by ECD. At the inception of Innovative
Transportation Systems, ECD's interest was 5.7%. ECD's interest increased to
11.7% as a result of an additional investment of $400,000 on June 19, 2000. On
October 3, 2000, ECD invested an additional amount of $909,000 in Innovative
Transportation Systems, increasing its ownership interest to 19%. On March 8,
2001, ECD invested an additional amount of $1,500,000, increasing its ownership
interest to 30%.  As of March 8, 2001, ECD is using the equity method to
account for its investment in Innovative Transportation Systems.


                                      23

<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

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

Sovlux

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

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

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

Investments in EV Global and Rare Earth Ovonic-China

      In February 1998, the Company and EV Global, a Lee Iacocca company,
entered into a Stock Purchase Agreement (Agreement) which provided for the
transfer to EV Global of 146,924 shares of ECD Common Stock and warrants to
purchase 133,658 shares of ECD Common Stock. The Agreement also provided for the
transfer to ECD of 250,000 shares of EV Global Common Stock and 129,241
shares of Unique Mobility, Inc. (Unique Mobility) Common Stock. Pursuant to
the terms of the warrant agreement, EV Global elected to exchange, in
March 2000, the warrants for 49,888 shares of ECD Common Stock. ECD's interest
in EV Global is less than 1%.

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

                                      24
<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

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


<TABLE>
<CAPTION>


                                       Three Months Ended            Nine Months Ended
                                            March 31,                     March 31,
                                ----------------------------    ----------------------------
                                    2001            2000            2001            2000
                                ------------    ------------    ------------    ------------
                                 (Unaudited)     (Unaudited)    (Unaudited)     (Unaudited)
   <S>                          <C>             <C>             <C>             <C>

   Weighted average number
      of shares outstanding       19,548,401      13,880,425      19,250,024      13,549,799
   Net loss                     $ (4,271,569)   $ (3,314,768)   $ (6,732,701)   $(11,350,364)

   BASIC NET LOSS PER SHARE     $   (.22)       $   (.24)       $   (.35)       $   (.84)
                                =============   =============   =============   =============

   Weighted average number
      of shares outstanding       19,548,401      13,880,425      19,250,024      13,549,799
   Weighted average shares
      for dilutive securities         -               -               -               -
                                -------------   -------------   -------------   -------------

  Average number of shares
      outstanding and potential
      dilutive shares             19,548,401      13,880,425      19,250,024      13,549,799
   Net loss                     $ (4,271,569)   $ (3,314,768)   $ (6,732,701)   $(11,350,364)

   DILUTED LOSS PER SHARE       $   (.22)       $   (.24)       $    (.35)      $   (.84)
                                =============   =============   =============   =============


</TABLE>

      Due to the Company's net losses, the weighted average number of shares of
potentially dilutive securities for 2001 of 1,777,033 (three months) and
1,952,611 (nine months) and for 2000 of 1,423,746 (three months) and 421,187
(nine months) were excluded from the calculations of diluted loss per share as
inclusion of these securities would have been antidilutive to the net loss per
share. Additional securities of 400,000 for 2000 (for both periods) and 0 for
both 2001 periods were excluded from the 2000 and 2001 calculations of weighted
average number of shares of potential dilutive securities. Because of the
relationship between the exercise prices and the average market price of ECD's
Common Stock during these periods, these securities would have been antidilutive
regardless of the Company's net loss.

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

      The Company has three business segments: its subsidiaries, Ovonic Battery
and United Solar, and the parent company, ECD. Ovonic Battery is involved in
developing and
                                      25

<PAGE>


                ENERGY CONVERSION DEVICES, INC. and SUBSIDIARIES

                   Notes to Consolidated Financial Statements

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

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
      March 31, 2001                $13,868      $ 6,776         $ 2,064         $(4,986)        $ 17,722
      March 31, 2000                  3,602        3,875              -               -             7,477

   Nine months ended
      March 31, 2001                $30,891      $15,998         $ 5,906         $(9,851)        $ 42,944
      March 31, 2000                  7,781       14,046              -               -            21,827

Operating Loss
   Three months ended
      March 31, 2001                $(2,898)     $(2,453)        $  (311)        $   682         $ (4,980)
      March 31, 2000                    566       (3,634)            -               -             (3,068)

   Nine months ended
      March 31, 2001                $   530      $(10,117)       $(1,400)        $   875         $(10,112)
      March 31, 2000                   (942)      (9,311)            -               -            (10,253)

Equity in Net Loss of Investee
 Under Equity Method
   Three months ended
      March 31, 2001                $   -            -           $  (835)        $    94         $   (741)
      March 31, 2000                   (658)         -               -               -               (658)

   Nine months ended
      March 31, 2001                $   -            -           $(1,909)        $   365         $ (1,544)
      March 31, 2000                 (1,956)         -                -              -             (1,956)

Interest Expense**
   Three months ended
      March 31, 2001                $    10      $   44          $   130             -            $   184
      March 31, 2000                      4          84              -               -                 88

   Nine months ended
      March 31, 2001                $    12      $  181          $   423         $   -            $   616
      March 31, 2000                     10         295              -               -                305

</TABLE>


                                      26

<PAGE>

<TABLE>
<CAPTION>
                                                                               Consolidating
                                      ECD    Ovonic Battery     United Solar*     Entries        Consolidated
                                     ------  --------------     -------------  -------------     ------------
<S>                                  <C>         <C>               <C>            <C>             <C>
Interest Income**
   Three months ended
      March 31, 2001                $  1,472          -            $     5             -            $  1,477
      March 31, 2000                     367          -                -               -                 367

   Nine months ended
      March 31, 2001                $  4,619          -            $    45             -            $  4,664
      March 31, 2000                     786          -                -               -                 786

Depreciation Expense
   Nine months ended
      March 31, 2001                $    656       $ 1,136         $ 1,283         $ (1,267)        $  1,808
      March 31, 2000                     558         1,083             -               -               1,641

Identifiable Assets
   As of March 31, 2001             $131,983       $13,961         $41,850         $(27,039)        $160,755
   As of March 31, 2000               30,977        12,343             -               -            $ 43,320

Capital Expenditures
   Nine months ended
      March 31, 2001                $    697       $   32          $   554             -            $  1,283
      March 31, 2000                     183          272              -               -                 455

Investments in Equity
  Method Investees
   Nine months ended
      March 31, 2001                $  4,049          -            $25,739         $ (5,587)        $ 24,201
      March 31, 2000                   2,260          -                -               -               2,260
</TABLE>
------------
  *  No financial data for United Solar for the three and nine months ended
     March 31, 2000 were included due to the fact that United Solar financial
     statements were not consolidated until after April 11, 2000. Prior to April
     11, 2000, ECD accounted for its investment in United Solar under the equity
     method.
  ** Excludes intercompany interest.


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

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

                                      27
<PAGE>


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

      The following discussion should be read in conjunction with the
accompanying Quarterly Financial Information and Notes thereto and the Company's
Annual Report on Form 10-K for the year ended June 30, 2000, and is qualified in
its entirety by the foregoing. The results of operations for the three months
and nine months ended March 31, 2001 are not necessarily indicative of results
to be expected in future periods.

                           Forward-Looking Information

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

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

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

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

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

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

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

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

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

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

                                      28

<PAGE>


      -   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 March 31, 2001 Compared to Three Months Ended March 31, 2000
-------------------------------------------------------------------------------

      The Company has continued to invest to further advance its technologies.
These investments in its technologies have led to historic new strategic
alliances over the past year with Texaco Inc., N.V. Bekaert S.A. and its
U.S.-based subsidiary (Bekaert), Intel Corporation (Intel), General Electric
Company (GE), Lockheed Martin Space Electronics and Communications (now BAE
Systems) and China's Rare Earth High-Tech Co. Ltd. of Baotou Steel Company (Rare
Earth High-Tech). According to generally accepted accounting principles as
practiced in the United States (GAAP), the investments the Company makes in its
technologies are expensed as research and development expense in the periods in
which they are incurred and the value of these technologies are not carried as
assets in the Company's balance sheet.

      The Company had a net loss in the three months ended March 31, 2001 of
$4,272,000 compared to a net loss of $3,315,000 for the three months ended March
31, 2000 - an increased loss of $957,000. The most significant factors
contributing to the increased loss were the $1,000,000 decrease in license fees
and a decrease of $2,779,000 in other revenues. Other factors contributing to
the change in profitability were a decrease in revenues from royalties
($65,000), higher patent and patent defense expenses ($468,000), higher
interest expenses ($96,000), a $37,000 profit on product sales compared to a
$1,146,000 loss last year, an improvement in the net cost of product
development ($1,103,000) and an increase in the interest income ($1,110,000).


                                      29

<PAGE>


      The net cost of product development to the Company decreased by
$1,103,000 despite more than double the expenditures for the development of
products to $12,464,000 compared to $6,041,000 in the same quarter the previous
year.

                                                        Three Months Ended
                                                              March 31,
                                                    --------------------------
                                                        2001          2000
                                                    ------------   -----------

      Cost of revenues from product development
          agreements                                $ 9,108,000    $ 1,816,000
      Product development and research                3,356,000      4,225,000
                                                    -----------    -----------
           Total cost of product development         12,464,000      6,041,000
      Revenues from product development
         agreements                                   9,245,000      1,719,000
                                                    -----------    -----------
           Net cost of product development          $ 3,219,000    $ 4,322,000
                                                    ===========    ===========

      The loss results from (i) ongoing product development and continued market
development activities, (ii) fixed costs related to maintaining and improving
the Company's core competencies pertaining to materials and electrode products,
and (iii) ongoing protection of the Company's intellectual property.

      Product sales, consisting of photovoltaic products, machine building,
battery packs, and positive and negative battery electrodes, increased 831% to
$7,354,000 in the three months ended March 31, 2001 from $790,000 in the three
months ended March 31, 2000. Photovoltaic sales were $1,586,000 in 2001 versus
zero in 2000. United Solar's financial statements were not consolidated with
ECD until April 11, 2000. Machine-building revenues increased to $5,205,000 in
2001 compared to $325,000 in 2000. The machine-building revenues in 2001 were
applicable to contracts to supply and build production equipment for Bekaert ECD
Solar Systems having 25MW of annual capacity and the sale of equipment for the
manufacture of NiMH batteries to the Rare Earth Ovonic joint ventures. The
machine-building revenues in 2000 related to a contract to build large-area
deposition equipment. Sales of negative and positive electrodes increased
$51,000, due to an increase in sales of positive electrodes. Battery pack sales
increased to $407,000 in 2001 versus $360,000 in 2000. Battery pack sales
increased due to orders from customers primarily related to evaluation of
battery packs for possible use in their products.

      Revenues from product development agreements, which relate primarily to
joint ventures established for the development and commercialization of ECD's
technologies, increased 438% to $9,245,000 in the three months ended March 31,
2001 from $1,719,000 in the three months ended March 31, 2000. There were total
increases in product development agreements of $8,419,000 which were due
primarily to development programs in 2001 for Texaco Ovonic Fuel Cell Company
LLC (Texaco Ovonic Fuel Cell) ($2,936,000), Texaco Ovonic Hydrogen Systems LLC
(Texaco Ovonic Hydrogen Systems) ($3,888,000), Ovonic Media, LLC (Ovonic Media)
($347,000) (see discussion of these joint ventures under Liquidity and Capital
Resources) and United Solar contracts with Department of Energy (DOE)
($365,000), partially offset by completing programs, after having successfully
met program

                                      30
<PAGE>


objectives, with Shell Hydrogen program ($0 in 2001 compared to $63,000 in 2000)
and National Institute of Standards and Technology (NIST) in the Company's
battery and hydrogen technologies ($205,000 in 2001 compared to $909,000 in
2000).

      Revenues from license agreements were zero in the three months ended March
31, 2001 compared to $1,000,000 in the three months ended March 31, 2000. The
2000 revenues resulted from a license to Sanyo Electric 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.
Royalties decreased 8% to $730,000 in the three months ended March 31, 2001 from
$796,000 in the three months ended March 31, 2000, primarily due to a favorable
change in estimate in the 2000 period which resulted in higher 2000 revenues.

      Other revenues are primarily related to services, personnel and facilities
provided to some of the Company's joint ventures. Revenues decreased by
$2,779,000 to $393,000 in the three months ended March 31, 2001 from $3,172,000
in the three months ended March 31, 2000. This decrease was due to lower
revenues from Ovonyx of $594,000 and lower billings to GM Ovonic. The revenues
from Ovonyx relate to services provided beginning in January 1999 for which
funds for payment first became available in March 2000. Revenues from GM Ovonic
are lower due to fewer of the Company's employees providing services at GM
Ovonic.

      There was a profitable margin of $37,000 on product sales in the three
months ended March 31, 2001 compared to a negative margin of $1,146,000 in 2000.
Profitable machine-building contracts offset losses for electrode production
where low sales volumes were coupled with high fixed costs.

      Expenses were incurred in 2001 and 2000 in connection with the protection
of the Company's United States and foreign patents covering its proprietary
technology. These expenses increased to $825,000 in the three months ended March
31, 2001 from $357,000 in the three months ended March 31, 2000, principally due
to litigation costs for the protection of our 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 to
$2,097,000 in the three months ended March 31, 2001 from $2,211,000 in the three
months ended March 31, 2000 was related to the increased allocation of costs
($1,367,000) to other cost elements due to increased volumes for product
development agreements and the amortization of negative goodwill ($117,000) in
connection with United Solar, increased expenses for both ECD ($577,000) and
Ovonic Battery ($433,000), and the consolidation of United Solar's expenses
($360,000) in 2001.

      The $956,000 improvement in other income (net) of $709,000 in the three
months ended March 31, 2001, compared to other expense (net) of $247,000 in the
three months ended March 31, 2000, was due principally to increased interest
income of $1,477,000 in the three months ended March 31, 2001 compared to
$367,000 in the three months ended March 31, 2000.


                                      31

<PAGE>


Nine Months Ended March 31, 2001 Compared to Nine Months Ended March 31, 2000
-----------------------------------------------------------------------------

      The Company had a net loss in the nine months ended March 31, 2001 of
$6,733,000 compared to a net loss of $11,350,000 for the nine months ended March
31, 2000 - an improvement of $4,617,000. The most significant factor
contributing to the lower losses was the increase in the amount of funding
from our joint venture partners for our product and production technology
development efforts related to the commercialization of our products. During the
nine months ended March 31, 2001, we increased expenditures for the development
of our products to $29,874,000 compared to $19,277,000 in the same period the
previous year. Despite the more than $10,000,000 increase in expenditures, the
net cost of product development to the Company decreased by $3,881,000 because
of the funding provided by our joint venture partners.


                                                          Nine Months Ended
                                                               March 31,
                                                      -------------------------
                                                          2001         2000
                                                      -----------   -----------

      Cost of revenues from product development
         agreements                                   $21,090,000   $ 7,714,000
      Product development and research                  8,784,000    11,563,000
                                                      -----------   ------------
           Total cost of product development           29,874,000    19,277,000
      Revenues from product development
          agreements                                   22,107,000     7,629,000
                                                      -----------   ------------
           Net cost of product development            $ 7,767,000   $11,648,000
                                                      ============  ===========

      Also contributing to the improved operating results were a profit of
$17,000 in the nine months ended March 31, 2001 on product sales compared to a
loss of $2,537,000 in 2000, a $3,879,000 increase in interest income and a
$412,000 improvement in equity losses from joint ventures, partially offset by
a $130,000 decrease in revenues from royalties, higher patent and patent
defense expenses ($1,590,000) and higher operating, general and administrative
expenses ($1,066,000) in the nine months ended March 31, 2001. The loss is
primarily due to: (i) ongoing product development and continued market
development activities, (ii) fixed costs related to maintaining and improving
the Company's core competencies pertaining to materials and electrode products,
and (iii) ongoing protection of the Company's intellectual property.

      Product sales, consisting of photovoltaic products, machine building,
battery packs, and positive and negative battery electrodes, increased 255% to
$14,314,000 in the nine months ended March 31, 2001 from $4,038,000 in the nine
months ended March 31, 2000. Photovoltaic sales were $4,556,000 in 2001 versus
zero in 2000. United Solar financial statements were not consolidated until
April 11, 2000. Machine-building revenues increased to $8,619,000 in 2001
compared to $1,448,000 in 2000. The machine-building revenues in 2001 were
applicable to contracts to build production equipment for Bekaert ECD Solar
Systems having 25MW of annual capacity and for equipment for the manufacture of
NiMH batteries for the Rare Earth Ovonic joint ventures. Sales of negative and
positive electrodes decreased $941,000, primarily due to one of the Company's
principal negative electrode licensees currently manufacturing its own electrode
products as allowed under its license from the

                                      32

<PAGE>


Company. Because most battery pack orders are being filled through GM Ovonic,
the Company's battery pack sales decreased to $855,000 in 2001 versus
$1,365,000 in 2000.

      Revenues from product development agreements, which relate primarily to
joint ventures established for the development and commercialization of ECD's
technologies, increased 190% to $22,107,000 in the nine months ended March 31,
2001 from $7,629,000 in the nine months ended March 31, 2000.  There were total
increases in product development agreements of $18,234,000 which were due
primarily to development programs in 2001 for Texaco Ovonic Fuel Cell Company
($6,153,000), Texaco Ovonic Hydrogen Systems ($8,461,000), Ovonic Media
($1,789,000) (see discussion of these joint ventures under Liquidity and Capital
Resources) and United Solar contracts with DOE ($1,226,000), partially offset
by completing programs, after having successfully met program objectives, with
GM to develop batteries for electric and hybrid electric vehicle applications
($0 in 2001 compared to $1,002,000 in 2000), the Shell Hydrogen program
($0 in 2001 compared to $750,000 in 2000) and decreases in revenues from
programs with DOE and National Renewable Energy Laboratory ($770,000 in 2001
compared to $1,103,000 in 2000) and NIST in the Company's battery and hydrogen
technologies ($1,411,000 in 2001 compared to $3,054,000 in 2000).

      Revenues from license agreements decreased to $2,800,000 in the nine
months ended March 31, 2001 from $3,178,000 in the nine months ended March 31,
2000.  The 2001 revenues consisted of agreements with three Chinese companies
(BYD Battery Co., Ltd., SANIK Battery Co., Ltd. and Inner  Mongolia Rare Earth
Ovonic Metal Hydride Co., Ltd., one of the three Rare Earth Ovonic joint
ventures).  The 2000 revenues included a $1,778,000 license fee from Toshiba
Battery Co., Ltd., $1,000,000 from Sanyo and $400,000 from Japan Storage.
Royalties decreased 5% to $2,404,000 in the nine months ended March 31, 2001
from $2,534,000 in the nine months ended March 31, 2000, primarily due to
decreased royalties from battery licensees.

      Other revenues decreased by $3,130,000 to $1,319,000 in the nine months
ended March 31, 2001 from $4,449,000 in the nine months ended March 31, 2000,
primarily due to the aforementioned decreased billings attributable to Ovonyx.

      There was a profitable margin on product sales in the nine months ended
March 31, 2001 compared to a negative margin of $2,537,000 in 2000.  Profitable
machine-building contracts offset losses for electrode production where low
sales volumes were coupled with high fixed costs.

      Expenses were incurred in 2001 and 2000 in connection with the protection
of the Company's United States and foreign patents covering its proprietary
technology. These expenses increased to $2,840,000 in the nine months ended
March 31, 2001 from $1,250,000 in the nine months ended March 31, 2000,
principally due to litigation costs for protection of our NiMH battery patent
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 increase in operating, general and administrative expenses to
$6,044,000 in the nine months ended March 31, 2001 from $4,978,000 in the nine
months ended March 31, 2000 was related to increased expenses at ECD
($1,326,000), consolidation of United Solar's

                                      33

<PAGE>


expenses ($1,118,000) in 2001, as well as costs ($774,000) associated with
license fees from Rare Earth, partially offset by increased allocations of costs
($2,067,000) to other cost elements due to increased volume for product
development agreements, and the amortization of negative goodwill ($350,000)
in connection with United Solar.

      The $4,476,000 improvement in other income (net) of $3,379,000 in the nine
months ended March 31, 2001, compared to other expense (net) of $1,097,000 in
the nine months ended March 31, 2000, was due principally to increased interest
income ($4,664,000 in 2001 compared to $785,000 in 2000) and reduced equity
losses of $1,544,000 in the nine months ended March 31, 2001 compared to
$1,956,000 in the three months ended March 31, 2000.

                         Liquidity and Capital Resources

      As of March 31, 2001, the Company had unrestricted consolidated cash, cash
equivalents and accounts receivable (including $16,485,000 of amounts due from
related parties) of $115,558,000, an increase of $10,177,000 from June 30, 2000.
As of March 31, 2001, the Company had consolidated working capital of
$95,613,000 compared with a consolidated working capital of $89,789,000 as of
June 30, 2000.

      Of the Company's $87,693,000 cash, cash equivalents and investments, the
Company purchased $17,760,000 of investments during the nine months ended March
31, 2001 consisting of commercial paper, classified as available for sale,
maturing from 91 days to 33 months. It is the Company's policy that investments
shall be rated "A" or higher by Moody's or Standard and Poor's, no single
investment shall represent more than 10% of the portfolio and at least 20% of
the total portfolio shall have maturities of less than 90 days.

      During the nine months ended March 31, 2001, $11,477,000 of cash was used
in operations. The difference between the net loss of $6,733,000 and the net
cash used in operations was due to an increase of $11,799,000 in accounts
receivable, principally due to new programs with Bekaert ECD Solar Systems and
the Texaco Ovonic joint ventures, partially offset by depreciation expense of
$1,808,000 and increases of $5,290,000 in accounts payable and accrued expenses
due to increased purchases relating to aforementioned new programs. In
addition, $1,283,000 of machinery and equipment was purchased during this
period.

      The Company's strategy is to finance its operations and growth through
strategic alliances (joint ventures and license agreements) with third parties
who can provide financial resources and additional marketing expertise for the
Company's technologies and products. Over the past 14 months, the Company has
entered into a number of historic business agreements bringing the Company's
short-term cash reserves to approximately $90 million and having a significant
positive impact on future cash flows. As part of its long-standing strategy, the
Company has made investments in its technologies which have resulted in enabling
intellectual property and products. It has entered into strategic alliances and
joint ventures with some of the world's leading corporations listed below, which
form the basis of a fundamental restructuring of the Company.

                                      34

<PAGE>


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

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

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

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

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

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

      -  On April 25, 2000, Ovonic Battery, after having received all necessary
         Chinese government approvals, officially started the first (having
         contract value to Ovonic Battery of $25.2 million) in a series of NiMH
         projects in China. On June 15, 2000, the second and third projects
         (having contract value to Ovonic Battery of $38.4 million) were
         started. These projects with Rare Earth Ovonic resulted in joint
         ventures, of which Ovonic Battery has a 19% interest, which provide an
         important
                                      35
<PAGE>


         entry for the Company into the vast Chinese market and have
         potential revenue to Ovonic Battery in excess of $100 million.

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

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

      On May 1, 2000, Texaco purchased a 20% equity stake in ECD for
$67,400,000. As part of this agreement, Texaco has rights to purchase additional
shares of ECD Common Stock in order to maintain its 20% equity stake. In
connection with these rights, Texaco purchased 125,233 additional shares for
approximately $3,795,000 on October 26, 2000, 39,805 additional shares for
approximately $1,078,000 on January 31, 2001, and 20,437 additional shares for
approximately $572,000 on May 8, 2001.

      During the next 12 months, the Company expects to purchase approximately
$5,000,000 of machinery and equipment and leasehold improvements.

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

      Primarily due to the new product development agreements with Texaco, the
amount of cash to be received under existing product development agreements in
the year ending June 30, 2001 is anticipated to be approximately $25,600,000
compared to $15,654,000 received from product development agreements in the year
ended June 30, 2000. Based on historical trends, the amount of cash from
royalties to be received in the year ending June 30, 2001 is expected to be
approximately $3,900,000 compared to $3,058,000 received in the year ended June
30, 2000. The amount of royalties we receive each year is dependent on the
production volumes of our licensees, the sales price of their products and,
because much of our royalty revenues are based on the Japanese Yen, the effect
of Yen-to-Dollar currency translations. Licensees may not terminate royalty
payments to us without also terminating the licensee's rights to manufacture
products under our patents. The failure of licensees to pay royalties would
constitute a material breach of the license agreement for which we could
terminate the license or seek damages.

      Due to the increase in its stock price, the Company has received, since
August 1, 1999, approximately $20,355,000 (approximately $40,000 of which
occurred after March 31, 2001) in proceeds from the exercise of employee stock
options and the exercise of warrants. While there are additional employee stock
options and privately placed warrants, which may be exercised, the Company is
unable to predict the amount or the timing of such exercises.


                                      36

<PAGE>


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

      Management believes that funds generated from operations, new business
agreements and existing cash and cash equivalents will be adequate to support
and finance planned growth, capital expenditures and the company-sponsored
product development programs over the coming year. As the Company's joint
ventures expand beyond the initial product and market development stages, the
Company will need additional sources of cash to fund the Company's share of the
capital required. The Company is exploring many alternatives, including, but not
limited to, debt financing through third parties, debt financing from our joint
venture partners, additional equity partners and investment of additional
intellectual property in exchange for the Company's share of funding.




























                                      37
<PAGE>


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

Item 1.  Legal Proceedings
-------  -----------------

      On March 6, 2001, Ovonic Battery filed suit in federal court in Detroit,
Michigan, against Matsushita Battery Industrial Co., Ltd. ("MBI"), Toyota Motor
Corporation, Panasonic EV Energy Co., Ltd. and several related entities for
infringement of patents held by Ovonic Battery.

      MBI and Panasonic EV Energy Co. supply NiMH batteries used in the Toyota
Prius gasoline-electric hybrid car sold in the United States by Toyota Motor
Corporation. The lawsuit charges that MBI's hybrid electric vehicle batteries,
battery components and battery systems infringe patents held by Ovonic Battery.

      Ovonic Battery also terminated a 1992 agreement which licensed MBI under
patents held by ECD and Ovonic Battery for the manufacture and sale of small
consumer batteries. MBI has failed to pay royalties to Ovonic Battery. In its
lawsuit, Ovonic Battery seeks damages for those unpaid royalties, and also seeks
to enjoin the importation of all Panasonic electronic products that contain
batteries using Ovonic Battery's patented technology.


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

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

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

      Since May 1, 2000, the Company has issued additional shares of ECD Common
Stock due to stock option and warrant exercises. So as to maintain its 20%
proportionate interest in the Company, Texaco purchased 125,233 shares of ECD
Common Stock on October 26, 2000 for $3,795,000, 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.

      Texaco acquired the ECD Common Stock in a private transaction not
involving any public offering under Section 4(2) of the Securities Act of 1933
and Regulation D thereunder.


                                      38

<PAGE>


Item 4. Submission of Matters to a Vote of Security Holders
------- ---------------------------------------------------

      At the Annual Meeting of Stockholders (the "Meeting") of ECD held on
February 22, 2001, the following directors were elected for the ensuing year and
until their successors shall be duly elected and qualified:


                                           For           Withheld Authority
                                           ---           ------------------

             Stanford R. Ovshinsky        22,534,352          366,387
             Iris M. Ovshinsky            22,535,182          365,557
             Robert C. Stempel            22,319,939          580,800
             Nancy M. Bacon               22,509,684          391,055
             Umberto Colombo              22,534,938          365,801
             Subhash K. Dhar              22,540,048          360,691
             Hellmut Fritzsche            22,536,494          364,245
             Tyler Lowrey                 22,542,448          358,291
             Walter J. McCarthy, Jr.      22,535,998          364,741
             Florence I. Metz             22,534,563          366,176
             James R. Metzger             22,534,307          366,432
             Stanley K. Stynes            22,538,603          362,136
             William M. Wicker            22,538,252          362,487

      At the Meeting, the stockholders approved a proposal to adopt the 2000
Non-Qualified Stock Option Plan (with 15,208,076 votes for, 963,635 votes
against, and 153,302 abstentions).

      Also approved at the Meeting was the appointment of Deloitte & Touche LLP
as independent accountants for the fiscal year ending June 30, 2001 (with
22,833,863 for, 32,742 against, and 28,134 abstentions).


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

      A report on Form 8-K was filed on March 7, 2001 reporting that on March 6,
2001 Ovonic Battery had filed suit in federal court in Detroit, Michigan,
against Matsushita Battery Industrial Co. Co., Ltd., Toyota Motor Corporation,
Panasonic EV Energy Co., Ltd. and several related entities for infringement of
patents held by Ovonic Battery.



















                                      39
<PAGE>


                                   SIGNATURES

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


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



                             By: /s/ Stephan W. Zumsteg
                                 -------------------------------------------
                                 Stephan W. Zumsteg
Date: May 15, 2001               Vice President and Chief Financial Officer
                                 (Principal financial and accounting officer)



                             By: /s/ Stanford R. Ovshinsky
                                 --------------------------------------------
                                 Stanford R. Ovshinsky
Date: May 15, 2001               President and Chief Executive Officer










                                       40