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

                                    FORM 10-Q

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 2001 or

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

                         Commission File Number 1-16157

                             NEWPOWER HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

                DELAWARE                                          52-2208601
     (State or other jurisdiction of                          (I.R.S. Employer
     incorporation or organization)                          Identification No.)

        ONE MANHATTANVILLE ROAD
           PURCHASE, NEW YORK                                       10577
(Address of principal executive offices)                          (Zip Code)

                                 (914) 697-2100
              (Registrant's telephone number, including area code)

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

As of August 10, 2001, there were 58,195,120 shares of NewPower Holdings, Inc.
common stock, par value $.01 per share, outstanding. As of August 10, 2001,
there were Class A warrants outstanding to purchase 69,070,800 shares of
NewPower Holdings, Inc. common stock at an exercise price of $0.05 per share.

<Page>

                             NEWPOWER HOLDINGS, INC.
                                    FORM 10-Q
                FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001

                                                                            PAGE
                                                                            ----
PART I - FINANCIAL INFORMATION

  ITEM 1. FINANCIAL STATEMENTS

     Consolidated Balance Sheets
        June 30, 2001 and December 31, 2000                                   3

     Consolidated Statements of Income
        Three and Six Months Ended June 30, 2001 and 2000                     4

     Consolidated Statements of Cash Flows
        Three and Six Months Ended June 30, 2001 and 2000                     5

     Notes to Financial Statements                                            6

  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                  15
             CONDITION AND RESULTS OF OPERATIONS

  ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK          21

PART II - OTHER INFORMATION

  ITEM 1. LEGAL PROCEEDINGS                                                  23

  ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                          23

  ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                    23

  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                23

  ITEM 5. OTHER INFORMATION                                                  24

  ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                   24

SIGNATURES                                                                   25


                                       2
<Page>

                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                             NEWPOWER HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<Table>
<Caption>
                                                                        JUNE 30,     DECEMBER 31,
                                                                          2001           2000
                                                                      -----------    ------------
ASSETS                                                                (Unaudited)
<S>                                                                    <C>            <C>
CURRENT ASSETS
    Cash and Cash Equivalents                                          $  39,546      $ 179,885
    Restricted Cash                                                      127,537         16,193
    Accounts Receivable, net of allowance of $2,973 and $1,250            52,561         47,885
    Investments in Marketable Securities                                  88,508        257,189
    Inventory and Imbalances                                              51,578         44,663
    Prepaid Expenses                                                       8,299          8,024
                                                                       ---------      ---------
    TOTAL CURRENT ASSETS                                                 368,029        553,839
                                                                       ---------      ---------
    Fixed Assets                                                          40,587         12,835
    Less: Accumulated Depreciation                                        (3,777)        (1,461)
                                                                       ---------      ---------
    Net Fixed Assets                                                      36,810         11,374
                                                                       ---------      ---------
    Investments in Marketable Securities                                 107,627        102,373
    Assets from Price Risk Management Activities                           7,246             --
    Other Assets                                                          12,581         12,761
    Restricted Cash, net of current                                       28,300             --
    Intangible Assets, net                                                52,433         31,995
                                                                       ---------      ---------
TOTAL ASSETS                                                           $ 613,026      $ 712,342
                                                                       =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

    Accounts Payable                                                   $  45,556      $  39,278
    Accrued Liabilities                                                   32,537         27,112
    Due to Affiliated Entities                                            26,630         29,960
    Liabilities from Price Risk Management Activities                     40,284             --
    Deferred Compensation                                                 10,862          9,390
                                                                       ---------      ---------
    TOTAL CURRENT LIABILITIES                                            155,869        105,740
                                                                       ---------      ---------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

    Preferred Stock, $.01 par value, 50,000,000 shares authorized;            --             --
       0 shares issued and outstanding
    Common Stock, $.01 par value, 500,000,000 shares authorized;             582            581
       58,150,120 and 58,054,882 shares issued and outstanding
    Paid-in Capital                                                      777,585        777,437
    Deferred Compensation                                                 (1,916)        (2,917)
    Accumulated Other Comprehensive Income                               (43,416)         1,335
    Accumulated Deficit                                                 (275,678)      (169,834)
                                                                       ---------      ---------
    TOTAL STOCKHOLDERS' EQUITY                                           457,157        606,602
                                                                       ---------      ---------
                                                                       ---------      ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $ 613,026      $ 712,342
                                                                       =========      =========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                   statements


                                       3
<Page>

                             NEWPOWER HOLDINGS, INC.
                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<Table>
<Caption>
                                                    THREE MONTHS ENDED JUNE 30,          SIX MONTHS ENDED JUNE 30,

                                                      2001              2000              2001              2000
                                                  ------------      ------------      ------------      ------------
<S>                                               <C>               <C>               <C>               <C>
NET REVENUES                                      $     64,617      $      2,631      $    190,633      $      4,757
COST OF SALES                                           58,644             2,248           176,019             4,031
                                                  ------------      ------------      ------------      ------------

GROSS MARGIN                                             5,973               383            14,614               726

OPERATING EXPENSES                                      68,430            36,602           136,033            45,558
                                                  ------------      ------------      ------------      ------------

OPERATING INCOME (LOSS)                                (62,457)          (36,219)         (121,419)          (44,832)

INTEREST (INCOME) EXPENSE                               (6,831)           (1,211)          (15,575)           (2,410)
                                                  ------------      ------------      ------------      ------------

NET INCOME (LOSS)                                 $    (55,626)     $    (35,008)     $   (105,844)     $    (42,422)
                                                  ============      ============      ============      ============

BASIC AND DILUTED NET LOSS PER COMMON SHARE       $      (0.96)     $      (1.57)     $      (1.82)     $      (1.98)

WEIGHTED AVERAGE SHARES USED TO COMPUTE BASIC
   AND DILUTED NET LOSS PER COMMON SHARE            58,150,120        22,348,569        58,133,809        21,479,443
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                   statements


                                       4
<Page>

                             NEWPOWER HOLDINGS, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                                      THREE MONTHS ENDED JUNE 30,   SIX MONTHS ENDED JUNE 30,
                                                                      ---------------------------   -------------------------
                                                                          2001            2000          2001           2000
                                                                      ------------     ----------   -----------     ---------
<S>                                                                     <C>            <C>           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Reconciliation of net loss to net cash used by operating activities

      Net loss                                                          $ (55,626)     $(35,008)     $(105,844)     $ (42,422)
      Depreciation and amortization                                         3,432            --          6,328             --
      Deferred compensation                                                 1,879            --          3,731          4,000
      Provision for doubtful accounts                                         693            --          1,723             --
      Net (gains) losses from price risk management activities             (7,363)           --        (12,037)            --
Changes in assets and liabilities
      (Increase) decrease in accounts receivable                           17,559          (400)        (5,170)           232
      (Increase) decrease in inventory and imbalances                     (39,216)           --          2,322             --
      (Increase) decrease in prepaid expenses                                 808            --           (275)            --
      Increase in accounts payable and accrued liabilities                 21,606        26,766          7,781         27,104
      Increase (decrease) in due to affiliates                             (4,329)        7,544         (3,330)        (3,120)
      Payments of deferred compensation                                        --            --         (1,109)            --
      (Increase) decrease in other assets and intangibles                   1,703        (5,800)           358         (5,800)
                                                                        ---------      --------      ---------      ---------
     NET CASH USED IN OPERATING ACTIVITIES                                (58,854)       (6,898)      (105,522)       (20,006)
                                                                        ---------      --------      ---------      ---------
CASH FLOWS FROM INVESTING ACTIVITIES

      Cash issued to purchase businesses, net of cash received            (27,000)           --        (33,434)            --
      Capital expenditures                                                (22,383)      (10,320)       (25,489)       (10,320)
      Net sales of investment securities                                  156,836            --        163,750             --
                                                                        ---------      --------      ---------      ---------
     NET CASH USED IN INVESTING ACTIVITIES                                107,453       (10,320)       104,827        (10,320)
                                                                        ---------      --------      ---------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES

      Increase in surety bonds and deposits                               (77,883)           --       (139,644)            --
      Proceeds from sale of common stock & warrants                            --         5,000             --        105,000
      Contributions from EES                                                   --            52             --          2,864
                                                                        ---------      --------      ---------      ---------
     NET CASH PROVIDED FROM FINANCING ACTIVITIES                          (77,883)        5,052       (139,644)       107,864
                                                                        ---------      --------      ---------      ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          (29,284)      (12,166)      (140,339)        77,538

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                             68,830        89,704        179,885             --
                                                                        ---------      --------      ---------      ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                $  39,546      $ 77,538      $  39,546      $  77,538
                                                                        =========      ========      =========      =========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                   statements


                                       5
<Page>

NEWPOWER HOLDINGS, INC. NOTES TO FINANCIAL STATEMENTS

NOTE 1-ORGANIZATION AND FORMATION

      NewPower Holdings, Inc. ("NPW" or the "Company"), formerly TNPC, Inc. and
EMW Energy Services Corp., is the successor to an operating unit of Enron Energy
Services, LLC ("EES") which is a subsidiary of Enron Corp. ("Enron"). NPW,
generally through its subsidiary The New Power Company, provides retail
marketing and retail sales of natural gas and power to residential and small
commercial customers in ten states: Ohio, Indiana, Georgia, Maryland,
Pennsylvania, Michigan, New Jersey, Virginia, California and Texas. NPW is
focusing substantially all of its resources on expanding its current marketing
efforts from servicing various isolated markets to being recognized as a
national retail provider of energy solutions to residential and small commercial
customers as additional markets continue to be opened.

NATURE OF OPERATIONS

      NPW is a new company with a limited operating history in the new and
rapidly evolving restructured retail energy markets. The development of NPW's
operations will depend upon, among other things, favorable markets opening under
viable competitive rules, NPW's ability to expand its customer base in initial
markets and the ability to enter new markets in a timely manner at reasonable
costs.

      NPW has incurred net losses since inception and management expects to
continue to incur losses for a period of time. NPW has increased operating
expenses significantly to develop its business. NPW's ability to become
profitable will depend on, among other things, it's ability to attract and
retain a critical mass of customers at a reasonable cost, to further develop
internal corporate organization and systems, and to manage effectively its
energy requirements and sell its products at a sufficient margin.

      Since January 6, 2000, NPW has financed its activities through private
placements of its common stock, warrants to purchase its common stock and a
public offering of its common stock. As discussed below, NPW was capitalized in
an initial private placement valued at $100 million and funding was completed on
January 6, 2000. Further private placements of NPW common stock and warrants
were made in May 2000 and July 2000 valued at $15 million and $104.4 million,
respectively. Also, NPW completed the initial public offering of its common
stock in October 2000 from which the Company received net proceeds of $543
million. NPW management believes it has adequate funding to sustain its
operating needs in accordance with its business plan, absent a significant
acquisition or other extraordinary transaction, which are not currently
contemplated. If NPW's cash requirements prove to be greater than expected, NPW
will need to obtain additional funding. NPW cannot be certain that additional
financing can be obtained. NPW's financial condition and business may be
materially adversely affected if additional capital is needed and cannot be
raised on acceptable terms.


                                       6
<Page>

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

      The financial statements present the balance sheets, statements of
operations and statements of cash flows applicable to operations related to the
residential customers contributed by EES, the customers acquired through
acquisitions of businesses in 2000 and 2001, as described in Note 3, and
customers obtained through the marketing efforts of NPW since August 2000. In
the opinion of NPW, the accompanying unaudited financial statements contain all
adjustments necessary to present fairly the financial position of NPW as of June
30, 2001, and the results of its operations and cash flows for the three and six
months ended June 30, 2001 and 2000. Income from interim periods may not be
indicative of future results. Other than as noted, adjustments were of a normal,
recurring nature. Certain reclassifications have been made to prior period
financial data for consistency with current period classification.

USE OF ESTIMATES

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions in determining NPW's assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

      NPW considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. The recorded carrying amounts of
NPW's cash and cash equivalents approximate their fair market value.

RESTRICTED CASH

      Certain state regulations, as well as certain of NPW's counterparties,
require collateral to ensure fulfillment of NPW's commitments. To meet these
requirements, NPW has provided cash collateral of $155.8 million as of June 30,
2001. A substantial portion of the collateral will revert to NPW's control upon
successful completion by NPW of specified commitments. Such collateral is
reflected as restricted cash in the accompanying balance sheets. Any portion of
cash collateral that reverts to NPW in a period beyond twelve months from the
balance sheet date is classified as non-current.


                                       7
<Page>

INVESTMENTS IN MARKETABLE SECURITIES

      NPW's short term investments are classified as available for sale under
the provisions of Statement of Financial Accounting Standards No. 115 -
"Accounting for Certain Debt and Equity Securities".

      NPW has invested excess proceeds from the IPO and private placements in
marketable securities to preserve capital and provide required liquidity. These
investments consist primarily of high grade short-term bonds and commercial
paper and the recorded carrying value equals their fair market value.

INVENTORY AND IMBALANCES

      Inventories represent natural gas in storage, and are stated at the lower
of weighted average cost or market. In addition, the Company delivers natural
gas to the local distribution companies for further delivery to the Company's
customers. Actual usage by the Company's customers will differ from the amount
of natural gas delivered to the local distribution companies. This difference is
referred to as an "imbalance" and is stated at the lower of cost or market. The
Company periodically compares the carrying value of natural gas in inventory and
imbalances to its realizable market value. The carrying value of any inventory
or imbalances deemed to be not realizable are charged to earnings.

INCOME TAXES

      Deferred taxes result from differences arising between the financial and
tax bases of NPW's assets and liabilities and are adjusted for changes in tax
rates and tax laws when changes are enacted. Valuation allowances are recorded
to reduce deferred tax assets when it is more likely than not that a tax benefit
will not be realized by NPW.

FIXED ASSETS

      Fixed assets are stated at cost. NPW provides for depreciation on fixed
assets on the straight-line basis over their estimated useful lives, as follows:

<Table>
                 <S>                                           <C>
                 Office furniture and fixtures                    3 years
                 Computer software and licenses                   3 years
                 Computer hardware                                3 years
                 Leasehold improvements                        Life of Lease
</Table>

REVENUE RECOGNITION

      NPW recognizes revenue for the sale of power or natural gas once the
commodity has been delivered to a customer. Unbilled power and natural gas sales
are estimated and recorded each period. NPW's bills to customers may also
include charges relating to the transmission and distribution of the commodity,
for which the utility is ultimately responsible. These amounts are excluded from
NPW's net revenues. As a result, neither NPW's revenues nor costs include the
transmission and distribution charges included in customers' bills.

COMPREHENSIVE INCOME / LOSS

      Comprehensive income is reported as a component of stockholders' equity.
As of June 30, 2001, comprehensive loss of negative $43.4 million relates to the
fair market value of the Company's risk


                                       8
<Page>

management assets and liabilities plus the unrealized gains on available for
sale securities included in the balance sheet as investments in marketable
securities.

NET LOSS PER COMMON SHARE

      Net loss per common share was determined by dividing net loss by the
weighted average common shares outstanding. Common equivalent shares related to
stock options and warrants are excluded from the calculation as their effect is
antidilutive. Accordingly, basic and diluted loss per common share are
equivalent.

      Common equivalents at June 30, 2001 and 2000 included 69,070,800 and
60,000,000 Class A warrants, respectively. Common stock equivalent shares
attributable to the Class A warrants at June 30, 2001 and 2000 computed on the
treasury stock method would have been approximately 68,645,898 and 59,226,804
shares, respectively.

CERTAIN RISKS AND CONCENTRATIONS

      NPW sells its energy services to residential and small commercial
customers in the United States. Reserves are maintained for credit losses.

      NPW's business is subject to many risks and uncertainties including
dependence on favorable regulatory developments, dependence on services provided
by third parties, potential conflicts of interest with principal stockholders,
substantial fluctuations in energy commodity prices, growth and commercial
acceptance of the Internet, activities of competitors, dependence on key
personnel and limited operating history.

NOTE 3-ACQUISITIONS

      In June 2001, NPW completed the acquisition of approximately 130,000 gas
and 7,000 power residential and small commercial customers in three separate
transactions. The customers, located in the Ohio, Pennsylvania and Maryland
markets, were acquired from AES Power Direct / Titan Energy, Inc., CoEnergy
Trading Company and Energy East Solutions. The acquisitions were accounted for
as purchases. Total consideration for the customer contracts consisted of
approximately $18.6 million in cash. In connection with the acquisitions, NPW
also acquired other assets, including gas storage inventory, accounts receivable
and fixed assets for combined consideration of approximately $8.4 million.
Additionally, NPW assumed forward physical commodity purchase contracts that had
a negative value of $3.9 million as of the acquisition date. NPW has accrued
this amount as part of the cost of the customers acquired. The amount will be
amortized through cost of sales as the related commodity purchases are settled
for cash. The results of operations for each of the portfolios acquired are
included in operating results since June 2001 when the Company assumed
operational control of the portfolios. The allocation of purchase price for the
portfolios described herein is preliminary in nature and is subject to
adjustments to actualize items such as customer counts, inventory levels,
accounts receivable and assumed liabilities.


                                       9
<Page>

      In May 2001, NPW exercised its option to not accept approximately 16,000
California residential power customers that were initially contributed to NPW by
EES. As a result, since May 1, 2001, service to these power customers has
reverted to the default provider in the respective local distribution areas.

      In the first quarter of 2001, NPW completed the acquisition of
approximately 7,200 residential and small commercial natural gas customers in
the Atlanta, Georgia market from Reliant Energy Retail, Inc. ("Reliant"). The
acquisition was accounted for as a purchase. Based on the mix of customers
acquired from Reliant and the average consumption of small commercial customers
in the Atlanta market, NPW estimates that the acquired portfolio equates to
approximately 40,000 residential customers. The total purchase consideration
included $4.5 million in cash. Also, in connection with the acquisition, we
purchased natural gas inventory for approximately $1.9 million. The results of
operations from the Reliant portfolio are included in operating results since
February 2001 when the Company assumed operational control of the Reliant
portfolio.

      The New Power Company began servicing approximately 237,000 customers in
March 2001, pursuant to an agreement with PECO Energy Company ("PECO"). In
October 2000, NPW reached an agreement with PECO to supply service to up to 20
percent of PECO's residential power customers who had not selected a competitive
energy services provider. PECO provides electric delivery service in
southeastern Pennsylvania, which is one of NPW's initial target markets.
Pursuant to requirements in the 1998 settlement of PECO's electric restructuring
case, PECO issued a request for proposal for a third party to supply Competitive
Default Service to 20% of its residential customers for a three-year term
beginning January 1, 2001.

      In December 2000, NPW acquired the residential and small commercial retail
energy business of Energy USA ("EUSA"), which was an operating unit of NiSource,
Inc.. The acquisition was accounted for as a purchase. NPW acquired
approximately 34,000 gas customers from EUSA. The results of operations of the
EUSA portfolio are included in NPW's operating results since December 2000.

      In July 2000, NPW acquired the residential and small commercial retail
energy business of the Columbia Energy Mass Markets Business Segment
("Columbia"), a retail provider of power and natural gas to residential and
small commercial customers in the United States. The acquisition was accounted
for as a purchase. NPW acquired approximately 285,000 gas customers and
approximately 20,000 power customers from Columbia. The results of operations of
the Columbia portfolio are included in NPW's operating results since the July
31, 2000 acquisition date.


                                       10
<Page>

NOTE 4-RELATED PARTY TRANSACTIONS

PURCHASES

      NPW made purchases of natural gas and power from affiliates Enron and EES,
during the three months ended June 30, 2001 and 2000, respectively, totaling
$77.9 million and $2.2 million. NPW made purchases of natural gas and power from
affiliates Enron and EES, during the six months ended June 30, 2001 and 2000,
respectively, totaling $159.2 million and $4.0 million.

NOTE 5-PRICE RISK MANAGEMENT ACTIVITIES

      Effective January 1, 2001, NPW adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended. SFAS No. 133
required that each derivative instrument be recorded as an asset or liability
measured at its fair value and that changes in the fair value of derivative
instruments be recognized currently in earnings unless specific hedge accounting
criteria are met.

      The purpose of NPW's hedging strategy is to reduce the Company's risk
profile for delivering energy to the consumer as well as achieve a more
predictable cash flow, while reducing the Company's exposure to adverse price
fluctuations of commodities. The hedging instruments used are swaps and forward
contracts for physical commodity purchases.

      Subsequent to NPW's acquisition of customers from Columbia Energy Group,
the Company began utilizing swap instruments to hedge commodity price and basis
exposure risk associated with its fixed price natural gas contracts. In these
swap instruments the Company pays the counter-parties the amount by which the
floating variable price (settlement price) is below the fixed swap price and
receives the amount by which the settlement price exceeds the fixed swap price.
In accordance with SFAS 133, NPW accounts for the financial swap transactions as
cash flow hedges. In periods prior to the occurrence of the hedged transaction,
the value of the hedges are recorded in the consolidated balance sheet as assets
and liabilities from price risk management activities with the resulting
unrealized gains or losses deferred and reflected as a component of the equity
account other comprehensive income (OCI). In the periods the hedged purchases
occur, the financial swaps are cash settled and deferred gains or losses
pursuant to the hedges are removed from the balance sheet and included in the
cost of the commodity purchased. Because of the high degree of effectiveness
between the hedging instruments and the underlying exposures being hedged,
fluctuations in the value of the derivative instruments are generally offset by
changes in the value or cash flows of the underlying exposures being hedged. The
financial instruments that are used in hedging transactions are assessed both at
inception and at least quarterly thereafter to insure they are effective in
offsetting changes in either the fair value or cash flows of the related
underlying exposures.

      Adoption of SFAS No. 133 required a one-time adjustment to NPW's balance
sheet of approximately $56 million, which was recorded as a net asset (from
price risk management activities) and as an increase to the stockholders' equity
account accumulated other comprehensive income. The following table presents the
activity in the accumulated other comprehensive income account from December 31,
2000 through June 30, 2001, (in $000's):


                                       11
<Page>

<Table>
<Caption>
                                                             Cumulative
                                                             Unrealized         Accumulated          Total Other
                                                              Gains on           Derivative         Comprehensive
                                                             Investments           Gains            Income (Loss)
                                                             -----------        -----------         -------------
  <S>                                                           <C>               <C>                  <C>
  Other Comprehensive Income, December 31, 2000                 $1,335            $      0             $  1,335
  Cumulative effect of change in accounting for SFAS
      No. 133 on January 1, 2001                                    --              56,000               56,000
   Unrealized gains on investments                                 324                  --                  324
   Net change in value of cash flow hedges                          --             (79,294)             (79,294)
   Derivative gains reclassified to earnings -
      Settled financial swaps                                       --             (21,781)             (21,781)
                                                                ------            --------             --------

Other Comprehensive Income (Loss), June 30, 2001                $1,659            ($45,075)            ($43,416)
                                                                ======            ========             ========
</Table>

      As of June 30, 2001, NPW has financial swaps in place to hedge certain
expected future cash flows through October 2006. Based on current market prices
NPW anticipates that approximately $36.7 million of net derivative losses,
currently reflected in accumulated other comprehensive income, will be
reclassified to earnings during the next 12 month period, pursuant to
settlements of financial swaps. However, since these hedges are to fix commodity
purchase costs at a set rate, NPW would expect to offset the majority of these
swap losses with lowered commodity purchase costs and sales of the commodity to
existing gas customers.

      NPW's forward contracts for the physical purchase of commodities are
generally entered into for delivery of the commodities to meet the requirements
of the Company's residential and small commercial customers in future periods.
To the extent the forward contracts relate to forecasted customer demand, at the
inception of the contracts, NPW accounts for these contracts as normal purchases
and sales under SFAS 133. As such, these contracts are not reflected in the
Company's financial statements until the month of actual purchase or sale of the
commodity.

      NPW periodically compares the committed volumes of its forward purchase
contracts to its forecasted customer demand volume. When the volumes pursuant to
NPW's forward purchase contracts exceed the probable volumes NPW expects to
deliver to its customers, the Company treats the excess positions as energy
trading activities and any gains or losses are reflected through current
earnings. All of NPW's energy trading activities are accounted for using mark to
market accounting under Emerging Issues Task Force (EITF) Issue No. 98-10,
"Accounting for Energy Trading and Risk Management Activities". The value of the
forward energy trading contracts are recorded as assets and liabilities from
price risk management activities in the consolidated balance sheet and changes
in the values are reflected through the statement of income as a component of
cost of sales. Net unrealized appreciation of trading risk management assets and
liabilities totaled $7.4 million during the three months ended June 30, 2001 and
is recorded as a reduction of cost of sales.


                                       12
<Page>

NOTE 6-COMMITMENTS AND CONTINGENCIES

COMMODITY PURCHASE COMMITMENTS

      As of June 30, 2001, NPW, under certain fixed rate commodity contracts,
had commitments for net purchases of 7,815,872 megawatt hours of electricity at
prices ranging from $7.00 - $150.00 per megawatt hour through December, 2003.

      As of June 30, 2001, NPW had commitments to purchase, at market prices,
approximately 6,299,631 dth of natural gas at prices ranging from $3.11 - $6.785
per dth through September, 2003.

AOL AGREEMENT

      In November 1999, NPW entered into an Interactive Marketing Agreement with
America Online(R) (AOL) under which AOL agreed to promote NPW on the America
Online(R) service, CompuServe(R) service and Digital City(R) service for a
period of six years. Under the terms of the agreement with AOL, NPW agreed to
pay AOL $49 million over the six-year period on a semi-annual basis for the
promotions and for inclusion in the AOL Rewards(R) program. NPW also agreed to
issue 258,060 shares of its common stock to AOL for every 100,000 customers that
would subscribe to NPW's service through AOL, up to 1 million customers. In
addition, the agreement required NPW to pay AOL $25 per customer for every
customer over 1 million that would sign up for NPW's services through AOL.
Through June 2001 NPW had made cumulative payments totaling $18.7 million under
the agreement. Such amount, net of $4.2 million of accumulated amortization, is
reflected in the accompanying balance sheet as of June 30, 2001.

      During the first quarter of 2001, NPW began discussions with AOL regarding
its participation in the new AOL/Aadvantage program and an assessment of NPW's
overall arrangements with AOL. During June 2001, NPW reached an agreement with
AOL to revise the terms of the original agreement. As part of the revised
agreement, NPW will continue to receive a reduced number of promotions on AOL
sites over a three-year period through June 2004 and NPW's participation in the
rewards program will be reduced. In addition, NPW has agreed to purchase
advertising through Time Warner Cable and other AOL Time Warner (AOLTW) offline
assets at mutually agreed rates. Additionally, AOL has waived its rights to
acquire NPW stock, or additional cash payments, based on customer acquisition
levels. NPW will account for the revisions to the AOL agreement prospectively
and will continue to amortize amounts paid to AOL to date on a straight-line
basis over the remaining three years of the revised agreement. Any amounts paid
pursuant to advertising through AOLTW offline media will be expensed as
incurred. Management believes the value to be provided by AOLTW over the
remaining three-year term of the agreement is sufficient to support the $14.5
million of net payments made to AOL in the balance sheet at June 30, 2001.



                                       13
<Page>

LITIGATION

      At June 30, 2001, NPW was engaged in routine disputes and litigation
arising in the ordinary course of business. In the opinion of management, the
ultimate liability thereunder, if any, will not have a material adverse effect
on the financial position or results of NPW.


                                       14
<Page>

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

OVERVIEW

      The following section should be read in conjunction with the unaudited
financial statements and the notes thereto included elsewhere in this Quarterly
Report on Form 10-Q. In November of 1999, we were formed by Enron to target the
rapidly restructuring residential and small commercial markets for power and
natural gas. We intend to become the first nationally branded provider of energy
solutions to residential and small commercial customers in the United States.

      We were capitalized through the contribution of certain assets by EES,
including 24,000 residential customer contracts, and a private placement to
outside investors, pursuant to an agreement executed on December 23, 1999. On
January 6, 2000, we completed our initial private placement of common stock and
two classes of warrants in exchange for an aggregate of $100 million in cash. In
exchange for its ownership, EES agreed to contribute the economic value of its
residential power and natural gas customers in California and Ohio to us and
entered into a number of agreements with us that we believe will offer us
competitive advantages as we grow our business.

      Following our initial private placement, we focused our efforts on hiring
our management team, refined our plans for the initial launch of our services in
Pennsylvania and New Jersey, developed our operating infrastructure and
identified other target markets. In conjunction with these activities, in May
2000, we entered into an agreement with IBM to provide us with systems
integration and other services relating to customer acquisition, customer care
and revenue management over a ten-year term. During 2001 we initiated the
application development stage of certain projects with IBM. As a result, during
the second quarter of 2001 we have capitalized approximately $19.6 million of
development costs as fixed assets. These costs will be depreciated over a
three-year period. We anticipate that we will continue to incur significant
development costs as we create unique interfaces to allow us to bill and collect
for our commodity fees in each of the new markets we enter. These systems will
require capabilities to allow them to communicate customer data and utility data
between NPW, the utility, our commodity vendors and our customers. Additionally,
the system requirements will vary significantly by market depending on the
specifications agreed to by the local regulatory agency. We are currently
reviewing the structure of our arrangements with IBM, including the costs
incurred to date as compared to the value provided.

      Through July 31, 2001, we had acquired approximately 127,000 customers
through our direct marketing efforts in our initial target markets. We acquired
these customers on a one-by-one basis, as is typical in a number of mass-market
subscriber industries, such as telephone service.

      In July 2000, we acquired the residential and small commercial retail
energy business of Columbia. The acquisition was accounted for as a purchase. We
acquired approximately 285,000 gas customers and approximately 20,000 power
customers from Columbia. The results of operations of the Columbia portfolio are
included in our operating results since the July 31, 2000 acquisition date.


                                       15
<Page>

      In December 2000, we acquired the residential and small commercial retail
energy business of EUSA. The acquisition was accounted for as a purchase. We
acquired approximately 34,000 gas customers from EUSA. The results of operations
of the EUSA portfolio are included in our operating results since December 2000.

      In the first quarter of 2001 we completed the acquisition of approximately
7,200 residential and small commercial natural gas customers in the Atlanta,
Georgia market from Reliant. The acquisition was accounted for as a purchase.
Based on the mix of customers acquired from Reliant and the average consumption
of small commercial customers in the Atlanta market, we estimate that the
acquired portfolio equates to approximately 40,000 residential customers. The
total purchase consideration included $4.5 million in cash. Also, in connection
with the acquisition, we purchased natural gas inventory for approximately $1.9
million. For accounting purposes, the closing has been reflected in February
2001.

      We began servicing approximately 237,000 customers during March 2001,
pursuant to an agreement with PECO. In October 2000, we reached an agreement
with PECO to supply service to up to 20 percent of PECO's residential power
customers who had not selected a competitive energy services provider. PECO
provides electric delivery service in southeastern Pennsylvania, which is one of
our initial target markets. Pursuant to requirements in the 1998 settlement of
PECO's electric restructuring case, PECO issued a request for proposal for a
third party to supply Competitive Default Service to 20% of its residential
customers for a three-year term beginning January 1, 2001.

      Currently all load serving entities, such as NPW, are subject to installed
capacity (ICAP) requirements within the PJM region which includes the states of
Pennsylvania, New Jersey and Maryland. PJM ICAP requirements thus apply to those
customers we acquired from PECO. The PJM ICAP requirements are satisfied for
those entities that are "in-balance" between owned generation and load served.
Load serving entities that have more load service demand than generation supply
must purchase their ICAP requirements through bi-lateral contracts, or in a spot
or forward market, or be subject to penalty assessments. We believe that these
provisions, and the governance procedures by which they are derived, are flawed
and act as a deterrent to creating a competitive marketplace. We are part of a
group that is aggressively working towards restructuring the PJM ICAP
requirements. We have filed a complaint with the Federal Energy Regulatory
Commission requesting the restructuring of certain ICAP requirements. If we are
unsuccessful in our efforts, ICAP payments and penalties will continue to
adversely affect our profitability in certain electricity markets. During the
quarter ended June 30, 2001 we incurred approximately $4 million of ICAP
charges.

      In May 2001, we exercised our option to not accept approximately 16,000
California residential power customers that were initially contributed to us by
EES. As a result, since May 1, 2001, service to these power customers has
reverted to the default provider in the respective local distribution areas.

      In June 2001, we completed the acquisition of approximately 130,000 gas
and 7,000 power residential and small commercial customers in three separate
transactions. The customers,


                                       16
<Page>

located in the Ohio, Pennsylvania and Maryland markets, were acquired from AES
Power Direct / Titan Energy, Inc., CoEnergy Trading Company and Energy East
Solutions. The acquisitions were accounted for as purchases. Total consideration
for the customer contracts consisted of approximately $18.6 million in cash. In
connection with the acquisitions, we also acquired other assets, including gas
storage inventory, accounts receivable and fixed assets for combined
consideration of approximately $8.4 million. Additionally, we assumed forward
physical commodity purchase contracts that had a negative value of $3.9 million
as of the acquisition date. We have accrued this amount as part of the cost of
the customers acquired. The amount will be amortized through cost of sales as
the related commodity purchases are settled for cash. The results of operations
for each of the portfolios acquired are included in our operating results since
June 2001 when we assumed operational control of the portfolios. The allocation
of purchase price for the portfolios described herein is preliminary in nature
and is subject to adjustments to actualize items such as customer counts,
inventory levels, accounts receivable and assumed liabilities.

      To date we have obtained approximately 47,000 customers in Texas, but will
not begin recording revenue from these customers until systems development and
operational readiness work is completed by the Electric Reliability Council of
Texas (ERCOT), the centralized entity responsible for overseeing wholesale
market scheduling and retail customer switching. ERCOT has stated that the pilot
program will begin to ramp up to material levels in the third quarter of 2001.
We anticipate that all of our customers in Texas will begin to receive
electricity from NPW by the fourth quarter of 2001.

      As of June 30, 2001, we had obtained licenses to act as an electricity
marketer in California, Maine, Massachusetts, New Jersey, Ohio, Pennsylvania,
Texas, Connecticut, Delaware and Maryland. Also, we had obtained licenses to act
as a natural gas marketer in Georgia, New Jersey, Pennsylvania, Virginia and
Maryland. We are continuing our efforts to obtain licenses, where required,
within all of our target markets.

      We recognize revenue for the sale of power or natural gas once the
commodity has been delivered to the customer. Our bills to customers may also
include charges relating to the transmission and distribution of the commodity,
for which the utility is ultimately responsible. These amounts are excluded from
our net revenues. As a result, neither our revenues nor our costs include the
transmission and distribution charges included in our customers' bills.
Additionally, we fully expense in the period incurred the marketing and
operations costs associated with organic customer acquisition.

RESULTS OF OPERATIONS

      Our revenues are currently derived from the sale and delivery of power and
natural gas to retail customers in the United States. For the three months ended
June 30, 2001 and 2000, respectively, revenues were $64.6 million and $2.6
million. For the six months ended June 30, 2001 and 2000, respectively, revenues
were $190.6 million and $4.8 million. The increase in revenues is attributable
to the growth of our portfolio of customers through organic marketing and
portfolio deals in 2001 as compared to the prior year period.

                                       17
<Page>

      Our cost of sales represents the direct costs of acquiring and delivering
power and natural gas to our customers. For the three months ended June 30, 2001
and 2000, respectively, cost of sales, as a percentage of revenues, totaled 91%
and 86%. For the six months ended June 30, 2001 and 2000, respectively, cost of
sales, as a percentage of revenues, totaled 92% and 85%. The increase in cost of
sales is primarily attributable to costs of providing energy to an increased
customer base as compared to the prior year period. Our cost of sales also
includes the net impact of our energy trading activities. During the three
months ended June 30, 2001 and 2000, such activities resulted in gains of $7.4
million and $0, respectively. During the six months ended June 30, 2001 and
2000, our energy trading activities resulted in gains of $12.0 million and $0,
respectively.

      Our operating expenses include costs incurred related to acquiring and
supporting residential and small commercial customers that were not part of the
direct process of delivering power and natural gas to our customers. For the
three months ended June 30, 2001 and 2000, respectively, operating expenses were
$68.4 million and $36.6 million. For the six months ended June 30, 2001 and
2000, respectively, operating expenses were $136.0 million and $45.6 million.
The increase in operating expenses over prior year's comparative periods relates
primarily to significantly increasing our staff and infrastructure to execute
our business plan. Also, our customer count increased significantly over prior
year, from approximately 24,000 to approximately 752,400, due to the positive
results of our marketing efforts and acquisitions of customer portfolios. As a
result, operating expenses for the three and six months ended June 30, 2001,
respectively, included $22.6 million and $55.9 million for systems development
and other professional services, $10.6 million and $15.7 million for direct
marketing, and $10.3 million and $18.7 million for billing and customer care.
Also, compensation expenses recorded during the three and six months ended June
30, 2001, respectively, included costs for the recruitment of certain
executives, which resulted in $1.9 million and $3.7 million of deferred
compensation expense.

LIQUIDITY AND CAPITAL RESOURCES

      Net cash used in operating activities of $58.9 million and $6.9 million
for the three months ended June 30, 2001 and 2000, respectively, and $105.5
million and $20.0 million for the six months ended June 30, 2001 and 2000,
respectively, resulted primarily from net losses of $55.6 million and $35.0
million for the respective three month periods and $105.8 million and $42.4
million for the respective six month periods. During the six months ended June
30, 2001, we used existing cash reserves of $33.4 million to purchase portfolios
of customers and certain other assets, including storage inventory. During the
six months ended June 30, 2001, we also used approximately $140 million of cash
to purchase surety bonds and as collateral deposits, including $50 million
related to servicing the customers acquired from PECO. Pursuant to our contract
with PECO, approximately $37.6 million of our cash collateral will be returned
in January 2002. The balance will be returned upon successful completion of each
remaining year of the contract.

      As of June 30, 2001, we had cash, cash equivalents, restricted cash,
investment securities and inventory and imbalances of approximately $443.1
million invested primarily in government securities, high-grade domestic
commercial paper and intermediate corporate securities. A significant portion of
our


                                       18
<Page>

portfolio matures in less than one year in order to meet our working capital
requirements. Additionally, in August 2001, we received a preliminary commitment
for a receivables financing program with an initial transaction size of between
$75 and $100 million. We currently expect that the net proceeds from the IPO,
together with the proceeds from our prior rounds of private financing, revenue
from operations and other financing sources such as our contemplated receivables
financing will be sufficient to fully fund all our working capital, capital
expenditures and liquidity requirements in accordance with our business plan.
Forecasting our cash needs long-term, however, is subject to numerous
uncertainties, and we may need to raise additional funds. We cannot be certain
that we will be able to obtain additional financing on favorable terms or at
all. If we need additional capital and cannot raise it on acceptable terms, our
financial condition and business may be materially adversely affected.

      In November 1999, we entered into an Interactive Marketing Agreement with
America Online(R) (AOL) under which AOL agreed to promote us on the America
Online(R) service, CompuServe(R) service and Digital City(R) service for a
period of six years. Under the terms of our agreement with AOL, we agreed to pay
AOL $49 million over the six-year period on a semi-annual basis for the
promotions and for inclusion in the AOL Rewards(R) program. We also agreed to
issue 258,060 shares of our common stock to AOL for every 100,000 customers that
would subscribe to our service through AOL, up to 1 million customers. In
addition, the agreement required us to pay AOL $25 per customer for every
customer over 1 million that would sign up for our services through AOL. Through
June 2001 we had made cumulative payments totaling $18.7 million under the
agreement. Such amount, net of $4.2 million of accumulated amortization is
reflected in the accompanying balance sheet as of June 30, 2001.

      During the first quarter of 2001, we began discussions with AOL regarding
our participation in the new AOL/Aadvantage program and an assessment of our
overall arrangements with AOL. During June 2001, we reached an agreement with
AOL to revise the terms of the original agreement. As part of the revised
agreement, we will continue to receive a reduced number of promotions on AOL
sites over a three-year period through June 2004 and our participation in the
rewards program will be reduced. In addition, we have agreed to purchase
advertising through Time Warner Cable and other AOL Time Warner (AOLTW) offline
assets at mutually agreed rates. Additionally, AOL has waived its rights to
acquire NPW stock, or additional cash payments, based on customer acquisition
levels. We will account for the revisions to the AOL agreement prospectively and
will continue to amortize amounts paid to AOL to date on a straight-line basis
over the remaining three years of the revised agreement. Any amounts paid
pursuant to advertising through AOLTW offline media will be expensed as
incurred. Management believes the value to be provided by AOLTW over the
remaining three-year term of the agreement is sufficient to support the $14.5
million of net payments made to AOL in the balance sheet at June 30, 2001.

      We have no debt outstanding. Accordingly, we have not been exposed to near
term adverse changes in interest rates. We are, however, continually exploring
the possibility of establishing credit lines or other debt instruments to assist
us in providing necessary letters of credit and to fund


                                       19
<Page>

part of our working capital requirements on a cost effective basis. If we incur
debt in the future we may experience increased volatility as a result of changes
in interest rates. Additionally, we do not expect inflation to have a material
effect on our results of operations. We have no foreign currency exposure and
therefore, are not affected by changes in foreign exchange rates.

SEASONALITY

      Our revenues are impacted by seasonality in that power sales generally
increase during the warmer summer months, whereas natural gas sales have a
reverse seasonality and increase during the colder winter months. These factors
will cause our financial results to vary from quarter to quarter.

FORWARD-LOOKING STATEMENTS

      Certain statements in this Form 10-Q are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of
1934. The words "estimate," "project," "intend," "expect," "believe" and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are found at various places throughout this Form 10-Q
and throughout the other documents incorporated herein by reference. The Company
undertakes no obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events. Although we believe
that our expectations are based on reasonable assumptions, we can give no
assurance that our goals will be achieved. Important factors that could cause
actual results to differ from estimates or projections contained in the
forward-looking statements include our limited operating history; delays or
changes in the rules for the restructuring of the electric and natural gas
markets; our ability to attract and retain customers; our ability to manage our
energy requirements and sell energy at a sufficient margin given the volatility
in prices for electricity and natural gas; and our dependence on third parties
to provide critical functions to us and to our customers.


                                       20
<Page>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      We are exposed primarily to counterparty risks and risks related to
commodity price changes in the power and natural gas markets. We conduct
business solely in the United States and are not subject to foreign operations
risk.

      Counterparty risk relates to the risk of loss that we would incur as a
result of nonperformance by counterparties pursuant to the terms of their
contractual obligations. We have established counterparty limits for each
trading partner.

      Commodity price risk is the risk of loss arising from adverse movements in
commodity prices. We have established a risk control group that monitors
commodity price risk to ensure compliance with our stated risk management
policies. Our current risk management policies and procedures are to use
physical and financial products to manage our commodity price risk and maintain
a balanced commodity portfolio within specified limits. Our risk management
policies and procedures are modeled after Enron's risk management policies and
procedures, adapted for a retail customer business. Our policies and procedures
cover, among others, areas of (1) general authorization of transaction activity
by designated individuals and significant limits, (2) classification of risks
into identifiable portfolios, (3) responsibilities, segregation of duties, and
functions to be performed by commodity procurement, credit, legal/contract
management, risk controls groups, and the chief risk officer, and (4)
performance and exposure reporting and notification requirements.

      We utilize derivative commodity instruments to hedge future purchases of
commodities to be provided to our customers. The purpose of our hedging strategy
is to achieve a more predictable cash flow, as well as to reduce our exposure to
adverse price fluctuations of commodities. While the use of these hedging
arrangements limits the downside risk of adverse price movements, they may limit
future revenues from favorable price movements. The use of hedging transactions
also involves the risk that the counterparties will be unable to meet the
financial terms of such transactions. The hedging instruments we use are swaps
and forward contracts for physical commodity purchases. These contracts are
placed with counterparties that we believe are minimal credit risks.

      We account for the financial swap transactions as cash flow hedges. In
periods prior to the occurrence of the hedged transaction, the value of the
hedges are recorded in the consolidated balance sheet as assets and liabilities
with the resulting unrealized gains or losses deferred and reflected as a
component of the equity account other comprehensive income (OCI). In the periods
the hedged purchases occur, the financial swaps are cash settled and deferred
gains or losses pursuant to the hedges are removed from the balance sheet and
included in the cost of the commodity purchased.

      Our forward contracts for the physical purchase of commodities are
generally entered into for delivery to our residential and small commercial
customers in future periods. To the extent the forward contracts relate to
forecasted customer demand, at the inception of the contracts, we account for
these contracts as normal purchases and sales in accordance with SFAS 133. As
such, these contracts are not reflected in our financial statements until the
month of actual purchase of the commodity.


                                       21
<Page>

      We periodically compare the committed volumes of our forward contracts to
our forecasted customer demand volume. When the volumes pursuant to our forward
contracts exceed the probable volumes we expect to deliver to our customers, we
treat the excess positions as trading activities and any hedge gains or losses
previously deferred as a component of OCI are reflected through current
earnings. All of our trading activities are accounted for using mark to market
accounting under Emerging Issues Task Force (EITF) Issue No. 98-10, "Accounting
for Energy Trading and Risk Management Activities". The value of the forward
energy trading contracts are recorded as assets and liabilities in the
consolidated balance sheet and changes in the values are reflected through the
statement of income as a component of cost of sales.

      See "Note 5 - Price Risk Management Activities", to the unaudited
consolidated financial statements, for additional information on our risk
management activities.


                                       22
<Page>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PORCEEDINGS

      See "Note 6 - Commitments and Contingencies" to the unaudited consolidated
financial statements.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

      None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      None

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

      In connection with the annual meeting of stockholders of the Company, held
on May 9, 2001, the following matters were put to vote with the indicated
results:

(1)   Election of Directors

<Table>
<Caption>
                                                  WITHHOLD AUTHORITY TO VOTE FOR
      NOMINEES:                     FOR                INDIVIDUAL NOMINEE
      ---------                     ---           ------------------------------
<S>                              <C>                         <C>
Linda G. Alvarado                52,294,302                   133,139
Richard A. Causey                52,292,873                   134,568
James V. Derrick, Jr.            52,292,002                   135,439
Peter T. Grauer                  52,298,473                   128,968
Ray J. Groves                    52,296,073                   131,368
William I Jacobs                 49,474,271                 2,953,170
H. Eugene Lockhart               49,468,171                 2,959,270
Kenneth L. Lay                   52,292,373                   135,068
Lou L. Pai                       52,298,173                   129,268
Eugene B. Shanks                 52,299,473                   127,968
</Table>

(2)   Approval of the Management Incentive Plan

<Table>
<Caption>
       FOR           AGAINST          ABSTAIN
       ---           -------          -------
   <S>               <C>              <C>
   42,312,477        624,556          32,572
</Table>

(3)   Ratification of the appointment of Arthur Andersen LLP, independent public
      accountants, as the Company's auditors for the year ending December 31,
      2001.

<Table>
<Caption>
       FOR           AGAINST          ABSTAIN
       ---           -------          -------
   <S>               <C>              <C>
   52,328,998        87,336           11,107
</Table>


                                       23
<Page>

ITEM 5. OTHER INFORMATION

      None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

      None

(b)   Reports on Form 8-K

      None


                                       24
<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.

                                        NEWPOWER HOLDINGS, INC.


Date: August 14, 2001                   By: /s/ William I Jacobs
                                           -------------------------------------
                                                William I Jacobs
                                                Managing Director, Chief
                                                Financial Officer and Director


Date: August 14, 2001                   By: /s/ Stephen Nolan
                                           -------------------------------------
                                                Stephen Nolan
                                                Controller


                                       25