<PAGE>

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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

(Mark one)
  X     QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934
                    for the three months ended June 30, 2001

                                       OR

____    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934
        For the transition period from _______________ to ______________

                             Commission File Number
                                    000-23657
                                AstroPower, Inc.
             (Exact name of registrant as specified in its charter)

Delaware                                                51-0315869
(State or other jurisdiction                            (IRS Employer
of incorporation or organization)                       Identification
                                                        Number)

Solar Park
Newark, Delaware                                        19716-2000
(Address of principal executive offices)                (Zip Code)

                                  302-366-0400
              (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 such shorter period that the Registrant was required
to file such report(s), and (2) has been subject to such filing requirements for
the past 90 days.

                    YES     X     NO
                        -------      -------
    ( Registrant became subject to filing requirements on February 12, 1998)

The number of shares outstanding of the Registrant's common stock, $0.01 par
value, as of August 10, 2001, was 14,131,352.

===============================================================================
<PAGE>

                                AstroPower, Inc.
               FORM 10-Q FOR THE THREE MONTHS ENDED June 30, 2001

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                               Page No.
                                                                                               --------

                          PART I: FINANCIAL INFORMATION
<S>                                                                                             <C>
ITEM 1.  FINANCIAL STATEMENTS

         |X|      Consolidated Balance Sheets -
                  June 30, 2001 (unaudited) and December 31, 2000 ............................   1, 2

         |X|      Consolidated Statements of Income (unaudited) -
                  Three months and six months ended June 30, 2001 and 2000 ...................   3, 4

         |X|      Consolidated Statements of Cash Flows (unaudited) -
                  Six months ended June 30, 2001 and 2000 ....................................      5

         |X|      Notes to Consolidated Financial Statements (unaudited) .....................  6 - 7

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS ................................................. 8 - 11

ITEM 3.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT
         MARKET RISK .........................................................................     11

                           PART II: OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS ...................................................................     12

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .................................     13

         SIGNATURES ..........................................................................     14
</TABLE>


Cautionary Note Regarding Forward-Looking Statements
----------------------------------------------------

This quarterly report on Form 10-Q contains forward-looking statements that are
made pursuant to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve risks, uncertainties and
assumptions as described from time to time in registration statements, annual
reports, and other periodic reports and filings which we file with the
Securities and Exchange Commission. All statements, other than statements of
historical facts, which address our expectations of sources of capital or which
express our expectation for the future with respect to financial performance or
operating strategies can be identified as forward-looking statements. As a
result, there can be no assurance that our future results will not be materially
different from those described herein as "believed", "anticipated", "estimated"
or "expected", which reflect our current views with respect to future events. We
caution readers that these forward-looking statements speak only as of the date
hereof. We hereby expressly disclaim any obligation or undertaking to release
publicly any updates or revisions to any such statements to reflect any changes
in our expectations or any change in events, conditions or circumstances on
which such statement is based.
<PAGE>

                                ASTROPOWER, INC.

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                        June 30           Dec. 31
ASSETS                                                    2001             2000
---------------------------------------------------   -------------    -------------
                                                       (unaudited)
<S>                                                    <C>                     <C>
CURRENT ASSETS:
Cash and cash equivalents .........................   $  82,455,098       24,538,022
Accounts receivable:
     Trade, net ...................................      16,679,996       15,753,018
     Other ........................................         156,095          127,348
Inventories .......................................      17,209,539       12,307,866
Prepaid expenses ..................................       1,238,403          558,143
Deferred tax asset ................................       8,378,224        6,351,355
                                                      -------------    -------------
                                                        126,117,355       59,635,752

INVESTMENT IN JOINT VENTURES ......................         674,821          718,224
OTHER INVESTMENTS .................................       2,011,750             --

PROPERTY AND EQUIPMENT ............................      26,920,310       23,613,649
     Less accumulated depreciation and amortization      (6,848,175)      (5,996,002)
                                                      -------------       ----------
                                                         20,072,135       17,617,647
                                                      -------------       ----------
          Total assets ............................   $ 148,876,061       77,971,623
                                                      =============    =============
</TABLE>



          See accompanying notes to consolidated financial statements.

                                       1
<PAGE>

                                ASTROPOWER, INC.

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                     June 30       Dec. 31
                                                                       2001          2000
                                                                   ------------   ------------
                                                                    (unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
----------------------------------------------------------------
<S>                                                               <C>             <C>
CURRENT LIABILITIES:
Accounts payable ...............................................   $  7,413,916      6,210,020
Accrued payroll and payroll taxes ..............................      1,187,219      1,001,405
Accrued expenses ...............................................      3,608,298        316,917
                                                                   ------------   ------------
          Total current liabilities ............................     12,209,433      7,528,342

OTHER LIABILITIES:
Deferred tax liability .........................................      2,158,169      2,158,169
Other ..........................................................        197,877        175,000
                                                                   ------------   ------------
          Total liabilities ....................................     14,565,479      9,861,511
                                                                   ------------   ------------


COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock ...................................................        141,263        117,390
Additional paid-in capital .....................................    130,838,923     64,848,641
Unearned compensation ..........................................           --          (49,668)
Retained earnings ..............................................      3,330,396      3,193,749
                                                                   ------------   ------------
           Total stockholders' equity ..........................    134,310,582     68,110,112
                                                                   ------------   ------------
                      Total liabilities and stockholders' equity   $148,876,061     77,971,623
                                                                   ============   ============
</TABLE>



          See accompanying notes to consolidated financial statements.

                                       2
<PAGE>

                                ASTROPOWER, INC.

                        CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                     Three Months Ended June 30
                                                    ----------------------------
                                                            (unaudited)

                                                        2001            2000
                                                    ------------    ------------
<S>                                                  <C>            <C>
REVENUES:
   Product sales ................................   $ 15,294,686      11,038,572
   Research contracts ...........................        771,113         872,911
                                                    ------------    ------------
             Total revenues .....................     16,065,799      11,911,483
COST OF REVENUES:
   Product sales ................................     10,609,107       7,692,580
   Research contracts ...........................        563,926         631,654
                                                    ------------    ------------
             Total cost of revenues .............     11,173,033       8,324,234
                                                    ------------    ------------
             Gross profit .......................      4,892,766       3,587,249
OPERATING EXPENSES:
   Product development expenses .................      1,196,535         720,235
   General and administrative expenses ..........      1,209,012       1,009,143
         Selling expenses .......................      1,030,516         814,710
         Litigation settlement related legal fees          8,704          28,940
                                                    ------------    ------------
             Income from operations .............      1,447,999       1,014,221
OTHER INCOME (EXPENSE):
   Interest expense .............................            (42)        (11,829)
   Equity in loss of joint ventures .............        (31,587)        (60,000)
   Interest income ..............................        948,017         333,961
                                                    ------------    ------------
             Total other income .................        916,388         262,132
                                                    ------------    ------------
INCOME BEFORE INCOME TAXES ......................      2,364,387       1,276,353
INCOME TAXES ....................................        709,320         319,089
                                                    ------------    ------------
NET INCOME ......................................   $  1,655,067         957,264
                                                    ============    ============



NET INCOME DATA:
   Net income per share - basic .................   $       0.12            0.08
                                                    ------------    ------------
   Net income per share - diluted ...............   $       0.11            0.08
                                                    ------------    ------------
   Weighted average shares outstanding - basic ..     14,067,919      11,458,035
                                                    ------------    ------------
   Weighted average shares outstanding - diluted      15,567,390      12,536,529
                                                    ------------    ------------
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                                ASTROPOWER, INC.

                        CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                          Six Months Ended June 30
                                                        ------------    ------------
                                                                (unaudited)

                                                            2001            2000
                                                        ------------    ------------
<S>                                                     <C>             <C>
REVENUES:
   Product sales ....................................   $ 28,875,921      20,709,054
   Research contracts ...............................      1,495,319       1,605,017
                                                        ------------    ------------
             Total revenues .........................     30,371,240      22,314,071
COST OF REVENUES:
   Product sales ....................................     20,057,590      14,291,413
   Research contracts ...............................      1,087,295       1,145,264
                                                        ------------    ------------
             Total cost of revenues .................     21,144,885      15,436,677
                                                        ============    ============
             Gross profit ...........................      9,226,355       6,877,394
OPERATING EXPENSES:
   Product development expenses .....................      2,321,220       1,343,172
   General and administrative expenses ..............      2,370,465       1,853,752
   Selling expenses .................................      1,872,986       1,353,559
   Litigation settlement and related legal fees .....      3,782,945          42,566
                                                        ------------    ------------
             Income (loss) from operations ..........     (1,121,261)      2,284,345
OTHER INCOME (EXPENSE):
   Interest expense .................................         (8,668)        (13,621)
   Equity in loss of joint ventures .................        (43,709)        (80,000)
   Interest income ..................................      1,368,855         674,789
                                                        ------------    ------------
             Total other income .....................      1,316,478         581,168
                                                        ------------    ------------
INCOME BEFORE INCOME TAXES ..........................        195,217       2,865,513
INCOME TAXES ........................................         58,570         796,140
                                                        ------------    ------------
NET INCOME ..........................................   $    136,647       2,069,373
                                                        ============    ============



NET INCOME DATA:
   Net income per share - basic .....................   $       0.01            0.18
                                                        ------------    ------------
   Net income per share - diluted ...................   $       0.01            0.16
                                                        ------------    ------------
   Weighted average shares outstanding - basic ......     13,105,854      11,381,042
                                                        ------------    ------------
   Weighted average shares outstanding - diluted ....     14,553,744      12,580,454
                                                        ------------    ------------
</TABLE>



          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                                ASTROPOWER, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                             Six Months Ended June 30
                                                                          ----------------------------
                                                                                   (unaudited)

                                                                              2001            2000
                                                                          ------------    ------------
<S>                                                                       <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income .........................................................   $    136,647    $  2,069,373
   Adjustments to reconcile net income to net cash (used in) / provided
    by operating activities:
       Deferred income taxes ..........................................         58,570         398,525
       Depreciation and amortization ..................................        852,173         617,539
       Amortization of unearned compensation ..........................         49,668          49,012
       Equity in loss of joint ventures ...............................         43,709        (167,319)
      Changes in working capital items:
            Accounts receivable .......................................       (955,725)     (1,834,409)
            Inventories ...............................................     (4,901,673)     (2,298,326)
            Prepaid expenses ..........................................       (680,260)       (224,029)
            Accounts payable and accrued expenses .....................      4,495,277       1,244,491
            Accrued payroll and payroll taxes .........................        185,814        (398,072)
            Other .....................................................         16,070          (8,333)
                                                                          ------------    ------------
   Net cash (used in) / provided by operating activities ..............       (699,730)        551,548
                                                                          ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures ...............................................     (3,306,661)     (4,101,483)
   Other investments ..................................................     (2,011,750)           --
                                                                          ------------    ------------
   Net cash used in investing activities ..............................     (5,318,411)     (4,101,483)
                                                                          ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from exercise of common stock options .....................      1,806,722       1,520,300
   Net proceeds from common stock offering ............................     62,128,495            --
                                                                          ------------    ------------
   Net cash provided by financing activities ..........................     63,935,217       1,520,300
                                                                          ------------    ------------

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS ..................     57,917,076      (3,132,731)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ......................     24,538,022      25,338,239
                                                                          ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............................   $ 82,455,098      22,205,508
                                                                          ============    ============
</TABLE>



                See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

                                AstroPower, Inc.

                   Notes to Consolidated Financial Statements
                                  June 30, 2001
                                   (unaudited)


(1) General

    The accompanying consolidated financial statements for the three month and
    six month periods ended June 30, 2001 and 2000 have been prepared by
    AstroPower, Inc. (Company) without audit, pursuant to the rules and
    regulations of the Securities and Exchange Commission. The information
    furnished herein reflects all adjustments (consisting only of normal
    recurring accruals) which are, in the opinion of management, necessary to
    present fairly the consolidated financial position and operating results of
    the Company as of and for the respective periods. Certain information and
    footnote disclosures normally included in annual consolidated financial
    statements prepared in accordance with accounting principles generally
    accepted in the United States of America have been omitted pursuant to such
    rules and regulations. However, management of the Company believes that the
    disclosures herein are adequate to make the information presented not
    misleading. The accompanying consolidated financial statements should be
    read in conjunction with the consolidated financial statements contained in
    the Company's Annual Report Form 10-K for the year ended December 31, 2000.
    The consolidated results of operations for interim periods may not be
    indicative of the results that may be expected for the entire year.

(2) Litigation Settlement

    In April 2001, the Company reached an agreement in principle with the U.S.
    Department of Justice to settle a civil action against the Company filed in
    October 2000, in the U.S. District Court for the District of Delaware
    seeking to recover damages and penalties with respect to the submission of
    invoices and Incurred Cost Submissions in connection with contracts with the
    U.S. Department of Defense and U.S. Department of Energy. A Release and
    Settlement Agreement dated June 29, 2001 was executed and the previously
    agreed to settlement payment of $3.5 million was made on July 9, 2001. On
    July 13, 2001, a Joint Stipulation of Dismissal was filed with the District
    Court stipulating that the action be dismissed with prejudice.

(3) Inventories

    A summary of inventories is as follows:

<TABLE>
<CAPTION>
                                               June 30, 2001             December 31, 2000
                                                (unaudited)
                                        ------------------------     ------------------------
                 <S>                      <C>                          <C>
                 Raw materials                       $15,391,352                  $10,501,576
                 Work-in-process                         992,867                      769,031
                 Finished goods                          825,320                    1,037,259
                                        ------------------------     ------------------------
                                                     $17,209,539                   12,307,866
                                        ========================     ========================
</TABLE>

(4) Debt

    On March 7, 2001, the Company increased its available revolving line of
    credit with a financial institution from $3 million to $6 million. The
    facility bears interest at the financial institution's National Commercial
    Rate minus 0.25% (8.25% as of March 7, 2001). Security for the facility is
    accounts receivable. The Company is required to maintain a minimum working
    capital ratio, a minimum level of tangible net worth and a minimum total
    debt to net worth ratio. There were no borrowings against this facility at
    June 30, 2001.

(5) Subsequent Event

    On July 31, 2001, the Company entered into an agreement to acquire
    Aplicaciones Tecnicas de la Energia, S.A., commonly known as Atersa, a
    privately held company based in Valencia, Spain. As part of the transaction,
    the Company will also acquire Atersa's 50% equity stake in AstraSolar, a
    Spanish solar cell manufacturing joint venture between the Company and
    Atersa. Atersa is a leading manufacturer of solar electric power modules and


                                       6
<PAGE>

    balance-of-system components, as well as a provider of system design and
    integration services. Atersa also designs and builds a full range of module
    manufacturing equipment.

    Under the terms of the agreement, the Company will acquire Atersa and
    Atersa's 50% stake in AstraSolar for 4,000 million pesetas (approximately
    $21.1 million) in a stock and cash transaction. Atersa shareholders will
    receive approximately 58% of the total consideration in cash and
    approximately 42% in AstroPower, Inc. shares. Closing of the transaction
    will take place following authorization by the Spanish Competition Law
    authorities.


(6) New Accounting Pronouncements

    In July 2001, the FASB issued Statement No. 141, Business Combinations, and
    Statement No. 142, Goodwill and Other Intangible Assets. Statement 141
    requires that the purchase method of accounting be used for all business
    combinations initiated after June 30, 2001 as well as all purchase method
    business combinations completed after June 30, 2001. Statement 141 also
    specifies criteria intangible assets acquired in a purchase method business
    combination must meet to be recognized and reported apart from goodwill.
    Statement 142 will require that goodwill and intangible assets with
    indefinite useful lives no longer be amortized, but instead tested for
    impairment at least annually in accordance with the provisions of Statement
    142. Statement 142 will also require that intangible assets with definite
    useful lives be amortized over their respective estimated useful lives to
    their estimated residual values, and reviewed for impairment in accordance
    with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
    for Long-Lived Assets to Be Disposed Of.

    The Company is required to adopt the provisions of Statement 141 immediately
    and Statement 142 effective January 1, 2002. Furthermore, any goodwill and
    any intangible asset determined to have an indefinite useful life that are
    acquired in a purchase business combination completed after June 30, 2001
    will not be amortized, but will continue to be evaluated for impairment in
    accordance with the appropriate pre-Statement 142 accounting literature.

    Management is in the process of evaluating the impact of SFAS No. 141 and
    SFAS No 142 on the Company's financial statements.

                                       7
<PAGE>

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

Overview

We develop, manufacture, market and sell a range of solar electric power
generation products, including solar cells, modules, panels and our SunChoice
pre-packaged systems for the global marketplace. Solar cells are the core
component inside every solar electric power system. Our products provide an
environmentally friendly, reliable energy solution at the point of use and are
sold for both off-grid and on-grid applications. In off-grid applications, our
products provide the primary source of electric power for rural homes and
villages and supply power for equipment in the telecommunications and
transportation industries. In on-grid applications, our products provide a
renewable source of alternative or supplemental electric power and provide
reliable back-up power in the event of a utility outage. In addition to our
solar power generation product offerings, we sell wholesale solar electric power
under long-term purchase agreements through a joint venture with GPU
International, Inc.

We currently generate product revenues from the sale of solar cells, modules,
panels and pre-packaged systems. While the predominant source of our product
revenues to date has been recycled wafer products, we are continuing a
significant expansion of our Silicon-Film manufacturing capacity. We recognize
product sales revenue upon shipment. Product sales represented 95.2% and 95.1%
of total revenues for the three months and six months ended June 30, 2001,
respectively. Solar cell prices and manufacturing costs vary depending upon
supply and demand in the market for solar cells and modules, order size, yields,
the costs of raw materials, particularly reclaimed silicon wafers recycled from
the semiconductor industry, and other factors.

We also generate revenue from contracts with various federal government agencies
to conduct research on advanced Silicon-Film products and optoelectronic
devices. Generally, these contracts last from six months to three years. We
recognize research contract revenue at the time costs benefiting the contracts
are incurred, which approximates the percentage of completion method.
Substantially all of our revenues from government contracts are subject to audit
under various federal statutes.

For the three months and six months ended June 30, 2001, 75.9% and 75.7%,
respectively, of our product revenues were generated by sales to customers
located outside of the United States. We believe that international sales will
continue to account for a significant portion of our product sales for the
foreseeable future. Current sales are denominated in U.S. dollars and foreign
exchange rate fluctuations have not had an impact on our results of operations.

Solar cells that we manufacture are sold to original equipment manufacturers
that assemble the solar cells into modules. In addition, we assemble and sell
modules to distributors and value-added resellers. We have also begun to sell
our SunChoice systems. The sale of modules and systems results in substantially
more revenue to us than the sale of solar cells due to the incremental value of
the additional materials, labor and overhead. Accordingly, our product sales are
affected not just by changes in total solar cells produced, but by changes in
the sales mix among solar cells, modules and systems. The gross margin
percentage for modules and systems are generally less than those of solar cells.
As a result, changes in the product sales mix may also affect total product
gross margin.

                                       8
<PAGE>

Results of Operations

Three Months Ended June 30, 2001 and 2000

Revenues - Our total revenues were $16.1 million for the three months ended June
30, 2001, an increase of $4.2 million or 34.9% from 2000. Product sales were
$15.3 million for the three months ended June 30, 2001, an increase of $4.3
million or 38.6% from 2000. Our increase in product sales was due to ongoing
strong demand for our products and expansion of manufacturing capacity. Contract
revenues were $771,000 for the three months ended June 30, 2001, a decrease of
$102,000 or 11.7% from 2000.

Gross profit - Our gross profit was $4.9 million for the three months ended June
30, 2001, a increase of $1.3 million or 36.4% from 2000. Product gross profit
for the three months ended June 30, 2001 was $4.7 million, an increase of $1.3
million or 40.0% from 2000. Our product gross margin was 30.6% for the three
months ended June 30, 2001. In the similar 2000 period, the product gross margin
was 30.3%. In the second quarter of 2000 we accelerated the pace of our capacity
expansion, the costs of which depressed product gross margins through the
balance of 2000. Our gross profit on research contracts for the three months
ended June 30, 2001 was $207,000, a decrease of $34,000 or 14.1% from the 2000
period.

Product development costs - Our product development costs for the three months
ended June 30, 2001 were $1.2 million, up $476,000 or 66.1% from 2000, as a
result of increased levels of development efforts related to new products.

General and administrative expenses - Our general and administrative expenses
for the three months ended June 30, 2001 were $1.2 million, an increase of
$200,000 or 19.8% from the similar 2000 period. The increase is primarily a
result of higher levels of salaries, professional fees and insurance expenses.

Selling expenses - Our selling expenses for the three months ended June 30, 2001
were $1.0 million, an increase of $216,000 or 26.5% from 2000. The increase is
due to higher salary costs as a result of additions to the sales and marketing
staff, and higher travel expenditures.

Litigation settlement related legal fees - Our professional fees related to our
overhead dispute for the three months ended June 30, 2001 were $9,000, a
decrease of $20,000 from 2000, as a result of lower activity due to reaching an
agreement to settle our litigation with the U.S. government in April 2001.

Interest income - Our interest income for the three months ended June 30, 2001
was $948,000, as compared with $334,000 in the 2000 period. The increase in
interest income is attributable to higher average balances as a result of our
March 2001 public offering which raised net proceeds of $62.1 million.

Income taxes - The income tax expense for the three months ended June 30, 2001
was $709,000, as compared with income tax expense of $319,000 in 2000,
representing an effective rate of 30.0%. Our effective tax rate is lower than
the statutory rates, principally as a result of research and experimentation tax
credits and the benefit of a Foreign Sales Corporation.

                                       9
<PAGE>

Results of Operations

Six Months Ended June 30, 2001 and 2000

Revenues - Our total revenues were $30.4 million for the six months ended June
30, 2001, an increase of $8.1 million or 36.1% from 2000. Product sales were
$28.9 million for the six months ended June 30, 2001, an increase of $8.2
million or 39.4% from 2000. Our increase in product sales was due to ongoing
strong demand for our products and expansion of manufacturing capacity. Contract
revenues were $1.5 million for the six months ended June 30, 2001, a decrease of
$110,000 or 6.8% from 2000.

Gross profit - Our gross profit was $9.2 million for the six months ended June
30, 2001, a increase of $2.4 million or 34.2% from 2000. Product gross profit
for 2001 was $8.8 million, an increase of $2.4 million or 37.4% from 2000. Our
product gross margin was 30.5% for the six months ended June 30, 2001. In the
similar 2000 period, the product gross margin was 31.0%. In the second quarter
of 2000 we accelerated the pace of our capacity expansion, the costs of which
depressed product gross margins through the balance of 2000 and 2001. Our gross
profit on research contracts for the six months ended June 30, 2001 was
$408,000, a decrease of $52,000 or 11.3% from the 2000 period.

Product development costs - Our product development costs for the six months
ended June 30, 2001 were $2.3 million, up $1.0 million or 72.8% from 2000, as a
result of increased levels of development efforts related to new products.

General and administrative expenses - Our general and administrative expenses
for the six months ended June 30, 2001 were $2.4 million, an increase of
$517,000 or 27.9% from the similar 2000 period. The increase is primarily a
result of higher levels of salaries, professional fees and insurance expenses.

Selling expenses - Our selling expenses for the six months ended June 30, 2001
were $1.9 million, an increase of $519,000 or 38.4% from 2000. The increase is
due to higher salary costs as a result of additions to the sales and marketing
staff, and higher travel expenditures.

Litigation settlement and related legal fees - Our costs related to our overhead
dispute for the six months ended June 30, 2001 were $3.8 million, an increase
from $43,000 in 2000. This increase is due to the $3.5 million settlement with
the U.S. government as well as the high level of activity, and related
professional fees during the first quarter of 2001 in connection with this
settlement.

Interest income - Our interest income for the six months ended June 30, 2001 was
$1.4 million, as compared with $675,000 in the 2000 period. The increase in
interest income is attributable to higher average balances as a result of our
March 2001 public offering which raised net proceeds of $62.1 million.

Income taxes - The income tax expense for the six months ended June 30, 2001 was
$59,000, as compared with income tax expense of $796,000 in 2000, representing
an effective rate of 30.0%. The decrease in income tax expense is primarily the
result of the tax benefit related to the $3.5 million settlement with the U.S.
government. Our effective tax rate is lower than the statutory rates,
principally as a result of research and experimentation tax credits and the
benefit of a Foreign Sales Corporation.

Net Income - Our net income for the six months ended June 30, 2001 was $137,000
as compared with net income of $2.1 million for the similar prior year period.
The decrease in net income is primarily the result of a non-recurring pre-tax
charge of $3.5 million related to our litigation settlement with the U.S.
government.

                                       10
<PAGE>

Liquidity and Capital Resources

At June 30, 2001, we had cash of $82.5 million, as compared with $24.5 million
at December 31, 2000. The increase in the cash balance primarily occurred during
the 2001 first quarter due to our public offering of 2,200,000 shares of Common
Stock in March 2001 which raised net proceeds of $62.1 million.

Our sources of liquidity as of June 30, 2001 consist principally of cash of
$82.5 million and an available bank credit line of $6 million. Any borrowings
under our bank facility will be secured by accounts receivable. There were no
borrowings outstanding under the bank credit line as of June 30, 2001.

On July 31, 2001, we entered into an agreement to acquire Aplicaciones
Tecnicas de la Energia, S.A., commonly known as Atersa, a privately held company
based in Valencia, Spain. As part of the transaction, we will also acquire
Atersa's 50% equity stake in AstraSolar, a Spanish solar cell manufacturing
joint venture betweeen us and Atersa. Atersa is a leading manufacturer of solar
electric power modules and balance-of-system components, as well as a provider
of system design and integration services. Atersa also designs and builds a full
range of module manufacturing equipment.

Under the terms of the agreement, we will acquire Atersa and Atersa's 50% stake
in AstraSolar for 4,000 million pesetas (approximately $21.1 million) in a stock
and cash transaction. Atersa shareholders will receive approximately 58% of the
total consideration in cash and approximately 42% in AstroPower shares. Closing
of the transaction will take place following authorization by the Spanish
competition law authorities.

We expect that our available cash balance, together with projected cash
generated from operations and the available bank credit line, will be sufficient
to fund our activities for at least the next 24 months.


ITEM 3.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

We develop products in the United States and market our products in North
America as well as in the Europe, Asia Pacific and Africa regions. As a result,
our financial results could be affected by factors such as changes in foreign
currency exchange rates or weak economic conditions in foreign markets. Because
all of our revenues are currently denominated in U.S. dollars, a strengthening
of the dollar could make our products less competitive in foreign markets. Our
interest income is sensitive to changes in the general level of U.S. interest
rates, particularly since the majority of our investments are in short-term
instruments. Due to the short-term nature of our investments, we believe that
there is not a material risk exposure.

                                       11
<PAGE>

                                AstroPower, Inc.
               FORM 10-Q FOR THE THREE MONTHS ENDED JUNE 30, 2001

                           PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        In April 2001, we reached an agreement in principle with the U.S.
        Department of Justice to settle a civil action against us filed in
        October 2000, in the U.S. District Court for the District of Delaware
        seeking to recover damages and penalties with respect to the submission
        of invoices and Incurred Cost Submissions in connection with contracts
        with the U.S. Department of Defense and U.S. Department of Energy. A
        Release and Settlement Agreement dated June 29, 2001 was executed and
        the previously agreed to settlement payment of $3.5 million was made on
        July 9, 2001. On July 13, 2001, a Joint Stipulation of Dismissal was
        filed with the District Court stipulating that the action be dismissed
        with prejudice.

                                       12
<PAGE>

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

        The Company's Annual Meeting of Shareholders was held on May 10, 2001
        for the purpose of the following:

        1.  To elect three directors to serve until the 2004 Annual Meeting of
            Shareholders.

        2.  To amend our 1999 Stock Option Plan so as to increase the number of
            shares available under the Plan.

        3.  To amend our 1998 Directors Plan so as to increase the number of
            shares available under the Plan.

        4.  To ratify the appointment of KPMG LLP as our independent accountants
            for the fiscal year 2001.

       Shareholders votes on these proposals follow:

Election of Directors:

             Name            For         Against      Broker Non-Votes
             ----            ---         -------      ----------------

Dr. Allen M. Barnett       8,219,511     363,733           --
Gilbert H. Steinberg       8,429,484     153,760           --
Dr. Jeffrey W. Edington    8,429,384     153,860           --
<TABLE>
<CAPTION>
                                             For        Against      Abstain         Broker Non-Votes
                                             ---        -------      -------         ----------------
<S>                                        <C>          <C>          <C>              <C>
Proposal to amend 1999 Stock Option
Plan                                       7,753,741     683,816     146,307              --

Proposal to amend 1998 Director Plan       7,724,475     684,889     174,500              --

Proposal to ratify appointment of
 independent accountants                   8,541,993      33,882       7,990              --

</TABLE>



                                       13
<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.



                                AstroPower, Inc.


Date: August 13, 2001          By: /s/   Allen M. Barnett
                                  ---------------------------------------
                                         Allen M. Barnett
                              President and Chief Executive Officer



Date: August 13, 2001          By: /s/   Thomas J. Stiner
                                  ---------------------------------------
                                         Thomas J. Stiner
                        Senior Vice President and Chief Financial Officer
                                   (Principal Financial Officer)