<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 September 30, 2000

                                      OR

____   TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

       For the transition period from _______________ to ______________

                            Commission File Number
                                   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 October 31, 2000, was 11,708,675.
<PAGE>

                               AstroPower, Inc.
            FORM 10-Q FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000

                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                          Page No.
                                                                          --------
<S>                                                                       <C>
                         PART I:  FINANCIAL INFORMATION
                         ------------------------------

ITEM 1.   FINANCIAL STATEMENTS

          [_]  Consolidated Balance Sheets -
               September 30, 2000 (unaudited) and December 31, 1999.......    1, 2

          [_]  Consolidated Statements of Income (unaudited) -Three
               months and nine months ended September 30, 2000 and 1999...       3

          [_]  Consolidated Statements of Cash Flows (unaudited) -
               Nine months ended September 30, 2000 and 1999..............       4

          [_]  Consolidated Notes to Financial Statements (unaudited).....       5

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS.............................     6-9

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

ITEM 1.   LEGAL PROCEEDINGS...............................................      10

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K................................      10

          SIGNATURES......................................................      11
</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, including statements with respect to year 2000 compliance,
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>
                             ASSETS                            September 30, 2000        December 31, 1999
                                                             ----------------------    --------------------
                                                                  (unaudited)
<S>                                                          <C>                       <C>
CURRENT ASSETS:
Cash and cash equivalents..................................  $         26,178,399      $        25,338,239
Accounts receivable:
   Trade, net..............................................            12,100,714               14,106,031
   Other...................................................               380,788                  418,174
Inventories................................................            11,510,092                7,823,382
Prepaid expenses and other.................................               725,860                  747,828
Deferred tax assets........................................             5,077,340                2,280,373
                                                             --------------------      -------------------
          Total current assets.............................            55,973,193               50,714,027

INVESTMENT IN JOINT VENTURES...............................               822,294                  662,838

PROPERTY AND EQUIPMENT.....................................            22,245,631               16,760,070
   Less accumulated depreciation and amortization..........            (5,600,348)              (4,629,442)
                                                             --------------------     --------------------
                                                                       16,645,283               12,130,628
                                                             --------------------     --------------------
          Total assets.....................................  $         73,440,770     $         63,507,493
                                                             ====================     ====================
</TABLE>

          See accompanying notes to consolidated financial statements

                                       1
<PAGE>

                                ASTROPOWER, INC.

                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                      September 30, 2000          December 31, 1999
                                                                    ---------------------        --------------------
                                                                          (unaudited)
<S>                                                                 <C>                          <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable..................................................  $           4,605,941        $          3,349,921
Accrued payroll and payroll taxes.................................                699,639                   1,050,525
Accrued expenses..................................................                359,841                     182,571
                                                                    ---------------------        --------------------
         Total current liabilities................................              5,665,421                   4,583,017

Deferred tax liability and other..................................              1,445,934                   1,431,398
                                                                    ---------------------        --------------------
         Total liabilities........................................              7,111,355                   6,014,415
                                                                    ---------------------        --------------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Common stock......................................................                116,780                     112,271
Additional paid-in capital........................................             63,854,525                  57,795,387
Unearned compensation.............................................                (74,174)                   (147,693)
Retained earnings (deficit).......................................              2,432,284                    (266,887)
                                                                    ---------------------        --------------------
          Total stockholders' equity..............................             66,329,415                  57,493,078
                                                                    ---------------------        --------------------
               Total liabilities and stockholders' equity.........  $          73,440,770        $         63,507,493
                                                                    =====================        ====================
</TABLE>

          See accompanying notes to consolidated financial statements

                                       2
<PAGE>

                               ASTROPOWER, INC.

                       CONSOLIDATED STATEMENTS OF INCOME

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

                                                       2000                   1999                  2000                  1999
                                               ------------------      ------------------      ----------------     ----------------
<S>                                            <C>                     <C>                     <C>                  <C>
REVENUES:
   Product sales.............................  $       12,554,703      $        8,584,332      $     33,263,756    $     22,134,613
   Research contracts........................             848,400                 770,351             2,453,418           2,349,191
                                               ------------------      ------------------      ----------------    ----------------
          Total revenues.....................          13,403,103               9,354,683            35,717,174          24,483,804
COST OF REVENUES:
   Product sales.............................           8,770,817               6,068,258            23,054,263          16,041,732
   Research contracts........................             636,685                 652,536             1,789,916           1,789,448
                                               ------------------      ------------------      ----------------    ----------------
          Total cost of revenues.............           9,407,502               6,720,794            24,844,179          17,831,180
                                               ------------------      ------------------      ----------------    ----------------
          Gross profit.......................           3,995,601               2,633,889            10,872,995           6,652,624
OPERATING EXPENSES:
   Product development expenses..............             920,333                 494,711             2,263,505           1,540,470
   General and administrative expenses.......           1,287,111                 803,714             3,140,863           2,155,992
   Selling expenses..........................           1,090,479                 395,778             2,444,038             989,239
   Professional fees related to overhead
      dispute................................             283,622                  11,817               326,188              51,781
                                               ------------------      ------------------      ----------------    ----------------
          Income from operations.............             414,056                 927,869             2,698,401           1,915,142
OTHER (EXPENSE) INCOME:
   Interest expense..........................                (310)                 (9,621)              (13,967)            (10,406)
   Interest income...........................             384,245                  11,637             1,069,319              69,290
   Other expense.............................              (2,115)                (12,758)              (12,363)            (12,758)
   Equity in loss from joint ventures........              (8,096)                      -               (88,096)                  -
                                               ------------------      ------------------      ----------------    ----------------
          Total other (expense) income.......             373,724                 (10,742)              954,893              46,126
                                               ------------------      ------------------      ----------------    ----------------
NET INCOME BEFORE INCOME TAXES...............             787,780                 917,127             3,653,294           1,961,268
INCOME TAXES.................................             157,983                 275,138               954,123             588,380
                                               ------------------      ------------------      ----------------    ----------------
NET INCOME...................................             629,797                 641,989             2,699,171           1,372,888
                                               ==================      ==================      ================    ================

NET INCOME DATA:

   Net income per share - basic..............  $             0.05      $             0.07      $           0.24    $           0.16
                                               ==================      ==================      ================    ================

   Net income per share - diluted............  $             0.05      $             0.07      $           0.21    $           0.14
                                               ==================      ==================      ================    ================

   Weighted average shares
   Outstanding - basic.......................          11,570,946               8,725,310            11,443,598           8,653,102
                                               ==================      ==================      ================    ================

   Weighted averages shares
   Outstanding - diluted.....................          13,043,871               9,758,268            12,870,475           9,612,795
                                               ==================      ==================      ================    ================
</TABLE>

          See accompanying notes to consolidated financial statements

                                       3
<PAGE>

                                ASTROPOWER, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                  Nine Months Ended September 30
                                                                                            (unaudited)
                                                                           ------------------------------------------
                                                                                  2000                    1999
                                                                           ------------------      ------------------
<S>                                                                        <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................ $        2,699,171      $        1,372,888
Adjustments to reconcile net income to net cash provided by (used in)
   operating activities:
          Deferred income taxes...........................................            475,517                 588,380
          Depreciation and amortization...................................            970,906                 735,787
          Equity in losses of joint ventures..............................             88,096                      --
          Amortization of unearned compensation...........................             73,519                  73,519
          Changes in working capital items:
               Accounts receivable........................................          2,042,703              (4,144,570)
               Inventories................................................         (3,686,710)             (3,509,447)
               Prepaid expenses...........................................             21,968                (698,446)
               Accounts payable and accrued expenses......................          1,433,290               1,929,713
               Accrued payroll and payroll taxes..........................           (350,886)               (120,730)
               Advance from customer......................................                  -                   3,646
               Other......................................................             14,536                (216,711)
                                                                           ------------------      ------------------
          Net cash provided by (used in) operating activities.............          3,782,110              (3,985,971)
                                                                           ------------------      ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
          Capital expenditures............................................         (5,485,561)             (2,394,742)
          Investment in joint ventures....................................           (247,552)               (490,000)
                                                                           ------------------      ------------------
               Net cash used in investing activities......................         (5,733,113)             (2,884,742)
                                                                           ------------------      ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
          Proceeds from issuance of common stock - stock options..........          2,745,933                 643,855
          Proceeds from issuance of common stock - 401(k)Plan.............             45,230                 124,466
                                                                           ------------------      ------------------
          Net cash provided by financing activities.......................          2,791,163                 768,321
                                                                           ------------------      ------------------

NET INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS.......................................................            840,160              (6,102,392)

CASH AND CASH EQUIVALENTS AT BEGINNING
   OF PERIOD..............................................................         25,338,239               6,545,095
                                                                           ------------------      ------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD................................ $       26,178,399      $          442,703
                                                                           ==================      ==================
</TABLE>

          See accompanying notes to consolidated financial statements

                                       4
<PAGE>

                                AstroPower, Inc.

                         Notes to Financial Statements
                               September 30, 2000
                                  (unaudited)



(1)  General

     The accompanying financial statements for the three-month and nine-month
     periods ended September 30, 2000 and 1999 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
     financial position and operating results of the Company as of and for the
     respective periods. Certain information and footnote disclosures normally
     included in annual financial statements prepared in accordance with
     generally accepted accounting principles 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 financial statements should be read in
     conjunction with the financial statements contained in the Company's Annual
     Report on Form 10-K for the year ended December 31, 1999.

(2)  Inventories

     A summary of inventories is as follows:


                                  Sept. 30,       Dec. 30,
                                    2000            1999
                                -----------     ----------
                                 (unaudited)
     Raw materials              $ 9,453,916      5,014,912
     Work-in-progress               405,815        550,069
     Finished goods               1,650,361      2,258,401
                                -----------     ----------
                                $11,510,092      7,823,382
                                ===========     ===========

(3)  Contingencies (unaudited)

    In October 2000, the United States government filed a civil action against
us in the U.S. District Court for the District of Delaware to recover damages
and penalties with respect to the submission of the invoices and Incurred Cost
Submissions in connection with contracts with the U.S. Department of Defense
and U.S. Department of Energy. The allegations in the complaint involve our
Incurred Cost Submissions, which are used to determine indirect cost rates, for
the period from 1991 through 1995, and invoices submitted between July 1994 and
January 1996. The complaint alleges that we falsely claimed that certain costs
were properly allocable to the government contracts when those costs were
attributable to a commercial venture, resulting in overpayments to us in excess
of at least $2.3 million and seeks treble damages and penalties aggregating
approximately $7.9 million. We have been in a dispute with respect to our
indirect cost rates with the government since 1996 and this action follows our
inability to resolve our differences. The government had previously audited and
accepted our indirect cost rate structure for 1991 through 1993.

    This action is in the early procedural stages. Accordingly, we cannot
predict the timetable on which this action will proceed. We disagree with the
allegations in the complaint and believe that we have valid defenses to the
government's claims. We intend to defend this action vigorously. However,
because litigation is subject to uncertainties, it is not possible for us to
predict the outcome of this action. An unfavorable outcome could have a
material adverse effect on our operating results and cash flows in the quarter
in which this action is resolved, but we do not expect that an unfavorable
outcome would have a material adverse effect on our business or financial
condition. In addition, defending this action may be costly and may divert our
management's attention.

    We are not party to any other material litigation and we are not aware of
any other pending or threatened litigation against us that could have a
material adverse effect upon our business, operating results or financial
condition.

                                       5

<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 SunChoiceTM
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-FilmTM manufacturing capacity. We
recognize product sales revenue upon shipment. Product sales represented 93.7%
and 93.1% of total revenues for the three months and nine months ended September
30, 2000, 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-FilmTM 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.

    For the three months and nine months ended September 30, 2000, 75.8% and
79.7% 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 SunChoiceTM 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 percentages 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.

    Substantially all of our revenues from government contracts are subject to
audit under various federal statutes. We have been in a dispute about indirect
cost rates with the government since 1996 and have, to date, been unable to
resolve our differences. In October 2000, the United States government filed a
civil action against us in the U.S. District Court for the District of
Delaware 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. The allegations in
the complaint involve our Incurred Cost Submissions, which are used to
determine indirect cost rates, for the period from 1991 through 1995, and
invoices submitted between July 1994 and January 1996. The government had
previously audited and accepted our indirect cost rate structure for 1991
through 1993. The complaint alleges that we falsely claimed that certain costs
were properly allocable to the government contracts when those costs were
attributable to a commercial venture, resulting in overpayments to us of at
least $2.3 million and seeks treble damages and penalties aggregating
approximately $7.9 million. Our proposed final indirect cost rates for 1996
have been submitted but have not yet been audited. This dispute does not affect
our indirect cost rates for 1997, 1998 and 1999, inasmuch as we revised our
methodology for determining those rates.

    This action is in the early procedural stages. Accordingly, we cannot
predict the timetable on which this action will proceed. We disagree with the
allegations in the complaint and believe that we have valid defenses to the
government's claims. We intend to defend this action vigorously. However,
because litigation is subject to uncertainties, it is not possible for us to
predict the outcome of this action. An unfavorable outcome could have a
material adverse effect on our operating results and cash flows in the quarter
in which this action is resolved, but we do not expect that an unfavorable
outcome would have a material adverse effect on our business or financial
condition. In addition, defending this action may be costly.

                                       6
<PAGE>

Results of Operations

Comparison of the Three Months Ended September 30, 2000 and 1999

Revenues - Our total revenues were $13.4 million for the three months ended
September 30, 2000, an increase of $4.0 million or 43.3% from 1999. Product
sales were $12.6 million for the three months ended September 30, 2000, an
increase of $4.0 million or 46.3% from 1999. Our increase in product sales was
due to higher production volumes, resulting from both manufacturing capacity
expansion and improvements in manufacturing productivity, as well as continued
strong demand for our products. Research contract revenues were $848,000 for the
three months ended September 30, 2000, an increase of $78,000 or 10.1% from
1999.

Gross profit - Our gross profit was $4.0 million for the three months ended
September 30, 2000, an increase of $1.4 million or 51.8% from 1999. Product
gross profit for 2000 was $3.8 million, an increase of $1.3 million or 50.4%
from 1999. Our product gross margin was 30.1% for the three months ended
September 30, 2000. In the similar 1999 period, the product gross margin was
29.3%. The increase in product gross margins was due to increased production
levels as compared to the year ago period. However, product gross margin
declined slightly from 30.3% in the three months ended June 30, 2000, as a
result of the effects of our increased capacity expansion. Our gross profit on
research contracts for the three months ended September 30, 2000 was $211,000,
an increase of $94,000 or 80.3% from the 1999 period.

Product development costs - Our product development costs for the three months
ended September 30, 2000 were $920,000, up $425,000 or 85.9% from 1999. The
increase is due to a higher level of development activity for our Silicon-Film
products and portable battery charger products.

General and administrative expenses - Our general and administrative expenses
for the three months ended September 30, 2000 were $1.3 million, an increase of
$483,000 or 60.1% from the similar 1999 period. The increase is primarily due to
higher levels of salaries as a result of additional positions to support our
growth, professional fees, insurance expenses and certain costs of being a
public company such as annual report, proxy solicitations and other related
costs.

Selling expenses - Our selling expenses for the three months ended September 30,
2000 were $1.1 million, an increase of $694,000 or 175.3% from 1999. The
increase is due to higher salary costs and relocation costs as a result of
additions to the sales and marketing staff, increased advertising expenditures
and higher travel costs.

Professional fees related to overhead dispute - Our professional fees related to
our overhead dispute (refer to Part II, Item I) for the three months ended
September 30, 2000 were $284,000, an increase of $272,000 from the similar 1999
period. This increase is due to the high level of activity, and related
professional fees, related to the dispute during the third quarter of 2000.

Interest income - Our interest income for the three months ended September 30,
2000 was $384,000, as compared with $12,000 in the 1999 period. The increase was
due to higher cash balances available for investment as a result of our public
offering in the fourth quarter of 1999.

Equity in losses of joint ventures - Equity in the losses of joint ventures was
$8,000 for the three months ended September 30, 2000. There was no comparable
amount in the same period in 1999. The ventures did not have significant
operations until the fourth quarter of 1999.

Income taxes - Income taxes for the three months ended September 30, 2000 were
$158,000, as compared with $275,000 in 1999. The effective tax rate for the 2000
period was 20%, as compared to 30% in the comparable 1999 period. 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.
The reduction in the effective tax rate is due to a higher percentage of
international sales in 2000 as compared to 1999, as well as higher levels of
research and experimentation tax credits.

                                       7
<PAGE>

Results of Operations

Comparison of the Nine Months Ended September 30, 2000 and 1999

Revenues - Our total revenues were $35.7 million for the nine months ended
September 30, 2000, an increase of $11.2 million or 45.9% from 1999. Product
sales were $33.3 million for the nine months ended September 30, 2000, an
increase of $11.1 million or 50.3% from 1999. Our increase in product sales was
due to higher production volumes, resulting from both manufacturing capacity
expansion and improvements in manufacturing productivity, as well as continued
strong demand for our products. Research contract revenues were $2.5 million for
the nine months ended September 30, 2000, an increase of $100,000 or 4.4% from
1999.

Gross profit - Our gross profit was $10.9 million for the nine months ended
September 30, 2000, an increase of $4.2 million or 63.4% from 1999. Product
gross profit for 2000 was $10.2 million, an increase of $4.1 million or 67.6%
from 1999. Our product gross margin was 30.7% for the nine months ended
September 30, 2000. In the similar 1999 period, the product gross margin was
27.5%. The increase in product gross margins was due to continued improvements
in productivity as well as increased production volumes and revenue contribution
from our second manufacturing plant which came on-line in the second quarter of
1998. Our gross profit on research contracts for the nine months ended September
30, 2000 was $663,000, an increase of $104,000 or 18.5% from the 1999 period.

Product development expenses - Our product development expenses for the nine
months ended September 30, 2000 were $2.3 million, up $723,000 or 47.0% from
1999. The increase is due to a higher level of development activity for our
Silicon-Film products and our portable battery charger products.

General and administrative expenses - Our general and administrative expenses
for the nine months ended September 30, 2000 were $3.1 million, an increase of
$985,000 or 45.7% from the similar 1999 period. The increase is primarily due to
higher levels of salaries as a result of additional positions to support our
growth, professional fees, insurance expenses and certain costs of being a
public company such as annual report, proxy solicitations and other related
costs.

Selling expenses - Our selling expenses for the nine months ended September 30,
2000 were $2.4 million, an increase of $1.5 million or 147.1% from 1999. The
increase is due to higher salary costs and relocation costs as a result of
additions to the sales and marketing staff, increased advertising expenditures
and higher travel costs.

Professional fees related to overhead dispute - Our professional fees related to
our overhead dispute (refer to Part II, Item I) for the nine months ended
September 30, 2000 were $326,000, an increase of $274,000 from the similar 1999
period. This increase is due to the high level of activity, and related
professional fees, related to the dispute during the third quarter of 2000.

Interest income - Our interest income for the nine months ended September 30,
2000 was $1.1 million, as compared with $69,000 in the 1999 period. The increase
was due to higher cash balances available for investment, as a result of our
public offering in the fourth quarter of 1999.

Equity in losses of joint ventures - Equity in the losses of joint ventures was
$88,000 for the nine months ended September 30, 2000. There was no comparable
amount in the same period in 1999. The ventures did not have significant
operations until the fourth quarter of 1999.

Income taxes - Income taxes for the nine months ended September 30, 2000 were
$954,000, as compared with $588,000 in 1999. The effective tax rate for the 2000
period was 26.1% as compared with 30.0% in the 1999 period. 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. The
reduction in the effective tax rate is due to a higher percentage of
international sales in 2000 as compared to 1999, as well as higher levels of
research and experimentation tax credits.

                                       8
<PAGE>

Liquidity and Capital Resources

    At September 30, 2000, we had cash of $26.2 million, as compared with $25.3
million at December 31, 1999. Cash provided by operating activities of $3.7
million for the nine months ended September 30, 2000 was principally due to
decreases in accounts receivable balances. Cash used in operating activities
for the nine months ended September 30, 1999 of $4.0 million was principally
due to increases in accounts receivable and inventory.

    Cash used in investing activities of $5.6 million and $2.9 million for the
nine months ended September 30, 2000 and 1999, respectively, was principally
due to capital expenditures for the increase of manufacturing capacity.

    Net cash provided from financing activities of $2.8 million and $768,000
for the nine months ended September 30, 2000 and 1999, respectively, was
principally due to the exercise of stock options.

    Our sources of liquidity as of September 30, 2000 consist principally of
cash of $26.2 million and available bank credit lines of $4 million. Any
borrowings under our bank facilities will be secured by accounts receivable,
inventory and machinery and equipment.

    We expect that our available cash balance, our projected cash generated from
operations and available bank credit lines will be sufficient to fund our
activities for at least the next 18 months.

                                       9
<PAGE>

                               AstroPower, Inc.
            FORM 10-Q FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000


                          PART II:  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

    In October 2000, the United States government filed a civil action against
us in the U.S. District Court for the District of Delaware to recover damages
and penalties with respect to the submission of the invoices and Incurred Cost
Submissions in connection with contracts with the U.S. Department of Defense
and U.S. Department of Energy. The allegations in the complaint involve our
Incurred Cost Submissions, which are used to determine indirect cost rates, for
the period from 1991 through 1995, and invoices submitted between July 1994 and
January 1996. The complaint alleges that we falsely claimed that certain costs
were properly allocable to the government contracts when those costs were
attributable to a commercial venture, resulting in overpayments to us in excess
of at least $2.3 million and seeks treble damages and penalties aggregating
approximately $7.9 million. We have been in a dispute with respect to our
indirect cost rates with the government since 1996 and this action follows our
inability to resolve our differences. The government had previously audited and
accepted our indirect cost rate structure for 1991 through 1993.

    This action is in the early procedural stages. Accordingly, we cannot
predict the timetable on which this action will proceed. We disagree with the
allegations in the complaint and believe that we have valid defenses to the
government's claims. We intend to defend this action vigorously. However,
because litigation is subject to uncertainties, it is not possible for us to
predict the outcome of this action. An unfavorable outcome could have a
material adverse effect on our operating results and cash flows in the quarter
in which this action is resolved, but we do not expect that an unfavorable
outcome would have a material adverse effect on our business or financial
condition. In addition, defending this action may be costly and may divert our
management's attention.

    We are not party to any other material litigation and we are not aware of
any other pending or threatened litigation against us that could have a
material adverse effect upon our business, operating results or financial
condition.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          Exhibits

          Exhibit No.              Description
          -----------              -----------

             3.5                   Form of Certificate of Amendment of Amended
                                   and Restated Certificate of Incorporation of
                                   AstroPower, Inc., dated June 15, 2000

             10.36                 Third Amendment to Lease, dated June 28,
                                   2000, by and between RREEF America Reit II
                                   Corp. E and AstroPower, Inc.

             27                    Financial Data Schedule

                                       10
<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:  November 3, 2000            By: /s/      Allen M. Barnett
                                       --------------------------------------
                                                Allen M. Barnett
                                       President and Chief Executive Officer



Date:  November 3, 2000            By: /s/      Thomas J. Stiner
                                       --------------------------------------
                                                Thomas J. Stiner
                                            Senior Vice President and
                                             Chief Financial Officer
                                          (Principal Financial Officer)

                                       11