<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 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 quarterly period ended June 30, 1999
                                                      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 0-29038

                            TANISYS TECHNOLOGY, INC.
             (Exact name of registrant as specified in its charter)

                        WYOMING                                74-2675493
            (State or other jurisdiction of                 (I.R.S. Employer
             incorporation or organization)              Identification Number)

          12201 TECHNOLOGY BLVD., SUITE 125
                    AUSTIN, TEXAS                                 78727
       (Address of principal executive offices)                (Zip Code)

                                 (512) 335-4440
              (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

         Indicated below are the number of shares outstanding of the
Registrant's common stock at July 30, 1999:

                                                         NUMBER OF SHARES
                           TITLE OF CLASS                  OUTSTANDING
                           --------------                  -----------
                    Common Stock, no par value              24,023,698

<PAGE>

                    TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES

                                      INDEX
<TABLE>
<S>                                                                                                        <C>
PART I  FINANCIAL INFORMATION
Item 1.   Interim Consolidated Financial Statements (Unaudited)
           Consolidated Balance Sheets - June 30, 1999 and September 30, 1998.............................  3
           Consolidated Statements of Operations - For the Three Month and Nine Month Periods Ended
            June 30, 1999 and 1998........................................................................  4
           Consolidated Statements of Cash Flows - For the Three Month and Nine Month Periods
            Ended June 30, 1999 and 1998..................................................................  5
           Notes to Interim Consolidated Financial Statements ............................................  6
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of
           Operations.....................................................................................  10
Item 3.   Quantitative and Qualitative Disclosures About Market Risk......................................  15

PART II OTHER INFORMATION
Item 1.   Legal Proceedings...............................................................................  15
Item 2.   Changes in Securities and Use of Proceeds.......................................................  15
Item 4.   Other Information...............................................................................  16
Item 5.   Exhibits and Reports on Form 8-K ...............................................................  16
SIGNATURES................................................................................................  19
</TABLE>


                                       2

<PAGE>

                                        PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                  TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                                         CONSOLIDATED BALANCE SHEETS
                                                 (UNAUDITED)
<TABLE>
<CAPTION>
                                                                             JUNE 30,       SEPTEMBER 30,
                                                                               1999             1998
------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>            <C>
 ASSETS
 Current assets:
      Cash and cash equivalents                                               $   556,435       $   253,107
      Restricted cash                                                             145,017           154,271
      Trade accounts receivable, net of allowance of $333,703 and
         $406,157, respectively                                                 7,912,558         4,206,919
      Inventory                                                                 3,554,099         3,224,671
      Prepaid expenses and other                                                  642,772           643,398
------------------------------------------------------------------------------------------------------------
         Total current assets                                                  12,810,881         8,482,366
------------------------------------------------------------------------------------------------------------
 Property and equipment, net of accumulated depreciation of
      $3,409,127 and $3,053,548, respectively                                   5,044,443         6,751,800
 Other noncurrent assets                                                          771,729           679,134
------------------------------------------------------------------------------------------------------------
         Total assets                                                         $18,627,053     $  15,913,300
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
      Accounts payable                                                        $ 5,473,137     $   4,648,129
      Accrued liabilities                                                       1,484,018         4,177,286
      Revolving credit note                                                     5,575,462         2,266,260
      Current portion of obligations under capital lease                          446,282           262,171
------------------------------------------------------------------------------------------------------------
         Total current liabilities                                             12,978,899        11,353,846
------------------------------------------------------------------------------------------------------------
 Long-term debt to shareholders, net of discount                                1,668,484                 -
 Long-term portion of obligations under capital lease                           1,257,102           754,751
------------------------------------------------------------------------------------------------------------
         Total liabilities                                                     15,904,485        12,108,597
------------------------------------------------------------------------------------------------------------
 Mandatorily redeemable convertible preferred stock:
      5% Series A Convertible Preferred Stock, $1 par value, 400 shares
         authorized, 230 and 400 shares issued and outstanding,
         respectively                                                           1,872,181         2,390,475
------------------------------------------------------------------------------------------------------------
 Stockholders' equity:
      Common stock, no par value, 50,000,000 shares authorized,
         23,942,021 and 20,799,714 shares issued and outstanding,
         respectively                                                          31,729,174        29,114,774
      Additional paid-in capital                                                1,687,312         1,687,312
      Accumulated other comprehensive loss                                        (54,505)           (2,625)
      Accumulated deficit                                                     (32,511,594)      (29,385,233)
------------------------------------------------------------------------------------------------------------
         Total stockholders' equity                                               850,387         1,414,228
------------------------------------------------------------------------------------------------------------
         Total liabilities and stockholders' equity                           $18,627,053     $  15,913,300
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
      THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE INTERIM CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

                                       3
<PAGE>

                                  TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                                 (UNAUDITED)
<TABLE>
<CAPTION>
                                                                   FOR THE THREE MONTHS           FOR THE NINE MONTHS
                                                                      ENDED JUNE 30,                ENDED JUNE 30,
                                                                    1999           1998           1999           1998
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>           <C>           <C>          <C>
 Net sales                                                         $13,113,602   $ 6,774,445   $40,553,075   $23,981,692
 Cost of goods sold                                                 10,198,661     6,138,178    32,997,915    19,927,368
-------------------------------------------------------------------------------------------------------------------------
 Gross profit                                                        2,914,941       636,267     7,555,160     4,054,324
-------------------------------------------------------------------------------------------------------------------------
 Operating expenses:
      Research and development                                         726,633       638,498     1,906,862     2,115,613
      Sales and marketing                                              876,568       739,684     2,535,806     2,093,590
      General and administrative                                     1,227,341     1,097,717     3,700,944     3,385,568
      Depreciation and amortization                                    213,341       479,361       670,508     2,611,187
      Bad debt expense                                                       -       108,925             -       350,868
-------------------------------------------------------------------------------------------------------------------------
        Total operating expenses                                     3,043,883     3,064,185     8,814,120    10,556,826
-------------------------------------------------------------------------------------------------------------------------
 Operating loss                                                       (128,942)   (2,427,918)   (1,258,960)   (6,502,502)
-------------------------------------------------------------------------------------------------------------------------
 Other income (expense):
      Interest income                                                    7,645        15,917        41,034        50,127
      Interest expense                                                (344,001)     (152,190)     (966,454)     (459,413)
      Other                                                              5,258             -        37,308             -
-------------------------------------------------------------------------------------------------------------------------
 Net loss                                                          $  (460,040)  $(2,564,191)  $(2,147,072)   (6,911,788)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
 Reconciliation of net loss to net loss applicable to common stock:
      Net loss                                                     $  (460,040)  $(2,564,191)  $(2,147,072)  $(6,911,788)
      Preferred stock dividends and amortization of the
       value of the beneficial conversion feature on the
       preferred stock                                                 (30,235)            -      (979,290)            -
-------------------------------------------------------------------------------------------------------------------------
 Net loss applicable to common stock                               $  (490,275)  $(2,564,191)  $(3,126,362)  $(6,911,788)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
 Basic and diluted loss per common share                           $     (0.02)  $     (0.12)  $     (0.14)  $     (0.34)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
 Weighted average number of common shares                           23,819,622    20,729,714    22,655,977    20,568,707
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
             THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE INTERIM CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

                                       4
<PAGE>

                                  TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                 (UNAUDITED)
<TABLE>
<CAPTION>
                                                              FOR THE THREE MONTHS         FOR THE NINE MONTHS
                                                                 ENDED JUNE 30,              ENDED JUNE 30,
                                                               1999          1998          1999          1998
-------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>           <C>           <C>           <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                   $  (460,040)  $(2,564,191)  $(2,147,072)  $(6,911,788)
 Adjustment to reconcile net loss to net cash used in
   operating activities:
     Depreciation and amortization                              569,119       667,959     1,600,160     2,948,091
 Changes in operating assets:
   Restricted cash                                             (144,809)      142,653         9,254     1,531,327
   Accounts receivable, net                                     742,977       209,435    (3,787,552)     (538,935)
   Inventory                                                   (647,746)     (323,359)     (461,634)      616,921
   Prepaid expenses and other                                   150,287        52,257       (71,869)      (57,799)
 Changes in accounts payable and accrued liabilities            541,286     2,222,502       477,517     4,615,338
-------------------------------------------------------------------------------------------------------------------
     Net cash provided by or (used in) operating activities     751,074       407,256    (4,381,196)    2,203,155
-------------------------------------------------------------------------------------------------------------------
 CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of fixed assets                                     (151,611)   (1,404,791)     (782,012)   (3,920,457)
 Proceeds from sale of property and equipment                          -            -             -        21,637
-------------------------------------------------------------------------------------------------------------------
     Net cash (used in) investing activities                   (151,611)   (1,404,791)     (782,012)   (3,898,820)
-------------------------------------------------------------------------------------------------------------------
 CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of debt to shareholders                       -             -     2,000,000             -
 Payment of debt financing costs                                      -             -       (21,350)            -
 Proceeds from issuance of preferred stock                            -     3,605,000             -     3,605,000
 Proceeds from issuance of common stock                               -             -             -       182,000
 Draws (payments) on revolving credit note, net              (1,488,325)     (903,427)    3,309,202      (848,928)
 Payments on capital lease obligations                         (110,975)      574,623      (360,754)      560,494
 Proceeds from exercise of stock options and warrants                 -             -       496,250       253,250
 Other                                                           (4,268)            -        43,188        (2,625)
-------------------------------------------------------------------------------------------------------------------
     Net cash (used in) or provided by financing  activities (1,603,568)    3,276,196     5,466,536     3,749,191
-------------------------------------------------------------------------------------------------------------------
 Increase (decrease) in cash and cash equivalents            (1,004,105)    2,278,661       303,328     2,053,526
 Cash and cash equivalents, beginning of period               1,560,540     1,764,882       253,107     1,990,017
-------------------------------------------------------------------------------------------------------------------
 Cash and cash equivalents, end of period                   $   556,435   $ 4,043,543   $   556,435   $ 4,043,543
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
      Cash paid for interest                                $   324,753   $   152,191   $   716,137   $   459,413
      Interest received                                           7,645        15,917        41,034        50,127
 NON-CASH INVESTING AND FINANCING ACTIVITIES:
      Capital lease additions                                         -             -     1,094,039             -
      Issuance of stock warrants for compensation                30,000             -       105,000        32,000
      Issuance of stock warrants in connection with issuance
         of debt to shareholders                                      -             -       461,538             -
      Preferred stock dividends paid in common stock             33,279             -        85,047             -
      Preferred stock dividends accrued                          30,235             -       108,002             -
      Amortization of beneficial conversion feature on
         preferred stock                                              -             -       865,493             -
      Conversion of preferred stock to common stock             203,498             -     1,383,787             -
     Accrued fixed assets not acquired & other                        -             -      (889,209)            -
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
          THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE INTERIM CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
                                       5
<PAGE>

                                           TANISYS TECHNOLOGY, INC.
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                 (UNAUDITED)

NOTE 1:    BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
           ACCOUNTING POLICIES

BASIS OF PRESENTATION

         The accompanying consolidated financial statements present the
financial position, results of operations and cash flows of Tanisys
Technology, Inc. ("Tanisys") and its wholly owned subsidiaries (collectively
referred to as the "Company") as of the dates and for the periods indicated.
All material intercompany accounts and transactions have been eliminated in
consolidation. All adjustments have been made to the accompanying interim
consolidated financial statements which are, in the opinion of the Company's
management, necessary for fair presentation of the Company's operating
results.

         The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. It is recommended that these interim consolidated
financial statements be read in conjunction with the Company's consolidated
financial statements and the notes thereto for the fiscal year ended
September 30, 1998 contained in the Company's Form 10-K as filed with the
Securities and Exchange Commission on December 29, 1998.

NOTE 2:  INVENTORY

         Inventory consists of the following:
<TABLE>
<CAPTION>
                                         JUNE 30,       SEPTEMBER 30,
                                           1999              1998
-----------------------------------------------------------------------
<S>                                    <C>              <C>
 Raw materials                         $  2,706,214     $    2,770,338
 Work-in-process                            491,224            280,445
 Finished goods                             356,661            173,888
-----------------------------------------------------------------------
 Total inventory                       $  3,554,099     $    3,224,671
-----------------------------------------------------------------------
-----------------------------------------------------------------------
</TABLE>

         Inventory is stated at the lower of cost or market value. Inventory
costs include direct materials, direct labor and certain indirect
manufacturing overhead expenses.

NOTE 3:  LONG-TERM DEBT

         In November 1998, the Company issued $2 million in debt with
attached stock warrants to certain stockholders of the Company. The debt is
due in two years and carries an interest rate of 10 percent per annum, due
quarterly and payable in either unregistered shares of common stock or cash,
at the option of the Company. One stock warrant was issued for each dollar of
debt, resulting in the issuance of 2 million stock warrants. Each warrant is
exercisable into one share of common stock at an exercise price of $0.25 per
share. The exercise price increases to $0.50 per share after August 1, 1999,
and $1.00 per share after October 1, 2000. The warrants expire on November 1,
2001. Through June 30, 1999 the noteholders had been issued 1,350,000 shares
of common stock upon the exercise of the warrants. The stock warrants and
underlying shares of common stock carry no registration rights.

                                       6

<PAGE>

         The Company determined the fair value of the warrants to be
approximately $462 thousand on the date of issuance, and has reflected this
value as a discount on the debt. The debt discount is being amortized to
interest expense over the life of the related debt. Long-term debt to
shareholders consists of the following at June 30, 1999:
<TABLE>
-----------------------------------------------------------------------------
<S>                                                            <C>
Notes payable to shareholders, interest of 10% per annum
      Payable quarterly in cash or common stock,
      Unsecured, due November 1, 2000                          $   2,000,000
      Less - unamortized discount                                  (331,516)
-----------------------------------------------------------------------------
 Long-term debt to shareholders, net of discount               $   1,668,484
-----------------------------------------------------------------------------
</TABLE>
         In connection with the placement and issuance of this debt, the
Company incurred costs of $21 thousand and issued 100,000 stock warrants to
the Company's chairman of the board and 25,000 stock warrants to its external
counsel. Each warrant is exercisable into one share of common stock at $0.01
per share, and the warrants expire on November 1, 2001. As of June 30, 1999,
all of these warrants had been exercised for 125,000 shares of common stock.
These shares of common stock carry no registration rights. The Company valued
the warrants at $0.60 per share, or $75 thousand. The total debt issuance
costs of $96 thousand have been reflected in other noncurrent assets in the
accompanying unaudited consolidated balance sheet and are being amortized
over the life of the related debt.

NOTE 4:  PREFERRED STOCK

         Pursuant to a Convertible Stock Purchase Agreement dated June 30,
1998 (the "Stock Purchase Agreement"), the Company issued 400 shares of its 5
percent Series A Convertible Preferred Stock, par value $1.00 per share
("Series A Stock"), for $4 million.

         The Series A Stock is convertible into the Company's common stock at
the option of the holder beginning 90 days after the June 30, 1998 closing
date. The Company agreed to register the underlying common stock by October
15, 1998 and completed the registration on August 13, 1998. The conversion
price is the lesser of the fixed conversion price of $2.31 per share or a
variable conversion price based on 80 percent of the average of the three
lowest prices of the common stock in the 30 consecutive days preceding each
conversion. On the closing date, the variable conversion price was lower than
the fixed conversion price, resulting in an immediate benefit to the
preferred stockholders of approximately $1.4 million. The $1.4 million value
of this beneficial conversion feature was reflected as a discount to the
carrying value of the preferred stock and as an increase to paid-in capital.
As of March 31, 1999, the $1.4 million of the beneficial conversion feature
was fully amortized and charged to accumulated deficit.

         The Series A Stock carries mandatory redemption rights that can be
exercised by the holder if certain triggering events occur. Subsequent to
June 30, 1999, the Company's common stock was delisted from trading on the
Nasdaq SmallCap Market, but is currently traded on the OTC Bulletin Board
(see Note 8). The delisting was a triggering event under the Stock Purchase
Agreement; however, the holder has not informed the Company of any intent to
exercise its redemption rights. The Company cannot estimate if or when the
holder will exercise its redemption rights. Therefore, the mandatory
redemption feature has not been valued. Should the holder exercise its right,
the Company will record a charge to the accumulated deficit equal to the
difference between the redemption price and the carrying value of the Series
A Stock.

         Dividends are payable quarterly in registered shares of common
stock, but must be paid in cash upon the occurrence of certain events.

         Attached to the Series A Stock were warrants to purchase 199,999
shares of common stock at $3.00 per share. The warrants currently are
exercisable and have a term of four years. The Company valued the warrants at
approximately $284,000 and reflected this amount in additional paid-in
capital.

         During the first two quarters of fiscal 1999, the holder of the
preferred stock converted 145 shares of preferred stock into 1,167,709 common
shares. During the third quarter of fiscal 1999, an additional 25 shares of
preferred stock were converted into 252,017 common shares.

                                       7
<PAGE>
                  At June 30, 1999, the carrying value of the Series A Stock
consists of the following:
<TABLE>
----------------------------------------------------------------------------
<S>                                                           <C>
Balance, September 30, 1998                                   $   2,390,475
      Conversion of 170 shares of preferred stock
         to 1,419,726 shares of common stock                     (1,383,787)
      Amortization of beneficial conversion feature                 865,493
----------------------------------------------------------------------------
 Balance, June 30, 1999                                       $   1,872,181
----------------------------------------------------------------------------
</TABLE>
NOTE 5:  LOSS PER SHARE

         Loss per share has been calculated in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." Basic
loss per share is computed by dividing the net loss applicable to common
stock by the weighted average number of common shares outstanding during the
period. Diluted loss per share is computed by dividing net loss applicable to
common stock by the weighted average number of common and common equivalent
shares (if dilutive). Diluted loss per share is the same as basic loss per
share since the effect of common equivalent shares and assumed conversion of
the convertible preferred stock is antidilutive. Following is a
reconciliation of the basic and diluted loss per share computations:
<TABLE>
<CAPTION>
                                          FOR THE THREE MONTHS ENDED        FOR THE NINE MONTHS ENDED
                                                     JUNE 30,                         JUNE 30,
                                              1999             1998             1999           1998
----------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>             <C>            <C>
 Net loss                                   $  (460,040)    $(2,564,191)   $(2,147,072)    $(6,911,788)
 Less-
      Preferred stock dividends                 (30,235)              -       (113,797)              -
      Amortization of the value of the
         beneficial conversion feature
         on the preferred stock                       -               -       (865,493)              -
----------------------------------------------------------------------------------------------------------
 Net loss applicable to common stock
      (basic and diluted)                   $  (490,275)    $(2,564,191)   $(3,126,362)    $(6,911,788)
----------------------------------------------------------------------------------------------------------
 Weighted average common shares used in
      computing basic and diluted Loss
      applicable to common stock
      Per share                              23,819,622      20,729,714     22,655,977      20,568,707
----------------------------------------------------------------------------------------------------------
 Loss applicable to common stock per
      Share (basic and diluted)             $     (0.02)    $     (0.12)   $     (0.14)    $     (0.34)
----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 6:  COMPREHENSIVE INCOME

         Effective October 1, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income." This standard establishes rules for the
reporting of comprehensive income and its components. Comprehensive income
consists of net income and foreign currency translation adjustments, as
follows:
<TABLE>
<CAPTION>
                                         FOR THE THREE MONTHS ENDED       FOR THE NINE MONTHS ENDED
                                                    JUNE 30,                          JUNE 30,
                                             1999             1998              1999             1998
-----------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>             <C>            <C>
 Net loss, as reported                     $  (460,040)   $  (2,564,191)     $  (2,147,072)   $ (6,911,788)
 Foreign currency translation
  adjustment                                   (34,982)               -            (51,880)              -
-----------------------------------------------------------------------------------------------------------
 Comprehensive loss                        $  (495,022)   $  (2,564,191)     $  (2,198,952)   $ (6,911,788)
-----------------------------------------------------------------------------------------------------------
</TABLE>
         The adoption of this standard had no net effect on the Company's net
loss or stockholders' equity for the three months and nine months ended June
30, 1999 and 1998, respectively. Prior year financial statements have been
reclassified to conform to the requirements of this standard.

                                       8
<PAGE>

NOTE 7:  SEGMENT REPORTING

         In June 1997, the Financial Accounting Standards Board issued SFAS
No. 131, "Disclosure about Segments of an Enterprise and Related
Information," which the Company adopted in the first quarter of fiscal 1999.
This standard establishes requirements for reporting information about
operating segments in annual financial statements and requires selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. Under this
standard, operating segments are to be determined consistent with the way
management organizes and evaluates financial information internally for
making operating decisions and assessing performance. The disclosure
provisions of this standard are not applicable for interim periods in the
year of adoption. The adoption of this new standard is not expected to have a
material impact on the Company's financial position or results of operations.

NOTE 8:  SUBSEQUENT EVENT(S)

         On May 11, 1999, the Company received notification from The Nasdaq
Stock Market, Inc. ("Nasdaq") that the Company does not comply with either of
the net tangible asset/market capitalization/net income requirements for
continued listing on the Nasdaq SmallCap Market. Nasdaq had requested that
the Company provide it with plans for complying with the requirements. The
Company appealed the Nasdaq notification and the appeal was heard on June 24,
1999 before a panel authorized by the Nasdaq Board of Directors.

         The basis of the appeal was the Company's reliance on Nasdaq Market
Place Rule 4310(c)(2) stating a $2,000,000 net tangible asset requirement.
The Company believed that the calculation of "net tangible assets" to equal
total assets, less intangibles, less total liabilities. However, in
accordance with Nasdaq unwritten policy, the value of the Series A
Convertible Preferred Stock (see Note 4) was excluded from the calculation of
the Company's net tangible assets, putting the Company in a position of
non-compliance.

         On July 27, 1999, the Company received notice that the Nasdaq Appeal
Panel determined to delist the Company's securities from The Nasdaq SmallCap
Market effective with the close of business July 27, 1999. The Company has
appealed the decision and is considering alternatives to comply with the
requirements for relisting on the Nasdaq SmallCap Market.

         The delisting was a triggering event of the Series A Stock, however,
the holder has not informed the Company if or when the holder will exercise
its redemption rights. (See Note 4)

         On July 28, 1999, the Company's stock began trading on the OTC
Bulletin Board, which was established for securities that do not meet the
Nasdaq SmallCap Market's listing requirements. Consequently, selling the
Company's common stock could be more difficult because of the smaller
quantities of shares that could be bought and sold, transactions could be
delayed, and security analysts' and news media's coverage of the Company
could be reduced. These factors could result in lower prices and larger
spreads in the bid and ask prices for shares of the Company's common stock.
If the Company is able to regain compliance with the particular deficiency,
the Company may be required to demonstrate its ability to sustain long-term
compliance with other applicable maintenance criteria.

                                       9
<PAGE>
         THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS AND INFORMATION RELATING TO TANISYS AND ITS SUBSIDIARIES THAT ARE
BASED ON THE BELIEFS OF THE COMPANY'S MANAGEMENT AS WELL AS ASSUMPTIONS MADE
BY AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY'S MANAGEMENT. WHEN USED
IN THIS REPORT, THE WORDS "ANTICIPATE," "BELIEVE," "ESTIMATE," "EXPECT," AND
"INTEND" AND WORDS OR PHRASES OF SIMILAR IMPORT, AS THEY RELATE TO THE
COMPANY OR ITS MANAGEMENT, ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. SUCH STATEMENTS REFLECT THE CURRENT RISKS, UNCERTAINTIES AND
ASSUMPTIONS RELATED TO CERTAIN FACTORS INCLUDING, WITHOUT LIMITATIONS,
COMPETITIVE FACTORS, GENERAL ECONOMIC CONDITIONS, CUSTOMER CONCENTRATIONS,
CUSTOMER RELATIONSHIPS AND FINANCIAL CONDITIONS, RELATIONSHIPS WITH VENDORS,
THE INTEREST RATE ENVIRONMENT, GOVERNMENTAL REGULATION AND SUPERVISION,
SEASONALITY, DISTRIBUTION NETWORKS, PRODUCT INTRODUCTIONS AND ACCEPTANCE,
TECHNOLOGICAL CHANGE, CHANGES IN INDUSTRY PRACTICES, ONE-TIME EVENTS AND
OTHER FACTORS DESCRIBED HEREIN. BASED UPON CHANGING CONDITIONS, SHOULD ANY ONE
OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD ANY UNDERLYING
ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE
DESCRIBED HEREIN AS ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED OR INTENDED.
THE COMPANY DOES NOT INTEND TO UPDATE THESE FORWARD-LOOKING STATEMENTS.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
OVERVIEW
         The following is a discussion of the interim consolidated financial
condition and results of operations of the Company for the three and
nine-month periods ended June 30, 1999 and 1998. It should be read in
conjunction with the Consolidated Financial Statements, the Notes thereto and
other financial information included elsewhere in this report, and in the
Company's Annual Report Form 10-K for the year ended September 30, 1998 as
filed with the Securities and Exchange Commission on December 29, 1998. For
purposes of the following discussion, references to year periods refer to the
Company's fiscal year ended September 30, 1998 and references to quarterly
periods refer to the Company's fiscal quarters ended June 30, 1999 and 1998.

         On November 2, 1998, the Company issued $2 million in debt with
attached stock warrants to certain stockholders of the Company. The debt is
due in two years and carries an interest rate of 10 percent per annum, due
quarterly, and payable in either unregistered shares of common stock or cash,
at the option of the Company.

RESULTS OF OPERATIONS

         The following table sets forth certain consolidated operations data
of the Company expressed as a percentage of net sales (unaudited) for the
three and nine-month periods ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
                                                      FOR THE THREE          FOR THE NINE
                                                      MONTHS ENDED           MONTHS ENDED
                                                        JUNE 30,               JUNE 30,
                                                      1999      1998        1999      1998
-----------------------------------------------------------------------   -------------------
<S>                                                   <C>       <C>         <C>      <C>
 Net sales                                               100%     100%         100%     100%
 Cost of goods sold                                       78%      91%          81%      83%
-----------------------------------------------------------------------   -------------------
 Gross profit                                             22%       9%          19%      17%
-----------------------------------------------------------------------   -------------------
 Operating expenses:
             Research and development                      6%       9%           5%       9%
             Sales and marketing                           6%      11%           6%       9%
             General and administrative                    9%      16%           9%      14%
             Depreciation and amortization                 2%       7%           2%      11%
             Bad debt expense                              0%       2%           0%       1%
-----------------------------------------------------------------------   -------------------
                        Total operating expenses          23%      45%          22%      44%
-----------------------------------------------------------------------   -------------------
 Operating loss                                           (1%)    (36%)         (3%)    (27%)
-----------------------------------------------------------------------   -------------------
 Other income (expense):
             Interest expense                             (3%)     (2%)         (2%)     (2%)
             Interest income                               0%       0%           0%       0%
             Other income                                  0%       0%           0%       0%
-----------------------------------------------------------------------   -------------------
 Net loss                                                 (4%)    (38%)         (5%)    (29%)
-----------------------------------------------------------------------   -------------------
-----------------------------------------------------------------------   -------------------
</TABLE>
                                       10
<PAGE>

NET SALES

         Net sales consist of build-to-order ("BTO") services, turnkey and
off-the-shelf semiconductor memory modules, memory test solutions and
licensing of the Company's proprietary Tanisys Touch technology, less returns
and discounts. Net sales increased 94% to $13.1 million in the third quarter
of fiscal 1999 from $6.8 million in the same period of fiscal 1998. Net sales
for the nine months of fiscal 1999 increased 69% to $40.6 million from $24.0
million in the same period of fiscal 1998. The increases in sales for the third
quarter and the nine months are due to sales increases for both tester and
memory products. While historical performance is no indicator of future
performance, net sales have increased quarter over quarter for three out of
the past four quarters. Memory sales have increased due to a larger proportion
of modules sold on a turnkey basis where the price includes the Dynamic Random
Access Memory (DRAM), versus modules manufactured on a contractual basis
where the DRAM component is consigned. Many factors will affect the Company's
ability to increase and/or maintain sales levels. See the Company's Form 10-K
as filed with the Securities and Exchange Commission on December 29, 1998 for
a more complete list of "Risk Factors."

COST OF SALES AND GROSS PROFIT

         Cost of sales includes the costs of all components and materials
purchased for the manufacture of products and the direct labor and overhead
costs associated with manufacturing. Gross profit increased 358% to $2.9
million in the third quarter of fiscal 1999 from $636 thousand in the third
quarter of fiscal 1998. Gross profit as a percent of sales increased to 22%
from 9% in the third fiscal quarter over the same period of fiscal 1998. Gross
profit for the nine months of fiscal 1999 increased 86% to $7.6 million from
$4.1 million in the same period of fiscal 1998. Gross profit as a percent of
sales increased to 19% from 17% for the nine months of fiscal 1999 over the
same period of fiscal 1998. The increase in gross margin is a result of
increased sales during the respective periods. The increase in tester sales
has contributed a greater portion of the increase in gross margin than the
turnkey memory products. Variations in the gross margin percentages reflect
the mix of the products sold and the differing margins achieved by each product.

RESEARCH AND DEVELOPMENT

         Research and development expenses consist of the costs associated
with the design and testing of new technologies and products. These relate
primarily to the costs of materials, personnel and employee compensation and
engineering design consulting fees. Research and development expenses
increased by $88 thousand in the third quarter of fiscal 1999 to $727 thousand
from $639 thousand in the same quarter of fiscal 1998. Research and
development expenses for the nine months of fiscal 1999 decreased 10% to $1.9
million from $2.1 million in the same period of fiscal 1998. The decreases in
spending over the same periods of last year reflect completion of the major
architecture of the Company's Darkhorse Sigma 3 tester platform and the
simultaneous decrease in the amount of research and development required on
the Company's legacy Sigma 2 tester platform.

SALES AND MARKETING

         Sales and marketing expenses include all compensation of employees
and independent sales and marketing personnel, as well as the costs of
advertising, promotions, trade shows, travel, direct support and overhead.
Sales and marketing expenses increased 19%, or $137 thousand to $877 thousand
in the third quarter of fiscal 1999 from $740 thousand in same quarter of
fiscal 1998. Sales and marketing expenses as a percentage of sales in the
third quarter of fiscal 1999 decreased to 6% from 11% in the same quarter of
1998. For the nine months of fiscal 1999 sales and marketing expenses
increased 21% to $2.5 million from $2.1 million in the same period of fiscal
1998, an increase of $442 thousand. Sales and marketing expenses as a
percentage of sales for the nine months ended June 30, 1999 decreased to 6%
from 9% as compared to the same period of fiscal 1998. The increases in sales
expenses represent increases in sales activities, including commissions,
while the decreases as a percentage of sales are due to the increased sales
volumes.

                                       11
<PAGE>

GENERAL AND ADMINISTRATIVE

         General and administrative costs consist primarily of personnel costs
and support costs, including compensation, employee benefits, utilities,
insurance, professional fees and all costs associated with a reporting company.
General and administrative expenses for the third fiscal quarter increased
12%, or $100 thousand, to $1.2 million from $1.1 million for the same quarter
of fiscal 1998. General and administrative expenses increased $300 thousand to
$3.7 million in the nine months of fiscal 1999 from the $3.4 million in the
same period of fiscal 1998. The increase was primarily due to the addition of
the Scotland facility. General and administrative expenses when expressed as a
percentage of sales decreased to 9% in the third quarter of fiscal 1999 from
16% in the same quarter of fiscal 1998. General and administrative expenses
when expressed as a percentage of sales for the nine months of fiscal 1999
decreased to 9% from 14% in the same period of fiscal 1998.

DEPRECIATION AND AMORTIZATION

         Depreciation and amortization includes the depreciation for all
fixed assets exclusive of those used in the manufacturing process and
included as part of "cost of sales" and the amortization of intangibles,
including goodwill incurred in the May 1996 acquisitions of 1st Tech
Corporation ("1st Tech") and DarkHorse Systems, Inc. ("DarkHorse").
Depreciation and amortization decreased to $213 thousand in the third quarter
of fiscal 1999 from the $479 thousand in the third quarter of fiscal 1998.
Depreciation and amortization decreased to $671 thousand in the nine months
of fiscal 1999, from the $2.6 million in the same period of fiscal 1998. The
decrease is due primarily to the complete amortization in April 1998 of
goodwill relating to the acquisitions of 1st Tech and DarkHorse. Depreciation
and amortization when expressed as a percentage of sales decreased to 2% in
the third quarter of fiscal 1999, from 7% in the same quarter of fiscal 1998.
Depreciation and amortization when expressed as a percentage of sales for the
nine months of fiscal 1999 decreased to 2% from 11% in the same period of
fiscal 1998.

OTHER INCOME (EXPENSE), NET

         Other income (expense), net, consists primarily of interest income
less interest expense. Interest expense is attributable to borrowings from a
revolving credit note, capital leases and notes payable. A major portion of
the interest expense relates to credit line draws made for short-term
inventory requirements and to fund accounts receivable. Interest income
relates to investment of available cash in short-term interest bearing
accounts and cash equivalent securities. Other income (expense) increased to
$331 thousand in the third quarter of fiscal 1999 from $136 thousand in the
same quarter of fiscal 1998. Other income (expense) increased to $888 thousand
in the nine months of fiscal 1999, from the $409 thousand of the same period
of fiscal 1998. The increases are due primarily to interest expense relating to
capital leases, increased borrowings on the Company's line of credit and the
long-term debt to shareholders.

PROVISION FOR INCOME TAXES

         For the years ended September 30, 1998 and 1997, the Company incurred
consolidated net operating losses for U.S. income tax purposes of
approximately $5.3 million and $6.0 million and for non-U.S. income tax
purposes of approximately $369 thousand and $-0-, respectively. The loss
carryforwards begin to expire in 2011. At September 30, 1998 and 1997, the
Company had temporary differences resulting in future tax deductions of
approximately $756 thousand and $513 thousand, respectively, principally
representing tax basis in accrued liabilities and reserves. Deferred income
tax assets from the loss carryforwards and asset basis differences aggregate
approximately $6.9 million and $4.6 million at September 30, 1998 and 1997,
respectively.

         For financial reporting purposes, a valuation allowance of $6.9
million and $4.7 million at September 30, 1998 and 1997, respectively, has
been recorded to offset the deferred tax assets due to uncertainty as to
whether the benefits will be realized.

         The availability of the net operating loss carryforwards and future
tax deductions to reduce taxable income is subject to various limitations
under the Internal Revenue Code of 1986, as amended (the "Code"), in the event
of an ownership change as defined in Section 382 of the Code. The Company may
lose the benefit of such net operating loss carryforwards due to Internal
Revenue Service ("IRS") Code Section 382 limitations.

                                       12
<PAGE>

This section states that after reorganization or other change in corporate
ownership, the use of certain carryforwards may be limited or prohibited. The
Company believes that the IRS Code Section 382 limitation did not exist at
September 30, 1998 and if triggered, the consequence is expected to have no
material impact on the Company's consolidated financial position or results of
operations.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception, Tanisys has utilized the funds acquired in equity
financings of its common stock and preferred stock, the exercise of stock
warrants and stock options, capital leases, operating leases, vendor credits,
certain bank borrowings and funds generated from operations to support its
operations, carry on research and development activities, acquire capital
equipment, finance inventories and accounts receivable balances and pay its
general and administrative expenses.

         During the third quarter of fiscal 1999, the Company utilized $1.6
million in net cash for financing activities, primarily to pay down the
Company's revolving credit line, and generated $751 thousand of cash in
operating activities. For the nine months of fiscal 1999, the Company
generated $5.5 million in net cash from financing activities of which $3.3
million was from net draws on the Company's revolving credit line and $2.0
million was from long term debt. The Company utilized $4.4 million of cash in
operations during the nine months of fiscal 1999, of which $3.8 million was
associated with an increase in accounts receivable. Capital expenditures
totaled approximately $152 thousand for the third quarter of fiscal 1999 and
$782 thousand for the nine months of fiscal 1999. The Company had $556
thousand in cash and a working capital deficit of $168 thousand at June 30,
1999.

         In the second and third quarters of fiscal 1999, the Company extended
payment terms with some suppliers in order to increase the availability of
on-hand cash. At the present time, the Company is not in compliance with the
agreed payment terms with many of its suppliers and there can be no assurance
that such suppliers will continue to ship supplies to the Company if the
Company does not comply with such terms.

         The Company requires additional equity and/or borrowings to meet its
working capital needs, capital requirements and to supplement its existing
funds, anticipated cash flows from operations and anticipated amounts
available from future vendor credits, bank borrowings, operating and capital
lease financing and long-term borrowings over the next 12 months. The Company
is actively seeking additional or alternate source or sources of investment
but there is no assurance that the Company will be able to locate an
alternate source or sources for the required increase in its outstanding debt
or that it will be successful in its attempts to raise a sufficient amount of
funds in a subsequent equity offering or offerings. In such an event, the
Company's inability to raise needed funds could have a material adverse
effect on the Company.

SUBSEQUENT EVENT(S)

         On May 11, 1999, the Company received notification from The Nasdaq
Stock Market, Inc. ("Nasdaq") that the Company does not comply with either of
the net tangible asset/market capitalization/net income requirements for
continued listing on the Nasdaq SmallCap Market. Nasdaq had requested that the
Company provide it with plans for complying with the requirements. The Company
appealed the Nasdaq notification, and the appeal was heard on June 24, 1999
before a panel authorized by the Nasdaq Board of Directors.

         The basis of the appeal was the Company's reliance on Nasdaq Market
Place Rule 4310(c)(2) stating a $2,000,000 net tangible asset requirement. The
Company believed that the calculation of "net tangible assets" to equal total
assets, less intangibles, less total liabilities. However, in accordance with
Nasdaq's unwritten policy, the value of the Series A Convertible Preferred
Stock was excluded from the calculation of the Company's net tangible assets,
putting the Company in a position of non-compliance.

         On July 27, 1999, the Company received notice that the Nasdaq Appeal
Panel's decision to delist the Company's securities from The Nasdaq SmallCap
Market effective with the close of business July 27, 1999. The Company has
appealed the decision and is considering alternatives to comply with the
requirements for relisting on the Nasdaq SmallCap.

                                       13
<PAGE>

         The delisting was a triggering event of the Series A Stock, however,
the holder has not informed the Company if or when the holder will exercise
its redemption rights.

         On July 28, 1999, the Company's stock began trading on the OTC
Bulletin Board. which was established for securities that do not meet the
Nasdaq SmallCap Market's listing requirements. Consequently, selling the
Company's common stock could be more difficult because of the smaller
quantities of shares that could be bought and sold, transactions could be
delayed, and security analysts' and news media's coverage of the Company
could be reduced. These factors could result in lower prices and larger
spreads in the bid and ask prices for shares of the Company's common stock.
If the Company is able to regain compliance with the particular deficiency,
the Company may be required to demonstrate its ability to sustain long-term
compliance with other applicable maintenance criteria.

SIGNIFICANT CUSTOMER CONCENTRATION

         A significant percentage of the Company's net sales are produced by
a relatively small number of customers. In the third quarter of fiscal 1999,
the ten largest customers accounted for approximately 74% of net sales
compared to approximately 76% in the same period in fiscal 1998. Four
customers represented 17%, 15%, 11% and 9%, respectively, in the third
quarter of fiscal 1999. The customer representing 17% of sales in the third
quarter of fiscal 1999 represented 4% of the Company's sales in same period
of fiscal 1998. In the nine months of fiscal 1999, the ten largest customers
accounted for approximately 74% of net sales compared to approximately 68% in
the same period of fiscal 1998. Four customers represented 10%, 11%, 20% and
11% respectively, in the nine months of fiscal 1999. The customer
representing 20% of sales in the nine months of fiscal 1999 represented 6% of
the Company's sales in the same period of fiscal 1998. While the Company
expects to continue to be dependent on a relatively small number of customers
for a significant percentage of its net sales, there can be no assurance that
any of the top ten customers will continue to utilize the Company's products
or services.

         One of the Company's largest customers, L.G. Semicon has been
purchased by Hyundai Electronics Industries Co., Ltd. (Hyundai). As a result
of this transaction, the operations of the two companies will be combined.
While a relationship exists with Hyundai, Tanisys does not presently have a
contractual relationship. Management of the Company expects to benefit from
the increased sales volumes resulting from the combined companies.

         The Company in general has no firm long-term volume commitments from
its customers and generally enters into individual purchase orders with its
customers. Customer purchase orders are subject to change, cancellation, or
delay with little or no consequence to the customer. The Company has
experienced such changes and cancellations and expects to continue to do so in
the future. The replacement of cancelled, delayed or reduced purchase orders
with new business cannot be assured. The Company's business, financial
condition and results of operations will depend significantly on its ability
to obtain purchase orders from existing and new customers, upon the financial
condition and success of its customers, the success of customers' products and
the general economy. Factors affecting the industries of the Company's major
customers could have a material adverse effect on the Company's business,
financial condition and results of operations.

YEAR 2000 COMPLIANCE

         The Year 2000 problem concerns the inability of certain computer
systems to recognize the year 2000 appropriately when the last two digits of
the year are entered in the date field. The Company has assessed its Year 2000
requirements and believes that its major computer systems and programs are
Year 2000 compliant and that the remaining systems are either already Year
2000 compliant or will become Year 2000 compliant as the Company continues to
replace obsolete or non-functional systems as part of its normal asset
replacement cycle.

         The Company could be adversely affected by the Year 2000 problem if
computer systems of third parties such as banks, suppliers, and others with
which the Company does business fail to address the Year 2000 problem
successfully. Many companies may need further modifications or upgrades to
their information systems to address the Year 2000 problem. The impact that
third parties will have on the Company's business, operating results and
financial condition is unknown. While the Company continues to gather data on
the Year 2000 compliance status of its customers and suppliers, there can be
no assurance that the Year 2000

                                       14
<PAGE>

problem, if experienced by such third parties, will not have a material
adverse effect upon the Company's business, operating results and financial
condition.

         Management believes that the worst case scenario could include
operational downtime, longer lead times, higher costs, and extended delays in
the material supply chain. There can be no assurance that the Company's
suppliers who are Year 2000 complaint will not experience problems. The
effects are unknown, and are uncertain; therefore, no assurances can be made
concerning Year 2000 readiness.

         The Company initiated a Year 2000 compliance project in October 1996,
it is currently 88% compliant with the entire project, and all critical
business systems are 100% compliant. Management expects to spend an additional
$36 thousand for the completion of this project. There has been no deferral of
information technology projects due to accommodate the Year 2000 project.

          The above Year 2000 disclosure constitutes a "Year 2000 Readiness
Disclosure" as defined in The Year 2000 Information and Readiness Disclosure
Act (the "Act"), which was signed into law on October 19, 1998. The Act
provides added protection from liability for certain public and private
statements concerning a company's Year 2000 readiness.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company does not believe that there is any material risk exposure
with respect to derivative or other financial instruments, which would require
disclosure under this item.

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         At the date hereof, there are no pending, or to the best knowledge
of the Company, threatened matters involving litigation involving the Company.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

(a)      Not applicable.

(b)      Not applicable.

(c)      In November 1998, the Company issued $2 million in debt with attached
         stock warrants (the "Warrants") to certain stockholders of the Company
         (the "Noteholders"). The promissory notes evidencing the debt have a
         two-year term and bear interest at 10 percent per annum, with interest
         due quarterly and payable in either unregistered shares of common stock
         or cash, at the option of the Company. One stock warrant was issued for
         each dollar of debt, resulting in the issuance of 2 million stock
         warrants. Each warrant is exercisable into one share of common stock
         beginning December 1, 1998, at an exercise price of $0.25 per share,
         increasing to $0.50 per share after August 1, 1999 and to $1.00 per
         share from October 1, 2000 through the expiration date of November 1,
         2001. 1,350,000 shares of common stock were issued upon exercise of the
         Warrants by the Noteholders as of June 30, 1999. The shares of common
         stock issued in payment of dividends and underlying the warrants were
         not registered under the Securities Act of 1933, as amended (the
         "Securities Act"), pursuant to the exemptions of such registration
         provided under Regulation D ("Regulation D") of the rules and
         regulations promulgated under the Securities Act by the Securities and
         Exchange Commission and Section 4(2) of the Securities Act. The Company
         relied upon certain representations and warranties of the Noteholders,
         including, among other things, their status as "accredited investors"
         (as that term is defined in Rule 501(a) of Regulation D) and their
         ability to evaluate the merits and risks involved and that the Common
         Stock was acquired solely for their own account for investment and not
         with a view to distribution.

         Pursuant to a Convertible Stock Purchase Agreement dated June 30, 1998
         (the "Stock Purchase Agreement") among the Company and KA Investments
         LDC, the Company issued 400 shares of its

                                       15

<PAGE>

         Five Percent Series A Convertible Preferred Stock, par value $1.00 per
         share and stated value of $10,000 per share (the "Series A Stock"), for
         consideration of $4 million. The Series A Stock is convertible into the
         Company's common stock at the option of the holder beginning 90 days
         after the June 30, 1998 closing date. The conversion price is the
         lesser of the fixed conversion price of $2.31 per share or a variable
         conversion price based on 80 percent of the average of the three lowest
         prices of the common stock in the 30 consecutive days preceding each
         conversion. On the closing date, the variable conversion price was
         lower than the fixed conversion price, resulting in an immediate
         benefit to the preferred stockholder of approximately $1.4 million.
         The Series A Stock carries mandatory redemption rights that can be
         exercised by the holder if certain triggering events occur, which
         could require the Company to redeem the Series A Stock for cash based
         on a formula provided in the Stock Purchase Agreement. Dividends are
         payable quarterly in registered shares of common stock but must be paid
         in cash upon the occurrence of certain events. Attached to the Series A
         Stock were four-year warrants to purchase 199,999 shares of common
         stock at $3.00 per share. During the three months ended June 30, 1999,
         the holder of the Series A Stock converted 25 shares of Series A Stock
         into 252,017 shares of common stock. During the nine months ended June
         30, 1999, a total of 170 preferred stock shares have been converted to
         1,419,726 common shares.

ITEM 4.  OTHER INFORMATION

         None.

ITEM 5.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      EXHIBITS:

         The exhibits listed below are filed as part of or incorporated by
reference in this report. Where such filing is made by incorporation by
reference to a previously filed document, such document is identified in
parentheses.
<TABLE>
<CAPTION>
         EXHIBIT
         NUMBER                         DESCRIPTION
         -------                        -----------
         <S>      <C>
         3.1      Articles of Incorporation of Tanisys Technology, Inc., as
                  amended (Exhibit 3.1 to Form S-3 filed August 13, 1998)

         3.2      Restated Bylaws of the Company (Exhibit 3.5 to General Form
                  for Registration of Securities on Form 10, filed November 27,
                  1996)

         4.1      Form of Common Stock Certificate (Exhibit 4.6 to General Form
                  for Registration of Securities on Form 10, filed November 27,
                  1996)

         4.2      Form of Class S Warrant Certificate (Exhibit 4.2 to December
                  31, 1997 Form 10-Q)

         4.3      Registration Rights Agreement dated June 30, 1998 between
                  Tanisys Technology, Inc. and KA Investments LDC (Exhibit 4.1
                  to Form S-3 Registration Statement filed August 13, 1998)

         10.1     Agreement and Plan of Merger dated as of April 9, 1996, by and
                  between Tanisys Technology, Inc., Tanisys Acquisition Corp.,
                  1st Tech Corporation and Gary W. Pankonien ("1st Tech Merger
                  Agreement") (Exhibit 10.3 to General Form for Registration of
                  Securities on Form 10, filed November 27, 1996)

         10.2     Amendment No. 1 dated May 16, 1996, to 1st Tech Merger
                  Agreement (Exhibit 10.4 to General Form for Registration of
                  Securities on Form 10, filed November 27, 1996)

                                       16

<PAGE>

         10.3     Articles of Merger (Delaware) of 1st Tech with and into
                  Tanisys Acquisition Corp., dated May 31, 1996 (Exhibit 10.5 to
                  General Form for Registration of Securities on Form 10, filed
                  November 27, 1996)

         10.4     Articles of Merger (Texas) of 1st Tech with and into Tanisys
                  Acquisition Corp., dated May 31, 1996 (Exhibit 10.6 to General
                  Form for Registration of Securities on Form 10, filed November
                  27, 1996)

         10.5     Agreement and Plan of Merger dated as of April 9, 1996, by and
                  between Tanisys Technology, Inc., Tanisys Acquisition Corp.
                  II, DarkHorse Systems, Inc., Jack Little, Archer Lawrence and
                  Gary W. Pankonien ("DarkHorse Merger Agreement") (Exhibit 10.7
                  to General Form for Registration of Securities on Form 10,
                  filed November 27, 1996)

         10.6     Amendment No. 1 dated May 16, 1996, to DarkHorse Merger
                  Agreement (Exhibit 10.8 to General Form for Registration of
                  Securities on Form 10, filed November 27, 1996)

         10.7     Articles of Merger (Delaware) of DarkHorse with and into
                  Tanisys Acquisition Corp. II, dated May 31, 1996 (Exhibit 10.9
                  to General Form for Registration of Securities on Form 10,
                  filed November 27, 1996)

         10.8     Articles of Merger (Texas) of DarkHorse with and into Tanisys
                  Acquisition Corp. II, dated May 31, 1996 (Exhibit 10.10 to
                  General Form for Registration of Securities on Form 10, filed
                  November 27, 1996)

         10.9     Employment Agreement dated July 11, 1996 by and between the
                  Company and Joe Davis (Exhibit 10.15 to General Form for
                  Registration of Securities on Form 10, filed November 27,
                  1996)

         10.10    1993 Stock Option Plan, as amended through May 20, 1996
                  (Exhibit 10.17 to General Form for Registration of Securities
                  on Form 10, filed November 27, 1996)

         10.11    Form of Stock Option Agreement (Exhibit 10.18 to General Form
                  for Registration of Securities on Form 10, filed November 27,
                  1996)

         10.12    401(k) Plan (Exhibit 10.19 to General Form for Registration of
                  Securities on Form 10, filed November 27, 1996)

         10.13    Lease Agreement dated May 18, 1993 by and between Tanisys
                  Technology, Inc., assumptor of 1st Tech Corporation, and AEtna
                  Life Insurance Company, as amended (Exhibit 10.20 to General
                  Form for Registration of Securities on Form 10, filed November
                  27, 1996)

         10.14    Master Lease Agreement dated November 9, 1994 by and between
                  1st Tech and Copelco Capital Inc. (Exhibit 10.21 to General
                  Form for Registration of Securities on Form 10, filed November
                  27, 1996)

         10.15    Manufacturing Agreement dated as of November 1, 1996 by and
                  between the Company and Siemens Components, Inc. (Exhibit
                  10.22 to Amendment No. 2 to General Form for Registration of
                  Securities on Form 10, filed March 11, 1997)

         10.16    Inventory Management Service Agreement dated as of November 1,
                  1996 by and between the Company and Siemens Components, Inc.
                  (Exhibit 10.23 to Amendment No. 2 to General Form for
                  Registration of Securities on Form 10, filed March 11, 1997)

         10.17    1997 Non-Employee Director Plan of Tanisys Technology, Inc.
                  (Exhibit 10.27 to Amendment No. 2 to General Form for
                  Registration of Securities on Form 10, filed March 11, 1997)

                                       17
<PAGE>

         10.18    Form of Non-Employee Director Stock Option Agreement (Exhibit
                  10.28 to Amendment No. 2 to General Form for Registration of
                  Securities on Form 10, filed March 11, 1997)

         10.19    Master Lease Agreement dated January 30, 1997 by and between
                  the Company and Copelco Capital, Inc. (Exhibit 10.30 to March
                  31, 1997 Form 10-Q)

         10.20    Loan and Security Agreement, dated as of July 24, 1997, by and
                  between Tanisys Technology, Inc., 1st Tech Corporation,
                  DarkHorse Systems, Inc., the Company and NationsCredit
                  Commercial Corporation, through its NationsCredit Commercial
                  Funding Division (Exhibit 10.32 to September 30, 1997 Form 10-K)

         10.21    Memory Module Corporate Purchase Agreement, dated July 22,
                  1997, by and between Tanisys Technology, Inc. and Compaq
                  Computer Corporation (Exhibit 10.33 to September 30, 1997 Form
                  10-K)

         10.22    Employment Agreement, dated as of September 11, 1997, by and
                  between Tanisys Technology, Inc. and Don McCord (Exhibit 10.34
                  to September 30, 1997 Form 10-K)

         10.23    Employment Agreement, dated as of October 20, 1997, by and
                  between Tanisys Technology, Inc. and Charles T. Comiso
                  (Exhibit 10.35 to September 30, 1997 Form 10-K)

         10.24    Employment Agreement, dated as of November 10, 1997, by and
                  between Tanisys Technology, Inc. and Joseph C. Klein, Ph.D.
                  (Exhibit 10.36 to September 30, 1997 Form 10-K)

         10.25    Manufacturing Service Agreement dated February 2, 1998 by and
                  between the Company and LG Semicon American, Inc. (Exhibit
                  10.37 to March 31, 1998 Form 10-Q)

         10.26    Manufacturing Service Agreement dated March 1, 1998 by and
                  between the Company and Toshiba America Electronic Components,
                  Inc. (Exhibit 10.38 to March 31, 1998 Form 10-Q)

         10.27    Convertible Preferred Stock Purchase Agreement dated June 30,
                  1998 between Tanisys Technology, Inc. and KA Investments LDC
                  (Exhibit 10.1 to Form S-3 Registration Statement filed August
                  13, 1998)

         10.28    Form of Warrant to purchase Common Stock granted by Tanisys
                  Technology, Inc. to each of KA Investments LDC, Midori Capital
                  Corporation, Hoth Incorporated and Randy Stein (Exhibit 10.2
                  to Form S-3 Registration Statement filed August 13, 1998)

         10.29    Form of Promissory Note issued by Tanisys Technology, Inc. in
                  connection with $2 million debt closed November 2, 1998
                  (Exhibit 10.1 to December 31, 1998 Form 10-Q)

         10.30    Form of Warrant Agreement entered into between Tanisys
                  Technology, Inc. and subscribers to the $2 million debt
                  offering closed November 2, 1998, and form of attached Stock
                  Purchase Warrant issued thereunder (Exhibit 10.2 to December
                  31, 1998 Form 10-Q)

         21.1     Subsidiaries of the Company (Exhibit 21.1 to September 30,
                  1998 Form 10-K)

         27.1     Financial Data Schedule (filed herewith)
</TABLE>
(b)      CURRENT REPORTS ON 8-K:

     None.

                                       18

<PAGE>

                                   SIGNATURES

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

                           TANISYS TECHNOLOGY, INC.

Date: August 16, 1999      By:  /s/ JOE O. DAVIS
                              -------------------------------------------
                              Joe O. Davis
                              SENIOR VICE PRESIDENT,
                              CHIEF FINANCIAL OFFICER AND CORPORATE SECRETARY
                              (Duly authorized and Principal Financial Officer)


Date: August 16, 1999      By:  /s/ DONALD R. TURNER
                              -------------------------------------------
                              Donald R. Turner
                              CORPORATE CONTROLLER
                              (Duly authorized and Principal Accounting Officer)


                                       19