<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 March 31, 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 April 30, 1999:

                                                  NUMBER OF SHARES
                    TITLE OF CLASS                   OUTSTANDING
                    --------------                   ----------- 
              Common Stock, no par value              23,688,589

<PAGE>

                    TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES

                                    INDEX

<TABLE>
<CAPTION>
<S>        <C>                                                                           <C>
PART I     FINANCIAL INFORMATION
Item 1.    Interim Consolidated Financial Statements (Unaudited)
           Consolidated Balance Sheets - March 31, 1999 and September 30, 1998...........  3
           Consolidated Statements of Operations - For the Three Month and 
             Six Month Periods Ended March 31, 1999 and 1998.............................  4
           Consolidated Statements of Cash Flows - For the Three Month and 
             Six Month Periods Ended March 31, 1999 and 1998.............................  5
           Notes to Interim Consolidated Financial Statements (Unaudited)................  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 3.    Submission of Matters to a Vote of Security Holders........................... 16
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>
                                                                               MARCH 31,      SEPTEMBER 30,
                                                                                 1999             1998
============================================================================================================  
<S>                                                                        <C>               <C>
 ASSETS
 Current assets:
    Cash and cash equivalents                                              $    1,560,540    $      253,107   
    Restricted cash                                                                   208           154,271   
    Trade accounts receivable, net of allowance of $332,648 and
      $406,157, respectively                                                    8,655,535         4,206,919   
    Inventory                                                                   3,006,352         3,224,671   
    Prepaid expenses and other                                                    861,899           643,398   
------------------------------------------------------------------------------------------------------------
          Total current assets                                                 14,084,534         8,482,366   
------------------------------------------------------------------------------------------------------------
 Property and equipment, net of accumulated depreciation of
    $3,974,407 and $3,053,548, respectively                                     5,409,179         6,751,800   
 Other noncurrent assets                                                          754,014           679,134  
------------------------------------------------------------------------------------------------------------
          Total assets                                                     $   20,247,727    $   15,913,300
============================================================================================================  

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
    Accounts payable                                                       $    4,614,197    $    4,648,129   
    Accrued liabilities                                                         1,984,716         4,177,286   
    Revolving credit note                                                       7,063,787         2,266,260   
    Current portion of obligations under capital lease                            447,567           262,171   
------------------------------------------------------------------------------------------------------------
          Total current liabilities                                            14,110,267        11,353,846   
------------------------------------------------------------------------------------------------------------
 Long-term debt to shareholders, net of discount                                1,616,886                 -   
 Long-term portion of obligations under capital lease                           1,385,963           754,751   
------------------------------------------------------------------------------------------------------------
          Total liabilities                                                    17,113,116        12,108,597   
------------------------------------------------------------------------------------------------------------
 Mandatorily redeemable convertible preferred stock:
    5% Series A Convertible Preferred Stock, $1 par value, 400 shares
       authorized, 255 and 400 shares issued and outstanding,
       respectively                                                             2,075,679         2,390,475   
------------------------------------------------------------------------------------------------------------
 Stockholders' equity:
    Common stock, no par value, 50,000,000 shares authorized,
       23,589,755 and 20,799,714 shares issued and outstanding,
       respectively                                                            31,412,397        29,114,774    
    Additional paid-in capital                                                  1,687,312         1,687,312    
    Accumulated other comprehensive loss                                         (19,523)           (2,625)
    Accumulated deficit                                                      (32,021,254)      (29,385,233)
------------------------------------------------------------------------------------------------------------
          Total stockholders' equity                                            1,058,932         1,414,228    
------------------------------------------------------------------------------------------------------------
          Total liabilities and stockholders' equity                       $   20,247,727    $   15,913,300
============================================================================================================  
</TABLE>

                     THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
                    THESE INTERIM CONSOLIDATED FINANCIAL STATEMENTS.

                                       3
<PAGE>

                    TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                               (UNAUDITED)

<TABLE>
<CAPTION>
                                                                       FOR THE THREE MONTHS           FOR THE SIX MONTHS
                                                                          ENDED MARCH 31,               ENDED MARCH 31,
                                                                        1999           1998          1999          1998
===========================================================================================================================
 <S>                                                                 <C>           <C>           <C>           <C>
 Net sales                                                           $14,519,943   $ 7,531,424   $ 27,439,473  $17,207,247
 Cost of goods sold                                                   11,859,173     6,266,533     22,799,254   13,789,190
---------------------------------------------------------------------------------------------------------------------------
 Gross profit                                                          2,660,770     1,264,891      4,640,219    3,418,057
---------------------------------------------------------------------------------------------------------------------------
 Operating expenses:
    Research and development                                             645,955       666,550      1,180,229    1,477,115
    Sales and marketing                                                  965,633       682,234      1,659,238    1,353,906
    General and administrative                                         1,291,284     1,269,488      2,473,603    2,287,851
    Depreciation and amortization                                        222,019     1,064,621        457,167    2,131,826
    Bad debt expense                                                           -       133,000              -      241,943
---------------------------------------------------------------------------------------------------------------------------
          Total operating expenses                                     3,124,891     3,815,893      5,770,237    7,492,641
---------------------------------------------------------------------------------------------------------------------------
 Operating loss                                                         (464,121)   (2,551,002)    (1,130,018)  (4,074,584)
---------------------------------------------------------------------------------------------------------------------------
 Other income (expense):
    Interest income                                                       15,279        14,684         33,389       34,210
    Interest expense                                                    (328,570)     (152,090)      (622,453)    (307,222)
    Other                                                                 32,050             -         32,050            -
---------------------------------------------------------------------------------------------------------------------------
 Net loss                                                            $  (745,362)  $(2,688,408)  $ (1,687,032) $(4,347,596)
===========================================================================================================================
 Reconciliation of net loss to net loss applicable to common stock:
      Net loss                                                       $  (745,362)  $(2,688,408)  $(1,687,032)  $(4,347,596)
      Preferred stock dividends and amortization of the value
        of the beneficial conversion feature on the preferred stock     (249,837)            -      (949,055)            -
---------------------------------------------------------------------------------------------------------------------------
 Net loss applicable to common stock                                 $  (995,199)  $(2,688,408)  $(2,636,087)  $(4,347,596)
===========================================================================================================================
 Basic and diluted loss per common share                             $     (0.04)  $     (0.13)  $     (0.12)  $     (0.21)
===========================================================================================================================
 Weighted average number of common shares                             23,121,625    20,580,936    22,074,154    20,488,203
===========================================================================================================================
</TABLE>

                     THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
                    THESE INTERIM CONSOLIDATED FINANCIAL STATEMENTS.

                                       4
<PAGE>

                    TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   FOR THE THREE MONTHS          FOR THE SIX MONTHS
                                                                      ENDED MARCH 31,              ENDED MARCH 31,
                                                                    1999          1998            1999          1998
=========================================================================================================================  
<S>                                                             <C>            <C>            <C>            <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                       $  (745,362)   $(2,688,408)   $(1,687,032)   $(4,347,596)  
 Adjustment to reconcile net loss to net cash used 
   in operating activities:
        Depreciation and amortization                               472,215      1,139,496      1,031,041      2,280,132   
 Changes in operating assets:
      Restricted cash                                                15,887        (83,311)       154,063      1,388,674   
      Accounts receivable, net                                   (1,341,224)       276,235     (4,530,529)      (748,370)  
      Inventory                                                     975,726        228,349        186,112        940,280   
      Prepaid expenses and other                                   (107,651)       (75,067)      (222,156)      (110,056)  
 Changes in accounts payable and accrued liabilities               (240,361)     3,193,407        (63,769)     2,392,835   
-------------------------------------------------------------------------------------------------------------------------  
          Net cash used in or provided by operating activities     (970,770)     1,990,701     (5,132,270)     1,795,899
-------------------------------------------------------------------------------------------------------------------------
 CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of fixed assets                                         (297,167)    (2,328,353)      (630,401)    (2,515,666)
 Proceeds from sale of property and equipment                             -              -              -         21,637
-------------------------------------------------------------------------------------------------------------------------
          Net cash used in investing activities                    (297,167)    (2,328,353)      (630,401)    (2,494,029)
-------------------------------------------------------------------------------------------------------------------------
 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 common stock                                   -        107,000              -        182,000
 Draws (payments) on revolving credit note, net                   1,761,739        (96,304)     4,797,527         54,499
 Payments on capital lease obligations                             (122,539)        (2,842)      (249,779)       (14,129)
 Proceeds from exercise of stock options and warrants               282,500        125,000        496,250        253,250
 Other                                                               10,832         (2,625)        47,455         (2,625)
-------------------------------------------------------------------------------------------------------------------------
         Net cash provided by financing activities                1,932,532        130,229      7,070,103        472,995
-------------------------------------------------------------------------------------------------------------------------
 Increase (decrease) in cash and cash equivalents                   664,596       (207,423)     1,307,433       (225,135)
 Cash and cash equivalents, beginning of period                     895,945      1,972,305        253,107      1,990,017
-------------------------------------------------------------------------------------------------------------------------
 Cash and cash equivalents, end of period                       $ 1,560,540    $ 1,764,882    $ 1,560,540    $ 1,764,882
=========================================================================================================================

 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid for interest                                      $   185,629    $   152,090    $   391,384    $   307,222
    Interest received                                                15,279         14,684        33,389          34,210
 NON-CASH INVESTING AND FINANCING ACTIVITIES:
    Capital lease additions                                          95,000              -      1,094,039              -
    Issuance of stock for satisfaction of accounts payable                -         32,000              -         32,000
    Issuance of stock warrants for compensation                           -              -         75,000              -
    Issuance of stock warrants in connection with 
      issuance of debt to shareholders                                    -              -        461,538              -
    Preferred stock dividends paid in common stock                   45,973              -         51,768              -
    Preferred stock dividends accrued                                34,642              -         77,767              -
    Amortization of beneficial conversion feature on
      preferred stock                                               215,195              -        865,493              -
    Conversion of preferred stock to common stock                   732,593              -      1,180,289              -
=========================================================================================================================
</TABLE>

                     THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
                    THESE INTERIM CONSOLIDATED FINANCIAL STATEMENTS.

                                       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>
                                      MARCH 31,     SEPTEMBER 30,
                                         1999           1998
               ==================================================
               <S>                 <C>              <C>
               Raw materials       $  2,541,383     $  2,770,338
               Work-in-process          129,391          280,445
               Finished goods           335,578          173,888
               --------------------------------------------------
               Total inventory     $  3,006,352     $  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 beginning on December 1, 1998, 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. The Noteholders, as of March 31, 1999, were 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, 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
March 31, 1999:

<TABLE>
<CAPTION>
               =========================================================================
               <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                                   (383,114)
               -------------------------------------------------------------------------
               Long-term debt to shareholders, net of discount            $   1,616,886
               =========================================================================
</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 beginning on December 1, 1998, and the warrants expire on November 1,
2001. As of March 31, 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. These redemption
rights could require the Company to redeem the Series A Stock for cash based on
a formula provided in the Stock Purchase Agreement. The Company cannot estimate
if or when the triggering events might occur nor the redemption price.
Therefore, the mandatory redemption feature has not been valued. Should a
triggering event occur, 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 quarter of fiscal 1999, the holder of the preferred
stock converted 55 shares of preferred stock into 473,965 common shares. During
the second quarter of fiscal 1999, the holder of the preferred stock converted
an additional 90 shares of preferred stock into 693,744 common shares.


                                       7
<PAGE>

         At March 31, 1999, the carrying value of the Series A Stock consists of
the following:

<TABLE>
<CAPTION>
               ================================================================ 
               <S>                                                <C>
               Balance, September 30, 1998                        $   2,390,475
                 Conversion of 145 shares of preferred stock
                   to 1,167,709 shares of common stock               (1,180,289)
                 Amortization of beneficial conversion feature          865,493
               ---------------------------------------------------------------- 
               Balance, March 31, 1999                            $   2,075,679
               ================================================================ 
</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 SIX MONTHS ENDED      
                                                       MARCH 31,                      MARCH 31,
                                                 1999             1998           1999           1998        
==========================================================================================================  
 <S>                                        <C>             <C>             <C>             <C>
 Net loss                                   $  (745,362)    $  (2,688,408)  $ (1,687,032)   $ (4,347,596)
 Less-
      Preferred stock dividends                 (34,642)                -        (83,562)              -
      Amortization of the value of the
         beneficial conversion feature
         on the preferred stock                (215,195)                -       (865,493)              -
----------------------------------------------------------------------------------------------------------
 Net loss applicable to common stock
      (basic and diluted)                   $  (995,199)    $  (2,688,408)  $ (2,636,087)   $ (4,347,596)
========================================================================================================== 
 Weighted average common shares used 
      in computing basic and diluted 
      Loss applicable to common stock
      Per share                              23,121,625        20,580,936     22,074,154      20,488,203
========================================================================================================== 
 Loss applicable to common stock per
      Share (basic and diluted)             $     (0.04)    $       (0.13)  $      (0.12)   $      (0.21)
========================================================================================================== 
</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 SIX MONTHS ENDED      
                                                     MARCH 31,                          MARCH 31,
                                               1999             1998              1999             1998
===========================================================================================================
 <S>                                       <C>            <C>                <C>              <C>
 Net loss, as reported                     $  (745,362)   $  (2,688,408)     $  (1,687,032)   $ (4,347,596)
 Foreign currency translation adjustment       (53,521)               -            (16,898)              -
-----------------------------------------------------------------------------------------------------------
 Comprehensive loss                        $  (798,883)   $  (2,688,408)     $  (1,703,930)   $ (4,347,596)
===========================================================================================================
</TABLE>


                                       8
<PAGE>

         The adoption of this standard had no net effect on the Company's net
loss or stockholders' equity for the three months and six months ended March 31,
1999 and 1998, respectively. Prior year financial statements have been
reclassified to conform to the requirements of this standard.

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 period 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 market. Nasdaq has requested that the Company 
provide it with plans for complying with the requirements. The Company 
appealed the Nasdaq notification and the appeal will be heard in late June 
1999 before a panel authorized by the Nasdaq Board of Directors. In the event 
the Company cannot meet either of the net tangible asset requirements, the 
Company's stock will likely be delisted from the Nasdaq market. The Company 
is pursuing alternatives to comply with the requirements; however, there can 
be no assurance that it can achieve compliance or that the Company's common 
stock will not be delisted from the Nasdaq market. If the Company's common 
stock is delisted from the Nasdaq market, it would be traded in the 
over-the-counter market in the so-called "pink sheets" or 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 would be more difficult because smaller quantities of shares 
could be bought and sold, transactions could be delayed, and security 
analysts' and news media's coverage of the Company may 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 six-month
periods ended March 31, 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 March 31, 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
six-month periods ended March 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                         FOR THE THREE          FOR THE SIX
                                                         MONTHS ENDED          MONTHS ENDED
                                                           MARCH 31,             MARCH 31,
                                                        1999     1998         1999     1998
=======================================================================     ================
 <S>                                                   <C>      <C>          <C>      <C>
 Net sales                                             100.0%   100.0%       100.0%   100.0%
 Cost of goods sold                                     81.7%    83.2%        83.1%    80.1%
-----------------------------------------------------------------------     -----------------
 Gross profit                                           18.3%    16.8%        16.9%    19.9%
-----------------------------------------------------------------------     -----------------
 Operating expenses:
             Research and development                    4.4%     8.9%         4.3%     8.6%
             Sales and marketing                         6.7%     9.1%         6.0%     7.9%
             General and administrative                  8.9%    16.9%         9.0%    13.3%
             Depreciation and amortization               1.5%    14.1%         1.7%    12.4%
             Bad debt expense                            0.0%     1.8%         0.0%     1.4%
-----------------------------------------------------------------------     -----------------
                        Total operating expenses        21.5%    50.7%        21.0%    43.5%
-----------------------------------------------------------------------     -----------------
 Operating loss                                        (3.2%)  (33.9%)       (4.1%)  (23.7%)
-----------------------------------------------------------------------     -----------------
 Other income (expense):
             Interest expense                          (2.3%)   (2.0%)       (2.3%)   (1.8%)
             Interest income                             0.2%     0.2%         0.2%     0.2%
             Other income                                0.2%     0.0%         0.1%     0.0%
-----------------------------------------------------------------------     -----------------
 Net loss                                              (5.1%)  (35.7%)       (6.1%)  (25.3%)
=======================================================================     =================
</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 92.8% to $14.5 million in the second 
quarter of fiscal 1999 from $7.0 million in the same period of fiscal 1998. 
Net sales for the first six months of fiscal 1999 increased 59.5% to $27.4 
million from $17.2 million in the same period of fiscal 1998. The increase in 
sales for the second quarter and first six months are due to sales increases 
across all product lines. While historical performance is no indicator of 
future performance, net sales have increased for the past three quarters. 
Historically, the industry has experienced seasonal decreases in sales during 
the third quarter but management believes that the Company can continue to 
generate quarter over quarter sales increases. 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 110.4% to $2.7 
million in the second quarter of fiscal 1999 from $1.3 million in the second 
quarter of fiscal 1998. Gross profit as a percent of sales increased to 18.3% 
from 16.8% in the second fiscal quarter over the same period of the prior 
year. Gross profit for the first six months of fiscal 1999 increased 35.8% to 
$4.6 million from $3.4 million in the same period of fiscal 1998. Gross 
profit as a percent of sales decreased to 16.9% from 19.9% for the first six 
months of fiscal 1999 over the same period the prior year. The increases in 
gross margin reflects the increasing sales during the respective periods. 
Variations in the gross margin percentages reflect the mix of the products 
sold and the differing margins achieved by each product. Gross margins have 
varied over the past six quarters from 11.3% to 24.5% depending on the mix of 
products sold.

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 
decreased by $21 thousand in the second quarter of fiscal 1999 to $646 
thousand from $667 thousand in the second quarter of fiscal 1998. Research 
and development expenses for the first six months of fiscal 1999 decreased 
20.1% to $1.2 million from $1.5 million in the same period of fiscal 1998. 
The decrease in spending over the same periods of last year reflects 
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 42%, or $283 thousand to $966 thousand in the
second quarter of fiscal 1999 from $682 thousand in the second quarter of fiscal
1998. Sales and marketing expenses as a percentage of sales in the second
quarter of fiscal 1999 decreased to 6.7% from 9.1% in the second quarter of
1998. For the first six months of fiscal 1999 sales expenses increased 21% to
$1.7 million from $1.4 million in the same period of fiscal 1998, an increase of
$300 thousand. Sales and marketing expenses as a percentage of sales for the six
months ended March 31, 1999 decreased to 6.0% from 7.9% as compared to the six
months ended March 31, 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 second fiscal quarter were generally
flat when compared to the second quarter of fiscal 1998. General and
administrative expenses increased $200 thousand to $2.5 million in the first
fiscal six months of fiscal 1999 from the $2.3 million in the first six months
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 8.9% in the second quarter of fiscal 1999 from 16.9% in the
second quarter of fiscal 1998. General and administrative expenses when
expressed as a percentage of sales for the first six months of fiscal 1999
decreased to 9.0% from 13.3% in the first six months 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 $222 thousand in second quarter of fiscal 1999 from the $1.1 million in
second quarter of fiscal 1998. Depreciation and amortization decreased to $457
thousand in the first six months of fiscal 1999, from the $2.1 million in the
first six months 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 1.5% in the second quarter of fiscal 1999, from 14.1% in the
second quarter of fiscal 1998. Depreciation and amortization when expressed as a
percentage of sales for the first six months of fiscal 1999 decreased to 1.7%
from 12.4% in the first six months of fiscal 1998.

         Depreciation expenses are expected to decrease as a percentage of
revenue and increase in terms of absolute dollars with additional facility
expansions and equipment purchases used in manufacturing and research and
development.

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 $281 thousand in the
second quarter of fiscal 1999 from $137 thousand in the second quarter of fiscal
1998. Other income (expense) increased to $557 thousand in the first six months
of fiscal 1999, from the $273 thousand of the first six months of fiscal 1998.
The increase is due primarily to interest expense relating to capital leases and
long-term notes payable.

         The Company expects to continue to require borrowings to fund growth in
accounts receivable and inventory in the future. The Company anticipates adding
manufacturing capacity financed with additional capital leases and long-term
notes, which will increase interest costs in future periods.

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.


                                      12
<PAGE>

         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. 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 second quarter of fiscal 1999, the Company generated $1.9
million in net cash from financing activities, primarily from net draws on the
Company's revolving credit line, and used $971 thousand of cash in operating
activities. For the first six months of fiscal 1999 the Company generated $7.1
million in net cash from financing activities of which $4.8 million was from net
draws on the Company's revolving credit line and $2.0 million was from long term
debt. The Company used $5.1 million of cash during the first six months of
fiscal 1999 of which $4.5 million was used to increase accounts receivable.

         During the second quarter 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 had $1.6 million in cash and a working capital deficit of $26
thousand at March 31, 1999. The Company anticipates that working capital will
increase as manufacturing equipment is financed and reclassified as a long-term
liability.

         Capital expenditures totaled approximately $297 thousand for the second
quarter of fiscal 1999 and a total of $630 thousand for the first six months of
fiscal 1999. The Company anticipates, depending on customer demand, leasing or
debt financing an estimated $10 million of capital equipment during the
remaining fiscal year. The actual commitment and purchase of the equipment will
be dependent upon achieving certain sales levels.

         The Company believes that its existing funds, anticipated cash flows
from operations and amounts available from future vendor credits, bank
borrowings, operating and capital lease financing, long-term borrowings, the
exercise of outstanding warrants and stock options and equity financing will be
sufficient to meet its working capital and capital expenditure needs for the
next 12 months.

         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 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 market. Nasdaq has requested that the Company 
provide it with plans for complying with the requirements. The Company 
appealed the Nasdaq notification and the appeal will be heard in late June 
1999 before a panel authorized by the Nasdaq Board of Directors. In the event 
the Company cannot meet either of the net tangible asset requirements, the 
Company's stock will likely be delisted from the Nasdaq market. The Company 
is pursuing alternatives to comply with the requirements; however, there can 
be no assurance that it can achieve compliance or that the Company's common 
stock will not be delisted from the Nasdaq market. If the Company's common 
stock is delisted from the Nasdaq market, it would be traded in the 
over-the-counter market in the so-called "pink sheets" or 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 would be more difficult because smaller quantities of shares 
could be bought and sold, transactions could be delayed, and security 
analysts' and news media's coverage of the Company may 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 second quarter of fiscal 1999, the
ten largest customers accounted for approximately 88% of net sales compared to
approximately 79% in the same period in fiscal 1998. Four customers represented
24%, 


                                      13
<PAGE>

13%, 12%, and 10%, respectively, in the second quarter of fiscal 1999. The 
customer representing 13% of sales in the second quarter of fiscal 1999 
represented 46% of the Company's sales in same period of the prior year. In 
the first six months of fiscal 1999, the ten largest customers accounted for 
approximately 84% of net sales compared to approximately 71% in the same 
period of the prior year. Four customers represented 26%, 14%, 7%, and 11% 
respectively, in the first six months of fiscal 1999. The customer 
representing 14% of sales in the first six months of fiscal 1999 represented 
36% of the Company's sales in the same period of the prior year. 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 appropriately recognize the year 2000 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 prior to December 31, 1999, as the
Company continues to replace obsolete or non-functional systems as part of its
normal asset replacement cycle. Therefore, the Company believes that its costs
to become Year 2000 compliant have been immaterial and will continue to be
immaterial in the future.

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

         Many companies may need to modify or upgrade their information systems
to address the Year 2000 problem. The effects of this issue and of the efforts
by other companies to address it are unclear. The Company believes that Year
2000 issues might affect the purchasing patterns of customers and prospective
customers. Many companies are expending significant resources to correct their
current software systems for Year 2000 compliance. These expenditures might
result in reduced funds available to purchase services and products such as
those offered by the Company.

         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.


                                      14
<PAGE>

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 March 31, 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 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 March 31, 1999, the holder of the Series A Stock
         converted 90 shares of Series A Stock into 693,744 shares of common
         stock.


                                      15
<PAGE>

ITEM 3.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         At the Annual Meeting of Stockholders held on March 18, 1999, the
following matters were adopted by the margins indicated:

         1.   To elect directors Parris H. Holmes, Jr. and Theodore W. Van Duyn
              to serve until the 2002 Annual Meeting of Stockholders.

                           For:             18,285,025
                           Against:         263,650
                           Abstain:         N/A

         2.   To ratify the appointment of Arthur Andersen LLP as independent 
              public accountants of the Company for the fiscal year ending 
              September 30, 1999.

                           For:             18,521,875
                           Against:         10,500
                           Abstain:         16,300

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)


                                      16
<PAGE>

         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)

         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)


                                      17
<PAGE>

         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)

         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.


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<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: May 17, 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: May 17, 1999                     By: /s/ DONALD R. TURNER
                                          ------------------------------------
                                          Donald R. Turner
                                          CORPORATE CONTROLLER
                                          (Duly authorized and Principal
                                          Accounting Officer)





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