<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, 1998
                                         or
[ ]  TRANSACTION 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 130
               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 is the number of shares outstanding of the Registrant's
only class of common stock at May 8, 1998:

             TITLE OF CLASS              NUMBER OF SHARES OUTSTANDING
             --------------              ---------------------------- 
     Common Stock, no par value                    20,729,714

<PAGE>

                     TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES

                                       INDEX

<TABLE>
<S>                                                                                           <C>
PART I    FINANCIAL INFORMATION
Item 1.   Financial Statements
          Consolidated Balance Sheets - March 31, 1998 (unaudited) and September 30, 1997. . . 3
          Consolidated Statements of Operations - For the Three and Six Month Periods 
            Ended March 31, 1998 and 1997 (unaudited). . . . . . . . . . . . . . . . . . . . . 4
          Consolidated Statements of Cash Flows - For the Three and Six Month Periods
            Ended March 31, 1998 and 1997 (unaudited). . . . . . . . . . . . . . . . . . . . . 5
          Notes to Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . . . 6 
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of
            Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PART II   OTHER INFORMATION
Item 1.   Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Item 4.   Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . .14
Item 5.   Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Item 6.   Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . .14
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
</TABLE>






                                       2

<PAGE>

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


                     TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                                    (UNAUDITED)

<TABLE>
                                                                        MARCH 31,     SEPTEMBER 30,
                                                                          1998            1997
--------------------------------------------------------------------------------------------------- 
<S>                                                                   <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents                                           $  1,764,882    $  1,990,017
  Restricted cash                                                          150,774       1,539,448
  Trade accounts receivable, net of allowance of $288,312 and
    $180,157, respectively                                               4,267,739       3,519,369
  Accounts receivable from related parties                                  12,371          12,371
  Inventory, net of allowance of $250,923 and $317,023, respectively     3,548,770       4,489,050
  Prepaid expenses and other current assets                                538,248         364,042
--------------------------------------------------------------------------------------------------- 
      Total current assets                                              10,282,784      11,914,297
--------------------------------------------------------------------------------------------------- 
Property and equipment, net of accumulated depreciation of
  $2,194,500 and $1,730,832, respectively                                4,551,278       2,539,324
Organization costs, net                                                        256             512 
Patents and trademarks, net                                                 75,276          80,327 
Goodwill, net of accumulated amortization of $6,872,207 
  and $5,079,457, respectively                                             298,791       2,091,541
Other noncurrent assets                                                    541,807         605,957 
--------------------------------------------------------------------------------------------------- 
Total Assets                                                          $ 15,750,192    $ 17,231,958 
--------------------------------------------------------------------------------------------------- 
--------------------------------------------------------------------------------------------------- 

LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:
  Accounts payable                                                    $  4,208,025    $  3,917,786 
  Accounts payable to related parties                                            -             250 
  Accrued liabilities                                                    2,813,035         710,189 
  Revolving credit note                                                  4,227,015       4,172,516 
--------------------------------------------------------------------------------------------------- 
      Total current liabilities                                         11,248,075       8,800,741 
--------------------------------------------------------------------------------------------------- 
  Obligations under capital lease                                           66,985          81,114 
--------------------------------------------------------------------------------------------------- 
      Total liabilities                                                 11,315,060       8,881,855 
--------------------------------------------------------------------------------------------------- 
Stockholders' equity:
Common stock, no par value, 50,000,000 shares
    authorized, 20,729,714 and 20,334,714 shares issued and 
    outstanding, respectively                                           29,034,774      28,599,524
Foreign translation adjustment                                              (2,625)             -
 Accumulated deficit                                                   (24,597,017)    (20,249,421)
--------------------------------------------------------------------------------------------------- 
      Total stockholders' equity                                         4,435,132       8,350,103 
--------------------------------------------------------------------------------------------------- 
Total Liabilities and Stockholders' Equity                            $ 15,750,192    $ 17,231,958 
--------------------------------------------------------------------------------------------------- 
--------------------------------------------------------------------------------------------------- 
</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>
                                                          FOR THE THREE                  FOR THE SIX
                                                           MONTHS ENDED                  MONTHS ENDED
                                                             MARCH 31,                     MARCH 31,
                                                       1998           1997           1998           1997
------------------------------------------------------------------------------------------------------------  
<S>                                                <C>            <C>            <C>            <C>
Net sales                                          $ 7,531,424    $12,057,378    $17,207,247    $27,321,039
Cost of goods sold                                   6,266,533     10,454,191     13,789,190     24,122,427
------------------------------------------------------------------------------------------------------------  
Gross profit                                         1,264,891      1,603,187      3,418,057      3,198,612
------------------------------------------------------------------------------------------------------------  
Operating expenses:
  Research and development                             666,550        653,634      1,477,115      1,172,342
  Sales and marketing                                  682,234        736,344      1,353,906      1,434,330
  General and administrative                         1,269,488        884,181      2,287,851      1,743,655
  Depreciation and amortization                      1,064,621      1,042,892      2,131,826      2,063,482
  Bad debt expense                                     133,000      1,759,806        241,943      1,806,647
------------------------------------------------------------------------------------------------------------  
      Total operating expenses                       3,815,893      5,076,857      7,492,641      8,220,456
------------------------------------------------------------------------------------------------------------  
Operating loss                                      (2,551,002)    (3,473,670)    (4,074,584)    (5,021,844)
------------------------------------------------------------------------------------------------------------  
Other income (expense):
  Interest income                                       14,684          2,690         34,210         14,399
  Interest expense                                    (152,090)      (151,604)      (307,222)      (316,874)
------------------------------------------------------------------------------------------------------------  
Net loss                                           $(2,688,408)   $(3,622,584)   $(4,347,596)   $(5,324,319)
------------------------------------------------------------------------------------------------------------  

Basic and diluted loss from operations per share   $     (0.13)   $     (0.21)   $     (0.21)   $     (0.32)
------------------------------------------------------------------------------------------------------------  
Weighted average shares outstanding:
  Basic                                             20,580,936     16,937,045     20,488,203     16,539,432
  Diluted                                           20,580,936     16,937,045     20,488,203     16,539,432
------------------------------------------------------------------------------------------------------------  
------------------------------------------------------------------------------------------------------------  
</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>
                                                                           FOR THE THREE                  FOR THE SIX 
                                                                            MONTHS ENDED                  MONTHS ENDED
                                                                              MARCH 31,                    MARCH  31,
                                                                         1998           1997           1998           1997
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>            <C>            <C>            <C>
Cash flows from operating activities:
Net loss                                                             ($2,688,408)   ($3,622,584)   ($4,347,596)   ($5,324,319)
Adjustments to reconcile net loss to net cash earned (used) in 
 operating activities:
   Depreciation and amortization                                       1,139,496      1,042,892      2,280,132      2,063,482
   Issuance of stock options                                             123,000            -          123,000            -  
   (Increase) decrease in restricted cash                                (83,311)           -        1,388,674            -  
   (Increase) decrease in accounts receivable                            276,235       (671,822)      (748,370)    (1,985,764)
   (Increase) decrease in inventory                                      228,349     (1,528,307)       940,280     (1,767,682)
   Increase in prepaid expense                                          (127,495)      (156,164)      (174,206)      (329,753)
   Decrease in other assets                                               52,428            -           64,150            -   
   Increase in accounts payable and accrued liabilities                3,193,407      3,689,199      2,392,835      3,119,438
------------------------------------------------------------------------------------------------------------------------------
Net cash earned (used) in operating activities                         2,113,701     (1,246,786)     1,918,899     (4,224,598)
------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:   
   Purchases of property and equipment                                (2,328,353)      (434,353)    (2,515,666)      (870,043)
   Proceeds from sale of property and equipment                              -              -           21,637            -  
   Patent and trademark costs                                                -              -              -           (6,094)
------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                 (2,328,353)      (434,353)    (2,494,029)      (876,137)
------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:  
   Draws (payments) on revolving credit note, net                        (96,304)       330,090         54,499      1,700,941
   Principal payments on capital lease obligations                        (2,842)       (21,534)       (14,129)       (33,475)
   Increase in foreign translation adjustment                             (2,625)           -           (2,625)           -
   Net proceeds from issuance of common stock                            107,000            -          182,000            -
   Net proceeds from exercise of stock options                               -           22,460        128,250         32,900
   Net proceeds from exercise of stock warrants                            2,000      1,330,968          2,000      2,485,968
------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                  7,229      1,661,984        349,995      4,186,334
------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents                                   (207,423)       (19,155)      (225,135)      (914,401)
Cash and cash equivalents, beginning of period                         1,972,305      1,794,323      1,990,017      2,689,569
------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                              $1,764,882     $1,775,168     $1,764,882     $1,775,168
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------

Supplemental disclosure of cash flow information:  
         Cash paid for interest                                         $152,090       $151,604       $307,222       $316,874
         Cash received from interest                                     $14,684         $2,690        $34,210        $14,399

Non-cash activity:
         20,000 shares issued to satisfy accounts payable                $32,000            -          $32,000            -
</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, 1997 contained in the Company's Form 10-K as filed with the 
Securities and Exchange Commission on December 29, 1997. 


NOTE 2:  INVENTORY

Inventory consists of the following:

<TABLE>
                                         March 31,    September 30,
                                           1998           1997
                                        ----------    -------------
<S>                                     <C>           <C>
Raw Materials                           $2,807,153     $3,976,488
Work-in-process                            223,901        204,783
Finished goods                             768,639        624,802
                                        ----------     ----------
                                         3,799,693      4,806,073
Less inventory allowance                  (250,923)      (317,023)
                                        ----------     ----------
Inventory, net                          $3,548,770     $4,489,050
                                        ----------     ----------
                                        ----------     ----------
</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. 

                                       6
<PAGE>

NOTE 3:  STOCKHOLDERS' EQUITY

EARNINGS PER SHARE

In the first quarter of fiscal 1998, the Company adopted SFAS No. 128, "Earnings
per Share," which establishes standards for computing and presenting earnings
per share ("EPS") for entities with publicly held common stock or potential
common stock.  This statement requires the restatement of historical earnings
per share amounts to conform with the new methodology.  However, the adoption of
this statement did not change the calculation of Primary EPS to Basic or Diluted
EPS from prior years because of the antidilutive effect of the common stock
equivalents.

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
                                                   Three Months Ended             Six Months Ended
                                                         March 31,                    March 31,
                                                  -------------------------     -------------------------
                                                     1998           1997           1998           1997
                                                 -----------    -----------    -----------    -----------
<S>                                              <C>            <C>            <C>            <C>
Numerator:
  Net loss-numerator for basic and diluted
   Earnings per share                            ($2,688,408)   ($3,622,584)   ($4,347,596)   ($5,324,319)

Denominator:
  Denominator for basic earnings per share-  
    Weighted average shares                       20,580,936     16,937,045     20,488,203     16,539,432
  Effect of dilutive securities:
    None                                                   -              -              -              -
                                                 -----------    -----------    -----------    -----------
  Denominator for diluted earnings per share- 
    Adjusted weighted average shares              20,580,936     16,937,045     20,488,203     16,539,432
                                                 -----------    -----------    -----------    -----------
                                                 -----------    -----------    -----------    -----------
Basic earnings per share                              ($0.13)        ($0.21)        ($0.21)        ($0.32)
                                                 -----------    -----------    -----------    -----------
                                                 -----------    -----------    -----------    -----------
Diluted earnings per share                            ($0.13)        ($0.21)        ($0.21)        ($0.32)
                                                 -----------    -----------    -----------    -----------
                                                 -----------    -----------    -----------    -----------
Stock options and warrants not included in the
  denominator for diluted earnings per share as
  their effect would have been antidilutive        4,169,316      2,492,200      4,169,316      2,492,200
                                                 -----------    -----------    -----------    -----------
                                                 -----------    -----------    -----------    -----------
</TABLE>

COMMON STOCK

During the three months ended March 31, 1998, 50,000 shares of common stock were
purchased by the Chief Executive Officer of the Company, as provided under his
employment agreement, for total gross proceeds of $75,000.

During the same time period, 20,000 shares of common stock were issued in
exchange for legal services in the amount of $32,000.

WARRANTS

During the three months ended March 31, 1998, warrants were exercised for the
purchase of 200,000 shares of common stock for total gross proceeds of $2,000. 
At March 31, 1998, warrants for the purchase of 89,999 shares of common stock
were outstanding, of which 67,497 were exercisable.

                                     7
<PAGE>

OPTIONS

During the three months ended March 31, 1998, the Board of Directors authorized
stock options exercisable for the purchase of 660,000 share of common stock to
be re-issued to former employees at the original exercise price, thus resulting
in $123,000 in compensation expense due to a market valuation adjustment.

NOTE 4:  RELATED PARTY TRANSACTIONS

In accordance with the terms of his employment agreement, the Chief Executive
Officer purchased 50,000 shares of common stock for a total purchase price of
$75,000 in January 1998. (See Note 3)

In accordance with the terms of two separation agreements, stock options for the
purchase of 660,000 shares of common stock were re-issued to former senior
officers of the Company at the original exercise price. (See Note 3)

In February 1998, the Chairman of the Board of Directors exercised stock
warrants for the purchase of 200,000 shares of common stock for a net exercise
price of $2,000. (See Note 3)

NOTE 5:  RECENT PRONOUNCEMENTS

The Financial Accounting Standards Board has issued SFAS No. 130, "Reporting
Comprehensive Income," SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information," and SFAS No. 132, "Employers' Disclosure
About Pension and Other Postretirement Benefits," All of which must be adopted
by the Company as of October 1, 1998.  Management believes the adoption of these
new standards will have no material effect on the company's financial position
or results of operations.

                                     8
<PAGE>

ITEM 2.  MANAGEMENT DISCUSSION AND ANALYSIS

     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 OF 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.

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, 1998 and 1997.  It should be read in conjunction with
the Consolidated Financial Statements, the Notes thereto and other financial
information included elsewhere in this report, and also in the Company's Form
10-K as filed with the Securities and Exchange Commission on December 29, 1997.
For purposes of the following discussion, references to year periods refer to
the Company's fiscal year ended September 30, 1997 and references to quarterly
periods refer to the Company's fiscal quarters ended March 31, 1998 and 1997.

     Effective February 1998, the Company established Tanisys (Europe), Ltd., a
wholly owned subsidiary of Tanisys located in Scotland.  Tanisys (Europe), Ltd.
will offer its Comprehensive Logistics and Supply Solutions (CLASS) program,
build-to-order services, turn key manufacturing services and manufacture and
market products consisting of semiconductor memory modules.  Tanisys (Europe),
Ltd will also serve as the European sales and marketing office for Darkhorse
tester products designed and produced by Tanisys Technology, Inc., including the
recently announced Sigma-3-TM- tester that offers module manufacturers truly
affordable, high-volume, production testing systems for 100 MHz SDRAM.

                                     9
<PAGE>

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, 1998 and 1997:                          

<TABLE>
                                                THREE MONTHS ENDED    SIX MONTHS ENDED
                                                     March 31,             March 31,
                                                ------------------    ----------------  
                                                 1998        1997      1998     1997    
                                                ------      ------    ------    ------  
         <S>                                    <C>         <C>       <C>       <C>
         Net sales                              100.0%      100.0%    100.0%    100.0%  
         Cost of goods sold                      83.2        86.7      80.1      88.3   
                                                ------      ------    ------    ------ 
         Gross profit                            16.8        13.3      19.9      11.7   
                                                ------      ------    ------    ------  
         Operating expenses:
           Research and development               8.9         5.4       8.6       4.3
           Sales and marketing                    9.1         6.1       7.9       5.2
           General and administrative            16.8         7.3      13.3       6.4
           Depreciation and amortization         14.1         8.7      12.4       7.6
           Bad debt expense                       1.8        14.6       1.4       6.6
                                                ------      ------    ------    ------ 
         Total operating expenses                50.7        42.1      43.6      30.1
                                                ------      ------    ------    ------ 
         Operating loss                         (33.9)      (28.8)    (23.7)    (18.4)
         Other expense, net                      (1.8)       (1.2)     (1.6)     (1.1)
                                                ------      ------    ------    ------ 
         Net loss                               (35.7)%     (30.0)%   (25.3)%   (19.5)%
                                                ------      ------    ------    ------ 
                                                ------      ------    ------    ------ 
</TABLE>

NET SALES 

     Net sales consist of custom manufacturing services, custom memory modules,
standard memory modules, design engineering fees, memory module test solutions
and advanced technology services, less returns and discounts.  Net sales
decreased to $7.5 million in the second quarter of fiscal 1998 from $12.1
million in the second quarter of fiscal 1997.  Net sales decreased to $17.2
million in the first six months of fiscal 1998 from $27.3 million in the first
six months of fiscal 1997.  The decrease in fiscal 1998 is primarily due to
changes in product mix.  The Company is emphasizing its quick-turn manufacturing
program, Comprehensive Logistics and Supply Solutions ("C.L.A.S.S."), which is
designed to support the build-to-order ("BTO") and configuration-to-order
("CTO") emphasis currently in place or contemplated by all the major personal
computer manufacturers.  The semiconductor memory chips used in this program,
primarily Dynamic Random Access Memory ("DRAM"), are supplied by the customer,
which reduces net sales and cost of sales by removing the highest cost component
in a memory module.  An additional factor in the decrease of net sales in the
second quarter of fiscal 1998 is the February 1998 introduction of the
Sigma-3-TM- testing system.  As a result of this announcement, many customers
postponed test equipment purchases until this product becomes available,
resulting in a short-term decrease in net sales relating to this product line.
Net sales are expected to increase significantly as the Sigma-3-TM- is placed
into mass production.

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 decreased to $1.3 million in second
quarter fiscal 1998 from $1.6 million in the second quarter of fiscal 1997. 
Gross profit increased to $3.4 million in the first six months of fiscal 1998
from $3.2 million in the first six months of fiscal 1997.  Gross profit margin
increased to 16.8% in second quarter 1998 from 13.3% in second quarter fiscal
1997.  Gross profit margin increased to 19.9% in the first six months of fiscal
1998 from 11.7% for the same time period in 1997.  The increase in gross profit
as well as the increase in gross profit margin was due primarily to the
transition to the C.L.A.S.S. program and the continuing decline in the cost of
raw materials, as described in Net Sales above.


                                     10

<PAGE>

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, management and employee 
compensation, and engineering design consulting fees.  Research and 
development expenses increased to $667 thousand in second quarter fiscal 1998 
from $654 thousand in second quarter fiscal 1997.  Expenses for the first six 
months of fiscal 1998 increased to $1.5 million from $1.2 million in the 
first six months of fiscal 1997.  The increase was due primarily to the 
development of new tester products and expenses related to the design of 
standard and custom modules.  Expenses relating to research and development 
are expected to remain approximately the same in terms of absolute dollars 
and to decrease as a percentage of revenue as the anticipated growth in 
revenue occurs. 

SALES AND MARKETING

     Sales and marketing expenses include all compensation of employees and 
independent sales personnel, as well as the costs of advertising, promotions, 
trade shows, travel, direct support and overhead.  Sales and marketing 
expenses decreased to $682 thousand in second quarter fiscal 1998 from $736 
thousand in second quarter fiscal 1997.  Sales and marketing expenses have 
remained at $1.4 million for the first six months of fiscal 1998 and fiscal 
1997.  Sales and marketing expenses expressed as a percentage of revenues 
have increased to 7.9% in the first six months of fiscal 1998 from 5.2% in 
the first six months of fiscal 1997, primarily due to decreased revenues.  
Sales and marketing expenses are expected to increase slightly when expressed 
as a percentage of revenue and to continue to increase in terms of absolute 
dollars in future periods as revenues increase. 

GENERAL AND ADMINISTRATIVE

     General and administrative costs consist primarily of personnel costs, 
including compensation and employee benefits, and support costs including 
utilities, insurance, professional fees and all costs associated with a 
reporting company.  General and administrative expenses increased to $1.3 
million in second quarter fiscal 1998 from $884 thousand in second quarter 
fiscal 1997, an increase of 44%. In the first six months of fiscal years 1998 
and 1997, general and administrative expenses were $2.3 million and $1.7 
million, respectively.  The increase in actual funds expended in fiscal 1998 
is primarily due to the expansion of the Company's facilities and operation 
hours and the addition of staff and contract labor.  In second quarter fiscal 
1998, compensation expense of $123 thousand was incurred in conjunction with 
the re-issuance of stock options to former employees in accordance with the 
terms of two separation agreements.  Expenses associated with the general and 
administrative area are expected to decrease significantly in absolute 
dollars and as a percentage of revenue in future periods due to expense 
containment programs currently in effect.  

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 acquisitions of 1st Tech and DarkHorse.  
Depreciation and amortization increased to $1.1 million in second quarter 
fiscal 1998 from $1.0 million in second quarter fiscal 1997.  Depreciation 
and amortization expenses for the first six months of 1998 were $2.1 million, 
an increase of 3% from the same time period in fiscal 1997.  The increase is 
due primarily to the purchases of additional network equipment and accounting 
software.  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 research and development.  
Amortization expenses are expected to decrease significantly in the third 
quarter of fiscal 1998 due to the complete amortization of goodwill relating 
to the acquisition of 1st Tech and DarkHorse.

                                      11
<PAGE>

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.  Substantially all 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) decreased to $137 thousand of expense in the second 
quarter of fiscal 1998 from $149 thousand in the second quarter of fiscal 
1997, a net decrease of 8%.  Other income (expense) has decreased 10% to $273 
thousand in the first six months of fiscal 1998 from $302 thousand in the 
first six months of fiscal 1997. The Company incurs net interest expense in 
order to maintain increased balances of inventories and accounts receivable.  
The Company expects to continue to require borrowings to fund growth in 
accounts receivable in the future and therefore expects to continue to 
reflect net interest expense. Interest expense is expected to increase 
slightly in terms of absolute dollars due to debt related to short-term 
borrowings for accounts receivable and inventory purchases to support the 
increase in revenues.

PROVISION FOR INCOME TAXES

     During fiscal 1997, the Company incurred consolidated net operating 
losses for U.S. income tax purposes of approximately $6.0 million.  The loss 
carryforwards expire in 2012 and 2011, respectively.  During 1997, the 
Company had temporary differences resulting in future tax deductions of $513 
thousand, principally representing tax basis in accrued liabilities and 
intangible assets. Deferred income tax assets from the loss carryforwards and 
asset basis differences aggregated $4.6 million and $2.2 million at September 
30, 1997.

     For financial reporting purposes, valuation allowances of $4.6 million 
and $2.2 million have been recorded to offset the deferred tax assets due to 
the uncertainty as to whether the benefits will be realized.

     The availability of the net operating loss carryforward and future tax 
deductions to reduce taxable income are 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 does not 
believe that an IRS Code Section 382 limitation existed as of September 30, 
1997.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, Tanisys has utilized the funds acquired in equity 
financings of its common 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, accounts receivable balances and pay its general and 
administrative expenses.  During the second quarter of fiscal 1998, the 
Company generated $7 thousand in net cash from financing activities versus 
$1.7 million in the second quarter of fiscal 1997.  The $7 thousand in fiscal 
1998 consisted primarily of $109 thousand from the purchase of common stock 
and stock warrants net of $96 thousand in net payments on the Company's 
revolving credit note.  At March 31, 1998, the Company had $1.9 million of 
cash and restricted cash. 
      
     Capital expenditures totaled approximately $2.3 million and $434 
thousand in the second quarter of fiscal years 1998 and 1997, respectively.  
These expenditures were primarily for the purchase of manufacturing 
equipment, test equipment and the expansion of manufacturing facilities.  The 
Company plans to spend approximately $4.8 million in the remainder of fiscal 
1998 in capital expenditures for additional manufacturing capacity through 
working capital, operating leases and capital leases.  At May 5, 1998, $1.7 
million of the estimated $4.8 million had been committed for the purchase of 
capital expenditures, to be financed through operating and capital leases. 

                                      12
<PAGE>

     The Company has entered into certain capital lease arrangements.  The 
outstanding principal on these obligations at March 31, 1998 was $188 
thousand.  
     
     The Company believes that its existing funds, anticipated cash flow from 
operations and amounts available from future vendor credits, bank borrowings, 
the exercise of outstanding warrants and stock options and equity financings 
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.

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 1998 
and 1997, the ten largest customers accounted for approximately 78% and 64% 
of net sales, respectively.  One customer produced 46% of sales in the second 
quarter of fiscal 1998.  The same customer produced 33% of sales for the six 
months ended March 31, 1998.  In the second quarter of fiscal 1997, one 
customer produced 25% of net sales.  The Company's two largest customers 
accounted for 13% and 11% of total revenue for the first six months of fiscal 
1997.  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 in fiscal 1998 
will continue to utilize the Company's products or services.  The actual 
customers producing the sales are different between the two periods, and the 
Company expects this type of variation of volume of purchases from a 
particular customer to continue throughout this fiscal year.
     
     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 canceled, 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 
customer's 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 Company is currently in the process of evaluating its information 
technology infrastructure for Year 2000 compliance.  The Company does not 
expect that the cost to modify its information technology infrastructure to 
be Year 2000 compliant will be material to its financial condition or results 
of operations.  The Company does not anticipate any material disruption in 
its operations as a result of any failure by the Company to be in compliance.
     
     The Company does not currently have any information concerning Year 2000 
compliance status of its suppliers and customers.  In the event that any of 
the Company's significant suppliers or customers do not successfully and 
timely achieve Year 2000 compliance, the Company's business or operations 
could be adversely affected.

                                      13
<PAGE>

                           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 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At the Annual Meeting of Stockholders held on March 24, 1998, the 
following matters were adopted by the margins indicated:

     1.  To elect directors Charles T. Comiso and Gordon Matthews to serve until
the 2001 Annual Meeting of Stockholders.

<TABLE>
<S>                           <C>
          For:                16,155,232
          Against:            N/A
          Abstain:            15,300         
</TABLE>

     2.  To ratify the appointment of Arthur Andersen LLP as independent public 
accountants of the Company for the fiscal year ending September 30, 1998.

<TABLE>
<S>                           <C>
          For:                14,896,487
          Against:            6,000
          Abstain:            1,295,045
</TABLE>

ITEM 5.  OTHER INFORMATION
     
     None.

ITEM 6.  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>
EXHIBIT
NUMBER                              DESCRIPTION    
-------                             -----------
<S>     <C>
 3.1    Articles of  Continuance dated June 30, 1993 (Exhibit 3.1 to Form
        10 Registration Statement filed November 27, 1996)

 3.2    Articles of Amendment to Articles of Continuance dated July 11,
        1994 (Exhibit 3.2 to Form 10 Registration Statement filed November 27, 
        1996)

 3.3    Articles of Amendment dated April 28, 1995 (Exhibit 3.3 to Form 10
        Registration Statement filed November 27, 1996)

 3.4    Articles of Amendment dated April 15, 1996 (Exhibit 3.4 to Form 10
        Registration Statement filed November 27, 1996)

 3.5    Restated Bylaws of the Company (Exhibit 3.5 to Form 10 Registration
        Statement filed November 27, 1996)
</TABLE>

                                      14
<PAGE>

<TABLE>
<S>     <C>
 4.1    Form of Common Stock Certificate (Exhibit 4.6 to Form 10
        Registration Statement filed November 27, 1996)

 4.2    Form of Class S Warrant Certificate (Exhibit 4.2 to Form 10-Q for
        the Quarterly period Ended December 31, 1997)
            
10.37   Manufacturing Service Agreement dated February 2, 1998 by and
        between the Company and LG Semicon American, Inc. (filed herewith)
            
10.38   Manufacturing Service Agreement dated March 1, 1998 by and between
        the Company and Toshiba America Electronic Components, Inc. (filed
        herewith)

27.1    Financial Data Schedule (filed herewith)
</TABLE>

CURRENT REPORTS ON 8-K:
     
     None.



                                  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 8, 1988         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 8, 1998         By: /s/ DONALD R. TURNER        
                              -------------------------------------------------
                              Donald R. Turner
                              CORPORATE CONTROLLER
                              (Duly authorized and Principal Accounting Officer)








                                      15