|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 1934For the
quarterly period ended December 31, 2000
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------

or

|[_] |  | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the
transition period from                to
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------

|Commission File Number
0-29038


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

|Wyoming(State or other jurisdiction ofincorporation or organization) | 74-2675493(I.R.S. EmployerIdentification Number)
|-------------------------------------------------------------------- | ------------------------------------------------

|12201 Technology Blvd., Suite 125Austin, Texas(Address of principal executive offices) | 78727(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 common stock at February 9,
2001:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Title of Class |                            | Number of SharesOutstanding
| | -------------- | -------------------------- | ---------------------------
| |                | Common Stock, no par value |                            

|TANISYS TECHNOLOGY,
INC. AND SUBSIDIARIES


INDEX
|-------------------------------------------------

|                                                                                          |        
|----------------------------------------------------------------------------------------- | -------
|PART I   FINANCIAL INFORMATION                                                            |        
|Item 1.        Interim Consolidated Financial Statements (Unaudited)                      |        
|Consolidated Balance Sheets 
December 31, 2000 and September 30, 2000                    |        
|Consolidated Statements of Operations
 For the Three Months Ended                        |        
|December 31, 2000
and 1999                                                                |        
|Consolidated Statements of Cash Flows
 For the Three Months Ended                        |        
|December 31, 2000
and 1999                                                                |        
|Notes to Interim Consolidated Financial
Statements                                        |        
|Item 2.        Managements Discussion and Analysis of Financial Condition and Results of |        
|Operations                                                                                |        
|Item 3.        Quantitative and Qualitative Disclosures About Market Risk                 |        
|PART II   OTHER INFORMATION                                                               |        
|Item 1.        Legal Proceedings                                                          |        
|Item 2.        Changes in Securities and Use of Proceeds                                  |  
;
|Item 3.        Defaults upon Senior Securities                                            |        
|Item 5.        Other Information                                                          |        
|Item 6.        Exhibits and Reports on Form 8-K                                           |        
|SIGNATURES                                                                                |        

|2
|-

|PART 1. FINANCIAL
INFORMATION


Item 1. Financial
Statements



TANISYS TECHNOLOGY,
INC. and SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(UNAUDITED)
|-----------------------------------------------------------------------------------------------------------------------------------------------

|                                                            | December 31,2000 | September 30,2000
|----------------------------------------------------------- | ---------------- | -----------------
|                                                           
|ASSETS                                                      |                  |                  
|Current assets:                                             |                 
|Cash and cash equivalents                                   |                  | $      808,151   
|Restricted cash                                             |                  | 50,000           
|Trade accounts receivable, net of allowance of $132,793 and |                 
|$132,743, respectively                                      |                  | 2,319,446        
|Inventory                                                   |                  | 725,415          
|Prepaid expenses and other                                  |                  | 114,528          
|                                                           
|Total current assets                                        |                  | 4,017,540        
|Property and equipment, net of accumulated depreciation of  |                 
|$853,686 and $954,945, respectively                         |                  | 439,025          
|Other noncurrent assets                                     |                  | 57,130           
|                                                           
|Total Assets                                                |                  | $   4,513,695    
|                                                           
|LIABILITIES AND STOCKHOLDERS EQUITY                        |                 
|Current liabilities:                                        |                 
|Accounts payable                                            |                  | $      321,480   
|Accrued liabilities                                         |                  | 295,011          
|Revolving credit note                                       |                  | 700,000          
|Current portion of obligations under capital lease          |                  | 7,367            
|Net current liabilities of discontinued operations          |                  | 853,180          
|                                                           
|Total current liabilities                                   |                  | 2,177,038        
|Long-term portion of obligations under capital lease        |                  |                 
|                                                           
|Total liabilities                                           |                  | 2,177,038        
|                                                           
|Stockholders equity:                                       |                 
|Common stock, no par value, 50,000,000 shares authorized,   |                 
|24,097,358 and 24,097,358 shares issued and outstanding,    |                 
|respectively                                                |                  | 37,579,849       
|Additional paid-in capital                                  |                  | 1,711,719        
|Accumulated deficit                                         |                  | (36,954,911      
|                                                           
|Total stockholders equity                                  |                  | 2,336,657        
|                                                           
|Total liabilities and stockholders equity                  |                  | $   4,513,695    
|                                                           

|The accompanying notes
are an integral part of these interim consolidated financial statements.
3
|-------------------------------------------------------------------------------------------------

|TANISYS TECHNOLOGY,
INC. and SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)
|-----------------------------------------------------------------------------------------

|                                             | For the Three MonthsEnded December 31,
|-------------------------------------------- | --------------------------------------
|
|                                            
|Net sales                                    |                                       
|Cost of goods sold                           |                                       
|                                            
|Gross profit                                 |                                       
|                                            
|Operating expenses:                          |                                       
|Research and development                     |                                       
|Sales and marketing                          |                                       
|General and administrative                   |                                       
|Depreciation and amortization                |                                       
|                                            
|Total operating expenses                     |                                       
|                                            
|Operating income                             |                                       
|Other income (expense):                      |                                       
|Interest income                              |                                       
|Interest expense                             |                                       
|Other                                        |                                       
|                                            
|Net income                                   |                                       
|                                            
|Net income                                   |                                       
|Preferred stock dividend                     |                                       
|                                            
|Net income applicable to common stockholders |                                       
|                                            
|Basic income per common share:               |                                       
|Income from applicable to common stockholder |                                       
|                                            
|Diluted income per common share:             |                                       
|Income applicable to common stockholders     |                                       
|                                            

|The accompanying notes
are an integral part of these interim consolidated financial statements.
4
|-------------------------------------------------------------------------------------------------

|TANISYS TECHNOLOGY,
INC. and SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)
|-----------------------------------------------------------------------------------------

|                                                               | For the Three MonthsEnded December 31,
|-------------------------------------------------------------- | --------------------------------------
|
|                                                              
|CASH FLOWS FROM OPERATING ACTIVITIES:                          |                                       
|Net income                                                     |                                       
|Adjustments to reconcile net income to net cash provided by    |                                       
|(used in) operating activities:                                |                                       
|Depreciation and amortization                                  |                                       
|Loss on disposal of fixed assets                               |                                       
|Changes in operating assets:                                   |                                       
|Restricted cash                                                |                                       
|Accounts receivable, net                                       |                                       
|Inventory                                                      |                                       
|Prepaid expenses and other                                     |                                       
|Other noncurrent assets                                        |                                       
|Accounts payable                                               |                                       
|Accrued liabilities                                            |                                       
|                                                              
|Net cash provided by (used in) operating activities of         |                                       
|continuing operations                                          |                                       
|                                                              
|CASH FLOWS FROM INVESTING ACTIVITIES:                          |                                       
|Purchases of fixed assets                                      |                                       
|                                                              
|Net cash used in investing activities of continuing operations |                                       
|                                                              
|CASH FLOWS FROM FINANCING ACTIVITIES:                          |                                       
|Draws (repayments) on revolving credit note, net               |                                       
|Payment of debt financing costs                                |                                       
|Proceeds from issuance of debt to stockholder                  |                                       
|(Payments) on capital lease obligations                        |                                       
|                                                              
|Net cash provided by (used in) financing activities of         |                                       
|continuing operations                                          |                                       
|                                                              
|Net cash used in discontinued operations                       |                                       
|                                                              
|Net decrease in cash and cash equivalents                      |                                       
|Cash and cash equivalents at beginning of period               |                                       
|                                                              
|Cash and cash equivalents at end of period                     |                                       
|                                                              
|                                                               |                                       
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:              |                                       
|Cash paid for interest                                         |                                       
|Interest received                                              |                                       
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                   |                                       
|Preferred stock dividends paid in common stock                 |                                       
|Preferred stock dividends accrued                              |                                       
|Conversion of preferred stock to common stock                  |                                       
|                                                              

|The accompanying notes
are an integral part of these interim consolidated financial statements.
5
|-------------------------------------------------------------------------------------------------

|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 unaudited interim consolidated financial statements include the accounts of
Tanisys Technology, Inc. (Tanisys) and its wholly owned subsidiaries, 1st Tech
Corporation (1st Tech), DarkHorse Systems, Inc. (DarkHorse), and Rosetta Marketing
and Sales Inc., and also include the accounts of Tanisys (Europe) Ltd., located in
Scotland, for the three months ended December 31, 1999 (collectively, the Company). The
stock of Tanisys (Europe) Ltd. was sold on December 9, 1999 (see Note 2 below). The
consolidated financial statements have been prepared in accordance with generally
accepted accounting principles. All significant intercompany balances and transactions
have been eliminated in consolidation.


The
accompanying unaudited interim 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 unaudited
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, 2000 contained in the Companys Form 10-K filed with the Securities and
Exchange Commission on December 15, 2000.


The
Company designs, manufactures and markets production-level automated test equipment for a
wide variety of memory technologies.


On
December 9, 1999, the Company sold its memory module manufacturing business, including
all of the common stock of Tanisys (Europe) Ltd. The assets, liabilities and the loss
from the sale of the memory module manufacturing business have been included in the
accompanying interim consolidated financial statements as discontinued operations.


NOTE 2.  DISCONTINUED
OPERATIONS


On
December 9, 1999, the Company sold certain assets of its memory module manufacturing
business, including all the stock of Tanisys (Europe) Ltd., a wholly owned subsidiary of
the Company located in Scotland. The sale also included the assumption of certain
liabilities by the buyer. The results of the memory module manufacturing business have
been classified as discontinued, and prior periods have been restated to reflect the sale.


The
loss on the sale, as well as the costs associated with the disposition of the memory
module manufacturing business, has been recorded in the financial statements as of
September 30, 1999. As of December 31, 2000, remaining future costs associated with the
disposition of the discontinued operations are $853,180.
6
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NOTE 3:  CASH AND CASH
EQUIVALENTS


The
Company invests its excess cash in money market funds, U.S. Treasury obligations, and
short-term debt instruments of U.S. corporations with strong credit ratings. The Company
has established guidelines with respect to the diversification and maturities that
maintain safety and liquidity. The Company considers all highly liquid investments with
an original maturity of three months or less and money market funds to be cash
equivalents. Restricted cash consists of a certificate of deposit pledged as collateral
for a letter of credit to a specific vendor.


NOTE 4:  INVENTORY


Inventory
consists of the following:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                | December 31,2000 | September 30,2000
|--------------- | ---------------- | -----------------
|               
|Raw materials   |                  | $491,379         
|Work-in-process |                  | 66,335           
|Finished goods  |                  | 167,701          
|               
|Total inventory |                  | $725,415         
|               

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


NOTE 5:  LONG-TERM DEBT


As of
December 31, 2000, and September 30, 2000, the Company had no long-term debt. However,
the Company had long-term debt to certain stockholders in the amount of $1,780,440 as of
December 31, 1999, upon which interest was paid during the quarter ended December 31,
1999. During the second quarter of the fiscal year ended September 30, 2000, all of the
debt to certain stockholders was converted to 4,000,000 shares of Common Stock. Along
with the notes payable to these stockholders, all related discounts and debt issuance
costs have been charged to Common Stock on the Consolidated Balance Sheet for the fiscal
year ended September 30, 2000.


NOTE 6:  PREFERRED STOCK


Pursuant
to a Convertible Stock Purchase Agreement dated June 30, 1998, the Company issued 400
shares of its 5% Series A Convertible Preferred Stock, par value $1 per share (Series A
Stock), for $4,000,000. As of March 31, 2000, the Company had converted all of the
Series A Stock into shares of Common Stock.


NOTE 7:  STOCKHOLDERS
EQUITY


At the
Companys Annual Meeting of Stockholders on May 23, 2000, the Companys stockholders
approved a one-for-two reverse stock split of the Companys Common Stock (the Reverse
Split) effective May 25, 2000. The Reverse Split had no effect on the number of
authorized shares of Common Stock, preferred stock or Series A Preferred Stock. Any
stockholder otherwise entitled to any fractional share interest due to the Reverse Split
received in lieu thereof, one additional share of Common Stock for the fractional share
such stockholder would have been entitled to as a result of the Reverse Split.









7
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
number of shares and per share amounts of the Companys Common Stock set forth herein
have been retroactively adjusted for all periods presented to reflect the Reverse Split.


On
December 6, 2000, the Company filed a Registration Statement on Form S-8 with the
Securities and Exchange Commission requesting that 7,000,000 shares of Common Stock be
registered and set aside for the Companys stock option plans.


NOTE 8:  EARNINGS PER
SHARE


Basic
income or loss per common share is computed based on the weighted average number of
common shares outstanding during each period. For the quarters ended December 31, 2000
and 1999, diluted income per common share is computed based on the weighted average
number of common shares outstanding after giving effect to the potential issuance of
Common Stock on the exercise of options and warrants. All Common Stock amounts and per
share information have been restated to reflect the Reverse Split for all periods
presented. The following table provides a reconciliation between net income and net
income applicable to common stockholders, and between basic and diluted shares
outstanding:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                         | For the Three Months EndedDecember 31,
|---------------------------------------- | --------------------------------------
|
|                                        
|Net income                               |                                       
|Less-                                    |                                       
|Series A Stock dividends                 |                                       
|Net income applicable to common          |                                       
|stockholders (basic and diluted)         |                                       
|                                        
|Weighted average number of common        |                                       
|shares used in basic earnings per share  |                                       
|Effect of dilutive securities            |                                       
|Stock Options                            |                                       
|Warrants                                 |                                       
|Series A Stock                           |                                       
|                                        
|Weighted average number of common        |                                       
|shares and dilutive potential Common     |                                       
|Stock used in dilutive earning per share |                                       
|                                        

|NOTE 9:  SUBSEQUENT
EVENT(S)


None.


NOTE 10:  CONTINGENCIES


The
Company is a defendant in a lawsuit filed by one of its customers related to the
discontinued memory module manufacturing business for alleged breach of contract. The
suit asks for actual damages, including all related expenses, in the amount of $77,838.
The Company believes the suit is without merit and is vigorously defending its position.
The Company believes it is unlikely that the final outcome of this claim would have a
material adverse effect on the Companys financial position or results from operations.


A
former leasing company has filed a lawsuit claiming a breach of a lease agreement for
certain manufacturing equipment previously utilized in the Companys discontinued memory
module manufacturing business. The manufacturing equipment has been sold at the direction
of the leasing company. The Company is unable at this time to determine the outcome of
this lawsuit. There can be no assurance that the resolution of this claim or any future
proceeding would not have a material adverse effect on the Companys results of
operations for the fiscal period in which such resolution may occur.





8
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The
Company is a defendant in a lawsuit filed by the purchaser of the Companys discontinued
memory module manufacturing business for alleged breach of representations, warranties
and covenants. The suit asks for $50,000 plus attorneys fees and court costs. The
Company believes that suit is without merit and is vigorously defending its position. The
Company believes it is unlikely that the final outcome would have a material adverse
effect on the Companys financial position or results from operations; however due to the
inherent uncertainty of litigation, there can be no assurance that the resolution of any
particular claim or proceeding would not have a material adverse effect on the Companys
results of operations for the fiscal period in which such resolution occurred.


In
December 1999, the Company sold assets and liabilities related to its memory module
manufacturing business and exited the memory module manufacturing business. Included in
the sale was all of the capital stock of Tanisys (Europe) Ltd., which was then a wholly
owned subsidiary of the Company. Tanisys (Europe) Ltd. (the Lessor) had executed a
15-year lease in April 1998 covering industrial premises situated in High Blantyre,
Scotland. In connection with the execution of the lease, the Company co-guaranteed the
lease payments along with the Scottish Enterprise. The initial annual rental payment was
approximately $200,000, plus increases based on reviews in 2003 and 2008. In March or
April 2000, Tanisys (Europe) Ltd., which is now owned by the purchaser of the Companys
discontinued memory module manufacturing business, vacated the premises, and accordingly,
the landlord is seeking reimbursement for its losses resulting from the Lessor vacating
the property. The Company is the first guarantor and the Scottish Enterprise is the
second guarantor of the lease. In addition to the guaranty of the rental payments, the
Company may be liable for interest, legal fees and other expenses in connection with the
default of Tanisys (Europe) Ltd. The Company is in the process of negotiating a discharge
of its obligations with the landlord; however, there is no assurance that the Company
will be successful in negotiating a favorable discharge of these obligations, in which
case the resulting liability could have a material adverse effect on the business,
financial condition and results of operations of the Company.




9
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 months ended December 31, 2000 and 1999. It
should be read in conjunction with the unaudited interim Consolidated Financial
Statements, the Notes thereto and other financial information included elsewhere in this
report, and in the Companys Annual Report on Form 10-K for the year ended September 30,
2000 filed with the Securities and Exchange Commission on December 15, 2000. For purposes
of the following discussion, references to year periods refer to the Companys fiscal
year ended September 30, 2000 and references to quarterly periods refer to the Companys
fiscal quarters ended December 31, 2000 and 1999.


On
December 9, 1999, the Company sold its memory module manufacturing business, including
all of the common stock of Tanisys (Europe) Ltd. The results of the memory module
manufacturing business have been classified as discontinued operations, and prior periods
have been restated to reflect the sale. The loss on the sale, as well as the costs
associated with the disposition of the memory module manufacturing business, has been
recorded in the consolidated financial statements as of September 30, 1999. As of
December 31, 2000, the remaining future costs associated with the disposition of the
discontinued operations was $853,180.


Since
consummating the sale transaction, the Company has refocused all of its efforts on the
development, manufacture and sale of production-level automated test equipment.




10
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 months ended December 31, 2000 and
1999:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              | For the ThreeMonths EndedDecember 31,
|----------------------------- | -------------------------------------
|
|                             
|Net sales                     |                                      
|Cost of goods sold            |                                      
|                             
|Gross profit                  |                                      
|                             
|Operating expenses:           |                                      
|Research and development      |                                      
|Sales and marketing           |                                      
|General and administrative    |                                      
|Depreciation and amortization |                                      
|                             
|Total operating expenses      |                                      
|                             
|Operating income              |                                      
|                             
|Other income (expense):       |                                      
|Interest income               |                                      
|Interest expense              |                                      
|Other                         |                                      
|                             
|Net income                    |                                      
|                             

|Net Sales


Net
sales consist of sales of production-level automated test equipment, less returns and
discounts. Net sales increased 6% to $2,140,277 in the first quarter of fiscal 2001 from
$2,016,660 in the same period last year. While sales of the Companys Darkhorse SIGMA3
memory module test systems remain strong, the quarter ended December 31, 2000, included
the first customer shipment of the Model 400, designed for testing the new Double Data
Rate (DDR) memory module technology.


Cost of Sales and Gross
Profit


Cost
of sales includes the costs of all components and materials purchased for the manufacture
of products, direct labor and related overhead costs. Cost of sales for the December 2000
quarter was up slightly in absolute dollars over the December 1999 quarter, but decreased
from 38% of net sales in the December 1999 quarter to 36% in the December 2000 quarter.
Gross profit for the quarter ended December 31, 2000 was $1,371,436, up approximately 9%
over the gross profit of $1,258,522 from the same quarter of last year. Gross profit as a
percent of sales increased to 64% in the quarter ended December 31, 2000 from 62% in the
December 1999 quarter. The increase in gross profit percentage was primarily attributable
to better raw material pricing.


Research and Development


Research
and development expenses, which consist of all costs associated with the engineering
design and testing of new technologies and products, were $556,519 for the first quarter
of fiscal year 2001 as compared to $318,625 for the same period last year, representing a
75% increase. The increase is a result of the development of test systems for both DDR
and Flash memory technologies, as well as a new multi-site architecture that can be
applied to all memory technologies. In an effort to continually improve engineering
productivity, the Company invested in additional software and hardware tools during the
first fiscal quarter of 2001.


Research
and development expenditures are expected to continue to increase as resources are
allocated to develop new test systems and enhance current test systems to meet the market
demands for the testing of new memory technologies.





11
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Sales and Marketing


Sales
and marketing expenses include compensation of sales and marketing related employees and
independent sales representatives, plus costs for travel, advertising, trade shows and
related overhead. Expenses of $325,417 for the first fiscal quarter of 2001 were
approximately the same when compared to $324,558 for the same quarter last year. The
Company continues to successfully sell test systems to the worlds largest semiconductor
and memory module manufacturers.


Sales
and marketing expenses expressed as a percentage of revenues in the first quarter of
fiscal 2001 and 2000 were 15% and 16%, respectively. Even though sales and marketing
expenses were relatively the same between the first fiscal quarter of 2001 and first
fiscal quarter of 2000, the Company expects its sales and marketing expenses to increase
in terms of absolute dollars and decrease as a percentage of net sales in future periods
as growth in revenue occurs.


General and
Administrative


General
and administrative expenses consist primarily of personnel costs, including employee
compensation and benefits, and support costs including utilities, insurance, professional
fees and all costs associated with a reporting company. General and administrative
expenses for the first quarter of fiscal 2001 decreased 6%, or $9,371, to $155,697 from
$165,068 for the same quarter of fiscal 2000. When expressed as a percentage of sales,
general and administrative expenses decreased from 8% in the first quarter of fiscal 2000
to 7% in the same quarter of fiscal 2001, primarily due to more efficient management of
these expenses. The absolute dollar expenses associated with the general and
administrative area are expected to increase at a much slower pace than revenues in
future periods with the anticipated continued growth in business activity.


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 Goods Sold, and the
amortization of intangibles, including patents related to memory module test systems
technology. Depreciation and amortization decreased to $32,111 in the first quarter of
fiscal 2001 from $54,452 in the same quarter of fiscal 2000. This decrease was due to the
declining depreciable basis of the Companys fixed assets.


Other Income (Expense),
Net


Other
income (expense), net consists primarily of interest income less interest expense.
Interest expense for the quarter ended December 31, 2000, is mostly attributable to the
Companys working capital loan facility which is utilized for short-term inventory
requirements and to fund accounts receivable. Interest expense for the quarter ended
December 31, 1999, included interest paid on the Companys working capital loan agreement
and interest paid on debt the Company issued to certain stockholders of the Company in
November 1998. The debt was converted to Common Stock in the second fiscal quarter of the
year ended September 30, 2000. Interest income relates to the investment of available
cash in short-term interest bearing accounts and cash equivalent securities. Other income
(expense) decreased to $4,051 of expense in the first quarter of fiscal 2001 from
$115,955 of expense in the first quarter of fiscal 2000. The decrease in other income
(expense) is primarily due to the reduction of interest expense resulting from the
reduction in debt from December 2000 to December 2001.


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 first quarter of fiscal 2001, the Company utilized $646,356 of cash in its continuing
operations associated primarily with the increase in accounts receivable of $606,029. The
vast majority of the Companys accounts receivable is with strong companies in the memory
module business. The Companys financing activities generated $96,725 due to an increase
in its revolving credit line. The Company had $808,151 in cash and working capital of
$1,840,502 at December 31, 2000, an increase in working capital of $247,045 from
September 30, 2000, the Companys previous fiscal year end.




12
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Significant Customer
Concentration


A
significant percentage of the Companys net sales is produced by a relatively small
number of customers. In the first quarter of fiscal 2001, the ten largest customers
accounted for approximately 98% of net sales compared to approximately 99% in the same
period in fiscal 2000. Two customers represented 51% and 20% of sales, respectively, in
the first quarter of fiscal 2001; the customer that represented 20% of sales in the first
quarter of fiscal 2001 represented only 9% of sales in the same period in fiscal year
2000. However, there were no other customers to compare between the first quarters in
both 2001 and 2000. 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.


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.



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


Information
on the Companys legal proceedings is contained in this Form 10-Q for the quarterly
period ended December 31, 2000 in Part 1 Financial Information under the caption Notes
to Consolidated Financial Statements under Note 10: Contingencies, and is incorporated
herein by reference.



Item 6. Exhibits and
Reports on Form 8-K.


(a)   Exhibits:


The
exhibits listed below is filed as part of this report.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Exhibit Number |  | Description
| | -------------- |  | -----------

| | 3.1 |  | Amended
and Restated Articles of Incorporation of Tanisys Technology, Inc. (filed herewith)
| | --- |  | -------------------------------------------------------------------------------------------

|(b)   Current Reports on
8-K:


None.





13
|---------------------------------------------

|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: February 14, 2001 |  | By: /s/ CHARLES T. COMISO 
Charles T. ComisoChief Executive Officer,President and Director
|----------------------- |  | --------------------------------------------------------------------------------------------------------

|Date: February 14, 2001 |  | By: /s/ TERRY W. REYNOLDS 
Terry W. ReynoldsVice President and Chief Financial Officer(Duly authorized and Principal Accounting Officer)
|----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

|14
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