<PAGE>
                                       
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                       
                            WASHINGTON, D.C.  20549

                             ---------------------
                                       
                                   FORM 10-Q

(Mark One)
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the quarterly period ended June 30, 1998
                                       or
[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES 
      EXCHANGE ACT OF 1934
      For the transition period from                 to
                                     ---------------    ---------------
                                       
                         Commission File Number 0-29038
                                       
                            TANISYS TECHNOLOGY, INC.
             (Exact name of registrant as specified in its charter)
                                       
                                       
                WYOMING                                          74-2675493
    (State or other jurisdiction of                          (I.R.S. Employer
     incorporation or organization)                       Identification Number)

   12201 TECHNOLOGY BLVD., SUITE 125
             AUSTIN, TEXAS                                          78727
(Address of principal executive offices)                         (Zip Code)
                                       
                                (512) 335-4440
              (Registrant's Telephone Number, Including Area Code)
                                          
     Indicate by check mark whether the Registrant (1) has filed all reports 
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act 
of 1934 during the preceding 12 months (or for such shorter period that the 
Registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.  [X] Yes  [ ] No

     Indicated below are the number of shares outstanding of the Registrant's 
common stock and 5% Series A Convertible Preferred Stock at August 13, 1998:

<TABLE>
<CAPTION>
                                                    NUMBER OF SHARES
             TITLE OF CLASS                           OUTSTANDING
             --------------                         ----------------
     <S>                                            <C>
     Common Stock, no par value                        20,729,714
     Preferred Stock, $1.00 par value                         400
</TABLE>
                                          
<PAGE>

                   TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                                       
                                     INDEX
                                       


<TABLE>
<S>                                                                         <C>
PART I   FINANCIAL INFORMATION
Item 1.  Financial Statements
           Consolidated Balance Sheets - June 30, 1998
             (unaudited) and  September 30, 1997 . . . . . . . . . . . . .   3
           Consolidated Statements of Operations - For the Three 
             and Nine Month Periods Ended June 30, 1998 and 1997
             (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . .   4
           Consolidated Statements of Cash Flows - For the Nine 
             Month Periods Ended June 30, 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 . . . . . . . . . . . . . . . . . . . . . . . .  15
Item 2.  Changes in Securities and Use of Proceeds . . . . . . . . . . . .  15
Item 5.  Other Information . . . . . . . . . . . . . . . . . . . . . . . .  15
Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . .  16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
</TABLE>


                                       2
<PAGE>

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
                                       
                    TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)
                                       
<TABLE>
<CAPTION>
                                                        June 30,       September 30,
                                                          1998             1997
------------------------------------------------------------------------------------
<S>                                                   <C>              <C>
ASSETS
Current assets:
  Cash and cash equivalents                           $  4,043,543     $  1,990,017
  Restricted cash                                            8,121        1,539,448
  Trade accounts receivable, net of allowance
    of $280,213 and $180,157, respectively               4,070,675        3,519,369
  Accounts receivable from related parties                       0           12,371
  Inventory, net of allowance of $470,132 
    and $317,023, respectively                           3,872,129        4,489,050
  Prepaid expenses and other current assets                485,990          364,042
------------------------------------------------------------------------------------
      Total current assets                              12,480,458       11,914,297
------------------------------------------------------------------------------------
Property and equipment, net of accumulated 
  depreciation of $2,561,013 and $1,730,832,
  respectively                                           5,589,555        2,539,324
Organization costs, net                                        128              512
Patents and trademarks, net                                 72,750           80,327
Goodwill, net of accumulated amortization
  of $7,170,998 and $5,079,457, respectively                     0        2,091,541
Other noncurrent assets                                    541,808          605,957
------------------------------------------------------------------------------------
Total Assets                                          $ 18,684,699     $ 17,231,958
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                    $  6,262,028     $  3,917,786
  Accounts payable to related parties                            0              250
  Accrued liabilities                                    2,981,535          710,189
  Revolving credit note                                  3,323,588        4,172,516
------------------------------------------------------------------------------------
      Total current liabilities                         12,567,151        8,800,741
------------------------------------------------------------------------------------
  Obligations under capital lease                          641,608           81,114
------------------------------------------------------------------------------------
      Total liabilities                                 13,208,759        8,881,855
------------------------------------------------------------------------------------
Mandatorily redeemable convertible preferred 
  stock: 
5% Series A Convertible Preferred 
  Stock - $1 par value, 400 shares
  authorized, 400 and 0 shares issued and 
  outstanding, respectively                              1,917,688                0
------------------------------------------------------------------------------------
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
Additional paid-in capital                               1,687,312                0
Foreign translation adjustment                              (2,625)               0
Accumulated deficit                                    (27,161,209)     (20,249,421)
------------------------------------------------------------------------------------
      Total stockholders' equity                         3,558,252        8,350,103
------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity            $ 18,684,699     $ 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>
<CAPTION>
                                                             For the Three                  For the Nine
                                                              Months Ended                  Months Ended
                                                               June  30,                      June 30,
                                                          1998          1997            1998           1997  
--------------------------------------------------------------------------------------------------------------
<S>                                                    <C>           <C>            <C>            <C>
Net sales                                              $6,774,445    $11,234,115    $23,981,692    $38,555,153
Cost of goods sold                                      6,138,178      9,757,174     19,927,368     33,879,602
--------------------------------------------------------------------------------------------------------------
Gross profit                                              636,267      1,476,941      4,054,324      4,675,551
--------------------------------------------------------------------------------------------------------------

Operating expenses:
   Research and development                               638,498        600,442      2,115,613      1,772,782
   Sales and marketing                                    739,684        701,319      2,093,590      2,135,651
   General and administrative                           1,097,717        861,270      3,385,568      2,604,922
   Depreciation and amortization                          479,361      1,064,738      2,611,187      3,128,221
   Bad debt expense                                       108,925        400,185        350,868      2,206,832
--------------------------------------------------------------------------------------------------------------
      Total operating expenses                          3,064,185      3,627,954     10,556,826     11,848,408
--------------------------------------------------------------------------------------------------------------
Operating loss                                         (2,427,918)    (2,151,013)    (6,502,502)    (7,172,857)
--------------------------------------------------------------------------------------------------------------
Other income (expense):
   Interest income                                         15,917          3,036         50,127         17,435
   Interest expense                                      (152,190)      (144,863)      (459,413)      (461,737)
--------------------------------------------------------------------------------------------------------------
Net loss                                              ($2,564,191)   ($2,292,840)   ($6,911,788)   ($7,617,159)
--------------------------------------------------------------------------------------------------------------

Basic and diluted loss from operations per share           ($0.12)        ($0.13)        ($0.34)        ($0.45)
--------------------------------------------------------------------------------------------------------------

Weighted average shares outstanding:
   Basic                                               20,729,714     17,851,214     20,568,707     16,932,967
   Diluted                                             20,729,714     17,851,214     20,568,707     16,932,967
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
</TABLE>

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


                                       4
<PAGE>
                                       
                   TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                        FOR THE NINE  MONTHS ENDED,  
                                                                JUNE 30,
                                                           1998            1997
----------------------------------------------------------------------------------
<S>                                                   <C>              <C>
Cash flows from operating activities:
Net loss                                              ($6,911,788)     ($7,617,159)
Adjustments to reconcile net loss to net cash 
 earned (used) in operating activities:
   Depreciation and amortization                        2,948,091        3,128,221
   Issuance of stock options                              123,000                0
   Decrease in restricted cash                          1,531,327                0
   (Increase) decrease in accounts receivable            (538,935)         618,460
   (Increase) decrease in inventory                       616,921       (1,404,725)
   Decrease in prepaid expense                           (121,948)         (72,314)
   (Increase) decrease in other assets                     64,149         (572,042)
   Increase in accounts payable and accrued 
     liabilities                                        4,615,338        2,999,923
----------------------------------------------------------------------------------
Net cash earned (used) in operating activities          2,326,155       (2,919,636)
----------------------------------------------------------------------------------

Cash flows from investing activities:

   Purchases of property and equipment                 (3,920,457)      (1,063,634)
   Proceeds from sale of property and equipment            21,637                0
   Patent and trademark costs                                   0           (6,094)
----------------------------------------------------------------------------------
Net cash used in investing activities                  (3,898,820)      (1,069,728)
----------------------------------------------------------------------------------

Cash flows from financing activities:
   Draws (payments) on revolving credit note, net        (848,928)        (234,646)
   Principal draws (payments) on capital lease 
     obligations                                          560,494          (43,237)
   Increase in foreign translation adjustment              (2,625)               0
   Net proceeds from issuance of preferred stock        3,605,000                0
   Net proceeds from issuance of common stock             182,000                0
   Net proceeds from exercise of stock options            128,250           32,900
   Net proceeds from exercise of stock warrants             2,000        2,485,968
   Premerger tax distributions on retained earnings             0          (16,500)
----------------------------------------------------------------------------------
Net cash provided by financing activities               3,626,191        2,224,485
----------------------------------------------------------------------------------

----------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents        2,053,526       (1,764,879)
Cash and cash equivalents, beginning of period          1,990,017        2,689,569
----------------------------------------------------------------------------------
Cash and cash equivalents, end of period               $4,043,543         $924,690
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------

Supplemental disclosure of cash flow information:
     Cash paid for interest                              $459,413         $420,930
     Cash received from interest                          $50,127          $17,435

Non-cash activity:
     20,000 shares issued to satisfy accounts payable     $32,000                0
</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>
<CAPTION>
                                June 30,     September 30,
                                  1998           1997
                              ----------     -------------
<S>                           <C>            <C>
Raw Materials                 $3,157,000      $3,976,488
Work-in-process                  236,229         204,783
Finished goods                   949,032         624,802
                              ----------      ----------
                               4,342,261       4,806,073
Less inventory allowance        (470,132)       (317,023)
                              ----------      ----------
Inventory, net                $3,872,129      $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 EPS:

<TABLE>
<CAPTION>
                                                          Three months Ended             Nine Months Ended
                                                                June 30,                      June 30,
                                                          1998           1997           1998           1997
                                                      --------------------------    --------------------------
<S>                                                   <C>            <C>            <C>            <C>
Numerator:
  Net loss-numerator for Basic and Diluted
    earnings per share                                ($2,564,191)   ($2,292,840)   ($6,911,788)   ($7,617,159)

Denominator:
  Denominator for basic earnings per share-  
    weighted average shares                            20,729,714     17,851,214     20,568,707     16,932,967
  Effect of dilutive securities:  None                          -              -              -              -  
                                                      -----------    -----------    -----------    -----------
  Denominator for diluted earnings per share-  
    adjusted weighted average shares                   20,729,714     17,851,214     20,568,707     16,932,967
                                                      -----------    -----------    -----------    -----------
                                                      -----------    -----------    -----------    -----------
Basic earnings per share                                   ($0.12)        ($0.13)        ($0.34)        ($0.45)
                                                      -----------    -----------    -----------    -----------
                                                      -----------    -----------    -----------    -----------
Diluted earnings per share                                 ($0.12)        ($0.13)        ($0.34)        ($0.45)
                                                      -----------    -----------    -----------    -----------
                                                      -----------    -----------    -----------    -----------
Stock options and warrants not included in the
  Denominator for diluted earnings per share as
  their effect would have been antidilutive             4,461,377      2,367,317      4,461,377      2,367,317
                                                      -----------    -----------    -----------    -----------
                                                      -----------    -----------    -----------    -----------
</TABLE>

PREFERRED STOCK

Pursuant to a Convertible Stock Purchase Agreement dated June 30, 1998 (the 
"Stock Purchase Agreement"), the Company issued 400 shares of its 5% Series A 
Convertible Preferred Stock, par value $1 per share ("Series A Stock"), for 
$4 million.  The Company incurred offering costs of approximately $400 
thousand.

The Series A Stock is convertible into the Company's no par value common 
stock ("Common Stock") at the option of the holder beginning 90 days after 
the June 30, 1998 closing date.  During the next 150 days, the holder has 
agreed to convert no more than 15% of the Series A Stock if certain quarterly 
revenue targets are met by the Company through December 31, 1998. The Company 
also has agreed to register the underlying Common Stock by October 15, 1998.  
Should this date not be met, the 15% restriction will increase to 25%.  The 
conversion price is the lesser of the fixed conversion price of $2.31 per 
share or a variable conversion price.  The Company has valued this beneficial 
conversion feature at approximately $1.4 million and has reflected this 
amount in additional paid-in capital.  This amount will be charged to the 
accumulated deficit through the earliest date of conversion.

The Series A Stock carries mandatory redemption rights which can be exercised 
by the holder if certain triggering events occur.  These redemption rights 
could require the Company to redeem the Series A Stock for cash based on a 
formula provided in the Stock Purchase Agreement.  The Company cannot 
estimate if or when the triggering events might occur nor the redemption 
price.  Therefore, the mandatory redemption 

                                       7
<PAGE>

feature has not been valued.  Should a triggering event occur, the Company 
will record a charge to the accumulated deficit equal to the difference 
between the redemption price and the carrying value of the Series A Stock.

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

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

At June 30, 1998, the carrying value of the Series A Stock reflects the $4 
million issuance price, less the offering costs and the values of the 
beneficial conversion feature and warrants.

WARRANTS

At June 30, 1998, warrants for the purchase of 289,998 shares of Common Stock 
were outstanding, of which 268,747 were exercisable.

OPTIONS

During the three months ended June 30, 1998, the Board of Directors granted 
seven-year stock options exercisable for the purchase of 142,000 shares of 
Common Stock to employees at an exercise price of $2.69 per share.

NOTE 4:  RELATED PARTY TRANSACTIONS

None.

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 that the 
adoption of these new standards will have no material effect on the Company's 
financial position or results of operations.

NOTE 6:  SUBSEQUENT EVENT

In connection with the issuance of Series A Stock and Common Stock Warrants 
discussed in Note 3, the Company granted the holders certain registration 
rights related to the shares of Common Stock underlying the Series A Stock, 
dividends on the Series A Stock and the exercise of the warrants.  The 
Company filed a registration statement on Form S-3 on August 13, 1998 to 
register the underlying Common Stock.  Such registration statement has not 
yet been declared effective.
                                       


                                       8
<PAGE>

ITEM 2.  MANAGEMENT'S 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 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.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

OVERVIEW

     The following is a discussion of the interim consolidated financial 
condition and results of operations of the Company for the three and 
nine-month periods ended June 30, 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 
June 30, 1998 and 1997.

     Effective second quarter 1998, the Company established Tanisys (Europe) 
Limited, a wholly owned subsidiary of Tanisys located in Scotland.  Tanisys 
(Europe) Limited is offering its Comprehensive Logistics and Supply Solutions 
("C.L.A.S.S.") program, build-to-order services, turnkey manufacturing 
services and manufactures and markets products consisting of semiconductor 
memory modules. Tanisys (Europe) Limited also is serving as the European 
sales and marketing office for Darkhorse tester products designed and 
manufactured 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.
     
     Pursuant to a Convertible Preferred Stock Purchase Agreement dated June 
30, 1998 (the "Purchase Agreement") between the Company and KA Investments 
LDC, a Cayman Islands corporation ("KA Investments"), the Company issued 400 
shares of its 5% Series A Convertible Preferred Stock, par value $1.00 per 
share ("Series A Stock"), for an aggregate purchase price of $4,000,000.  The 
Series A Stock is convertible into shares of Common Stock pursuant to a 
formula based upon the Conversion Price, which shall be equal to the lower of 
either (a) $2.31 per share or (b) 80% of the average of the three lowest 
closing bid prices per share of Common Stock for the 30 trading days 
immediately prior to conversion (as more fully described in the Articles of 
Incorporation of the Company).  Dividends accrue on the Series A Stock at a 
rate of 5% per annum, and may be paid in shares of Common Stock, but must be 
paid in cash upon the occurrence of certain events.  The Company is required
to redeem certain of the shares of Series A Stock upon the occurrence of 
certain triggering events.  In addition, the Company granted warrants (the 
"Warrants") to KA Investments, Midori Capital Corporation ("Midori"), Hoth 
Incorporated ("Hoth") and Randy Stein ("Stein") (KA Investments, Midori, Hoth 
and Stein collectively referred to as the "Selling Stockholders") to purchase 
an aggregate of approximately 200,000 shares of Common Stock at a purchase 
price of $3.00 per share (subject to adjustment as provided by the terms of 
the Warrants).  The Warrants may be exercised on or before June 30, 2002.  
Pursuant to a Registration Rights Agreement between the Company and KA 
Investments dated June 30, 1998, the Company granted the Selling Stockholders 
certain registration rights related to the shares of Common Stock issuable 
upon conversion of the Series A Stock and upon the exercise of the Warrants. 
The Registration Statement to which this Prospectus is a part has been filed 
pursuant to the terms of such Registration Rights Agreement and registers the 
resale by the Selling Stockholders of such shares of Common Stock issuable 
upon conversion of the Series A Stock and upon exercise of the Warrants. The 
Purchase Agreement, the Registration Rights Agreement, a form of the Warrants 
and the Articles of Incorporation of the Company, as amended (containing the 
terms of the Series A Stock) have been filed as exhibits hereto.

                                       


                                       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 nine-month periods ended June 30, 1998 and 1997:                          

<TABLE>
<CAPTION>
                                               Three Months Ended    Nine Months Ended
                                                    June 30,             June 30,
                                                 1998      1997       1998      1997
                                                -----     -----      -----     -----
          <S>                                  <C>        <C>        <C>       <C>
          Net sales                             100.0%    100.0%     100.0%    100.0%
          Cost of goods sold                     90.6      86.9       83.1      87.9
                                                -----     -----      -----     -----
          Gross profit                            9.4      13.1       16.9      12.1
                                                -----     -----      -----     -----
          Operating expenses:
            Research and development              9.4       5.3        8.8       4.6
            Sales and marketing                  10.9       6.2        8.7       5.5
            General and administrative           16.2       7.7       14.1       6.8
            Depreciation and amortization         7.1       9.5       10.9       8.1
            Bad debt expense                      1.6       3.6        1.5       5.7
                                                -----     -----      -----     -----
          Total operating expenses               45.2      32.3       44.0      30.7
                                                -----     -----      -----     -----

          Operating loss                        (35.8)    (19.2)     (27.1)    (18.6)
          Other expense, net                     (2.0)     (1.3)      (1.7)     (1.2)
                                                -----     -----      -----     -----
          Net loss                              (37.8%)   (20.5%)    (28.8%)   (19.8%)
                                                -----     -----      -----     -----
                                                -----     -----      -----     -----
</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 $6.8 million in the third quarter of fiscal 1998 from 
$11.2 million in the third quarter of fiscal 1997.  Net sales decreased to 
$24.0 million in the first nine months of fiscal 1998 from $38.6 million in 
the first nine 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, 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 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.  The decrease in net sales in the third 
quarter of fiscal 1998 is due to a decreased demand in memory modules by 
C.L.A.S.S. customers as a result of a major PC Company purging inventory in 
its dealer channels. 

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 $636 thousand 
in third quarter fiscal 1998 from $1.5 million in third quarter fiscal 1997. 
Gross profit decreased to $4.1 million in the first nine 
                                       


                                      10
<PAGE>

months of fiscal 1998 from $4.7 million in the first nine months of fiscal 
1997.  Gross profit margin decreased to 9.4% in third quarter fiscal 1998 
from 13.1% in third quarter fiscal 1997. Gross profit margin increased to 
16.9% in the first nine months of fiscal 1998 from 12.1% for the same period 
in 1997.  The decreases in gross profit and in gross profit margin for the 
third quarter were due primarily to the decrease in sales to the Company's 
C.L.A.S.S customers, as discussed in Net Sales above. A secondary cause for 
the decrease in gross profit and in gross profit margin for third quarter 
1998 is the additional expenses associated with establishing the Scotland 
subsidiary.   The increase in gross profit margin for the first nine months 
of 1998 compared to the same period in 1997 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.

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 $638 thousand in third quarter fiscal 1998 
from $600 thousand in third quarter fiscal 1997.  Expenses for the first nine 
months of fiscal 1998 increased to $2.1 million from $1.8 million in the 
first nine 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 increased to $739 thousand in third quarter fiscal 1998 from $701 
thousand in third quarter fiscal 1997.  Sales and marketing expenses were 
$2.1 million for the first nine months of both fiscal 1998 and fiscal 1997.  
Sales and marketing expenses expressed as a percentage of revenues increased 
to 8.7% in the first nine months of fiscal 1998 from 5.5% in the first nine 
months of fiscal 1997, primarily due to decreased revenues.  Sales and 
marketing expenses are expected to decrease slightly when expressed as a 
percentage of revenue and to continue to increase steadily 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 $1.1 
million in third quarter fiscal 1998 from $861 thousand in third quarter 
fiscal 1997. In the first nine months of fiscal years 1998 and 1997, general 
and administrative expenses were $3.4 million and $2.6 million, respectively. 
The increase in actual funds expended in fiscal 1998 is primarily due to the 
opening of the Company's facility in Scotland and the addition of staff at 
the facility in the United States.  Expenses associated with the general and 
administrative area are expected to remain relatively constant in absolute 
dollars and decrease as a percentage of revenue in future periods. 
                                       


                                      11
<PAGE>

DEPRECIATION AND AMORTIZATION

     Depreciation and amortization includes the depreciation for all fixed 
assets exclusive of those used in the manufacturing process and included as 
part of "Cost of Sales" and the amortization of intangibles, including 
goodwill incurred in the May 1996 acquisitions of 1st Tech Corporation ("1st 
Tech") and DarkHorse Systems, Inc. ("DarkHorse").  Depreciation and 
amortization decreased to $479 thousand in third quarter fiscal 1998 from 
$1.1 million in third quarter fiscal 1997.  Depreciation and amortization 
expenses for the first nine months of 1998 were $2.6 million, a decrease of 
$517 thousand from the same time period in fiscal 1997.  The decrease is due 
primarily to the complete amortization in April 1998 of goodwill relating to 
the acquisitions of 1st Tech and DarkHorse.  Depreciation expenses are 
expected to decrease as a percentage of revenue and increase in term of 
absolute dollars with additional facility expansions and equipment purchases 
used in manufacturing and research and development. 

OTHER INCOME (EXPENSE), NET

     Other income (expense), net consists primarily of interest income less 
interest expense.  Interest expense is attributable to borrowings from a 
revolving credit note.  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 third 
quarter of fiscal 1998 from $139 thousand in the third quarter of fiscal 
1997.  Other income (expense) has decreased to $409 thousand in the first 
nine months of fiscal 1998 from $444 thousand in the first nine months of 
fiscal 1997. The Company incurs net interest expense in order to maintain 
balances of inventories and accounts receivable.  The decrease in other 
income (expense) is primarily due to a decrease in short-term borrowings on 
the revolving credit note.  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, 
respectively, 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 of the benefits to 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 at September 30, 1997.

LIQUIDITY AND CAPITAL RESOURCES

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


                                      12
<PAGE>

1998, the Company generated $3.6 million in net cash from financing 
activities versus $2.2 million in the third quarter of fiscal 1997.  The $3.6 
million in fiscal 1998 consisted of the purchase of convertible preferred 
stock.  At June 30, 1998, the Company had $4.1 million of cash and restricted 
cash. The Company's working capital is negative $87 thousand but is expected 
to increase when long-term financing is secured for approximately $1.7 
million of equipment classified in "accrued liabilities" on the June 30, 1998 
balance sheet.
     
          Capital expenditures totaled approximately $1.3 million and $1.4 
million in the third 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 in 
the U.S. and Scotland to meet customer demand. The Company plans to spend an 
additional $3.2 million in the remainder of fiscal 1998 in capital 
expenditures for additional manufacturing capacity in the U.S. and leasehold 
improvements to the Scotland manufacturing facility, of which $2.0 million is 
committed and expected to be financed through working capital, operating 
leases and capital leases.  The Company expects to obtain financing for 
approximately $1.7 million of manufacturing equipment located in its Scotland 
facility in the fourth fiscal quarter of 1998.

     The Company has entered into certain capital lease arrangements.  The 
outstanding principal on these obligations at June 30, 1998 was $641 
thousand. 

     The Company is aggressively pursuing new customers, which will require 
additional manufacturing capacity. In addition, current customers have 
indicated that additional capacity may secure additional orders, and the 
Company intends to take advantage of these opportunities. Expected sales 
growth of both new and existing customers is expected to require additional 
accounts receivable and inventories. The Company believes that its existing 
funds, anticipated cash flow from operations and amounts available from 
future vendor credits, bank borrowings, operating and capital lease 
financing, 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 third quarter of fiscal 1998 
and 1997, the ten largest customers accounted for approximately 79.3% and 
54.1% of net sales, respectively.  In the first nine months of fiscal 1998 
and 1997, the ten largest customers accounted for approximately 66.3% and 
54.6% of net sales, respectively.  The Company's two largest customers 
accounted for 21.1% and 19.8% of total revenue in the third quarter of fiscal 
1998.  One customer represented approximately 32.3% of total revenue for the 
nine months ended June 30, 1998. In the third quarter of fiscal 1997, one 
customer produced 16.6% of net sales. The same customer produced 13.8% of 
sales for the nine months ended June 30, 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 in 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 
                                       


                                      13
<PAGE>

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 majority of the 
Company's enterprise computer systems and software are already Year 2000 
compliant and the Company does not expect that the cost to modify its 
remaining 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 comprehensive information 
concerning Year 2000 compliance status of its suppliers and customers but is 
in the process of gathering such information.  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.
                                       


                                      14
<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 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     Pursuant to a Convertible Preferred Stock Purchase Agreement dated June 
30, 1998 (the "Purchase Agreement") between the Company and KA Investments 
LDC, a Cayman Islands corporation ("KA Investments"), the Company issued 400 
shares of its 5% Series A Convertible Preferred Stock, par value $1.00 per 
share ("Series A Stock"), for an aggregate purchase price of $4,000,000. The 
Series A Stock is convertible into shares of Common Stock pursuant to a 
formula based upon the Conversion Price, which shall be equal to the lower of 
either (a) $2.31 per share or (b) 80% of the average of the three lowest 
closing bid prices per share of Common Stock for the 30 trading days 
immediately prior to conversion (as more fully described in the Articles of 
Incorporation of the Company). Dividends accrue on the Series A Stock at a 
rate of 5% per annum, and may be paid in shares of Common Stock, but must be 
paid in cash upon the occurrence of certain events. The Company is required to
redeem certain of the shares of Series A Stock upon the occurrence of certain 
triggering events. In addition, the Company granted warrants (the "Warrants") 
to KA Investements, Midori Capital Corporation ("Midori"), Hoth Incorporated 
("Hoth") and Randy Stein ("Stein") (KA Investments, Midori, Hoth and Stein 
collectively referred to herein as the "Selling Stockholders") to purchase an 
aggregate of approximately 200,000 shares of Common Stock at a purchase price 
of $3.00 per share (subject to adjustment as provided by the terms of the 
Warrants). The Warrants may be exercised on or before June 30, 2002. Except 
as required by law or otherwise provided in the Certificate of Designation 
for the Preferred Stock, the Preferred Stock shall have no voting rights. 
However, so long as any shares of Preferred Stock are outstanding, the 
Company shall not and shall cause its subsidiaries not to, without the 
affirmative vote of the holders of all of the shares of the Preferred Stock 
then outstanding, authorize or create any class of stock ranking as to 
dividends or distribution of assets of the Company upon a liquidation senior 
to or otherwise pari passu with or senior to the Preferred Stock. Upon any 
liquidation, dissolution or winding-up of the Company, whether voluntary or 
involuntary, the holders of the Preferred Stock shall be entitled to receive 
out of the assets of the Company, whether such assets are capital or surplus, 
for each share of Preferred Stock an amount equal to the $10,000, plus all 
due but unpaid dividends per share, whether declared or not, before any 
distribution or payment shall be made to the holders of Common Stock.

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>
<CAPTION>
Exhibit
Number                              Description    
-------                             -----------
<S>       <C>
 3.1      Articles of  Incorporation of Tanisys Technology, Inc., as amended 
          (Exhibit 3.1 to Form S-3 Registration Statement filed August 13, 1998)

 3.2      Restated Bylaws of the Company (Exhibit 3.5 to Form 10 Registration 
          Statement filed November 27, 1996)

 4.1      Form of Common Stock Certificate (Exhibit 4.6 to Form 10 Registration 
          Statement filed November 27, 1996)



                                       15
<PAGE>

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

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

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

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


(b)  CURRENT REPORTS ON 8-K:

     None.



                                      16
<PAGE>
                                       
                                  SIGNATURES

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

<TABLE>
<S>                                    <C>
                                       TANISYS TECHNOLOGY, INC.


Date: August  14, 1998                 By:  /s/ JOE O. DAVIS
                                          ----------------------------------------------
                                       Joe O. Davis
                                       SENIOR VICE PRESIDENT,
                                       CHIEF FINANCIAL OFFICER AND CORPORATE SECRETARY
                                       (Duly authorized and Principal Financial Officer)


Date: August 14, 1998                  By:  /s/ DONALD R. TURNER
                                          ----------------------------------------------
                                       Donald R. Turner
                                       CORPORATE CONTROLLER
                                       (Duly authorized and Principal Accounting Officer)
</TABLE>


                                      17