<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, 1997
                                          or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
    For the transition period from       to     

                        Commission File Number 0-23038
                                       
                           TANISYS TECHNOLOGY, INC.
            (Exact name of registrant as specified in its charter)
                                       
                                       
           WYOMING                                   74-2675493
(State or other jurisdiction of                   (I.R.S. Employer
 incorporation or organization)                Identification Number)

   12201 TECHNOLOGY BLVD., SUITE 130                   
         AUSTIN, TEXAS 78727                            78727
(Address of principal executive offices)              (Zip Code)

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

    Indicated below is the number of shares outstanding of the registrant's 
only class of common stock at July 31,  1997:

              TITLE OF CLASS                      NUMBER OF SHARES
              --------------                         OUTSTANDING
                                                     -----------
         Common Stock, no par value                  20,091,214

<PAGE>

                  TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                                       
                        QUARTERLY REPORT ON FORM 10-Q
                FOR THE QUARTERLY PERIOD ENDED JUNE 30,  1997
                                       
                                     INDEX
                                       

<TABLE>
                                                                                                PAGE
                                                                                                ----
<S>                                                                                             <C>
PART I  FINANCIAL INFORMATION
Item 1    Interim Consolidated Condensed Financial Statements (Unaudited)
          Consolidated Condensed Balance Sheets - June 30,1997 and September 30, 1996 . . . .    3
          Consolidated Condensed Statements of Loss - For the Three Month and Nine Month 
            Periods Ended June 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . .    4
          Consolidated Condensed Statements of Cash Flows - For the Nine Month Period  
            Ended June 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . .    5
          Notes to Interim Consolidated Condensed Financial Statements.. . . . . . . . . . . .    6
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of
           Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
PART II  OTHER INFORMATION
Item 1.   Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
Item 5.   Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
Item 6.   Exhibits and Reports on Form 8-K
          (a) Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
          (b) Current Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . .   16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17
</TABLE>
                                       2
<PAGE>

                        PART L. FINANCIAL INFORMATION
          ITEM 1. INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                       
                  TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                    CONSOLIDATED CONDENSED BALANCE SHEETS
                                 (UNAUDITED)
                                       
<TABLE>
                                                                     JUNE 30,         SEPTEMBER 30,
                                                                       1997               1996
---------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>
ASSETS
Current assets:
   Cash and cash equivalents                                        $   924,690        $ 2,689,569 
   Trade accounts receivable, net of allowance of $429,064 and        4,455,939          5,069,399 
        $84,557, respectively
    Accounts receivable from related parties                             12,691             17,691 
   Inventory                                                          3,209,183          1,804,458 
   Prepaid expense                                                      289,884            217,570 
---------------------------------------------------------------------------------------------------
      Total current assets                                            8,892,387          9,798,687 
---------------------------------------------------------------------------------------------------
Property and equipment, net of accumulated depreciation of            2,449,979          1,817,479 
    $1,501,488 and $906,589, respectively
Incorporation costs, net                                                    640              1,024 
Patents and trademarks, net                                              82,853             84,337 
Goodwill, net of accumulated amortization of $4,183,082 and           2,987,915          5,677,040 
    $1,493,958, respectively
Other assets                                                            656,042             84,000 
---------------------------------------------------------------------------------------------------
                                                                    $15,069,816        $17,462,567 
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:
   Accounts payable                                                 $ 6,434,696        $ 2,920,530 
   Accounts payable to related parties                                      250             64,618 
   Accrued liabilities                                                  479,501            929,376 
   Revolving credit note                                              2,840,354          3,075,000 
---------------------------------------------------------------------------------------------------
      Total current liabilities                                       9,754,801          6,989,524 
---------------------------------------------------------------------------------------------------
   Obligations under capital lease                                       79,763            123,000 
---------------------------------------------------------------------------------------------------
      Total liabilities                                               9,834,564          7,112,524 
---------------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity:
      Preferred Stock, $1 par value, 10,000,000 shares authorized, 
      no shares issued or outstanding                                         0                  0 
      Common stock, no par value, 50,000,000 shares authorized;      22,988,004         20,469,136 
       17,851,214 and 15,978,537 shares issued and outstanding, 
       respectively
   Accumulated deficit                                              (17,752,752)       (10,119,093) 
---------------------------------------------------------------------------------------------------
      Total stockholders' equity                                      5,235,252         10,350,043 
---------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                          $15,069,816        $17,462,567 
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------

            THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>

                                       3
<PAGE>

                  TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF LOSS
                                 (UNAUDITED)
                                       
<TABLE>
                                          For the Three Months         For the Nine Months
                                             Ended June 30,               Ended June 30,
                                          1997            1996          1997          1996
----------------------------------------------------------------------------------------------
<S>                                    <C>             <C>           <C>            <C>
Net sales                              11,234,115      3,770,498     38,555,153     3,862,233 
Cost of goods sold                      9,757,174      3,234,179     33,879,602     3,243,410 
----------------------------------------------------------------------------------------------
Gross profit                            1,476,941        536,319      4,675,551       618,823 
----------------------------------------------------------------------------------------------

Operating expenses:
   Research and development               600,442        333,268      1,772,782       604,461 
   Sales and marketing                    701,319        336,872      2,135,651       478,898 
   General and administrative             861,270        530,100      2,604,922     1,099,326 
   Depreciation and amortization        1,064,738        649,503      3,128,221       684,064 
   Bad debt expense                       400,185          7,699      2,206,832         7,699 
----------------------------------------------------------------------------------------------
      Total operating expenses          3,627,954      1,857,442     11,848,408     2,874,448 
----------------------------------------------------------------------------------------------
Operating loss                         (2,151,013)    (1,321,123)    (7,172,857)   (2,255,625) 
----------------------------------------------------------------------------------------------
Other income (expense):
   Interest income                          3,036         22,291         17,435        60,751 
   Interest expense                      (144,863)       (32,716)      (461,737)      (32,716)
   Other income (expense)                       -          2,393              -         2,393 
----------------------------------------------------------------------------------------------
Net loss                               (2,292,840)    (1,329,155)    (7,617,159)   (2,225,197) 
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------


Loss per weighted average common 
share                                   $   (0.13)      $  (0.11)      $  (0.45)     $  (0.21) 
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------

Weighted average number of 
common shares                          17,851,214     12,442,287     16,932,967    10,637,044 
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------

         THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>

                                       4
<PAGE>

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

<TABLE>
                                                              For the Nine months 
                                                                Ended June 30,  
---------------------------------------------------------------------------------------
                                                               1997           1996     
---------------------------------------------------------------------------------------
<S>                                                         <C>            <C>         
Cash flows from operating activities:
Net loss                                                    $(7,617,159)   $(2,225,197)
Adjustment to reconcile net loss to net cash provided 
 by (used in) operating activities:
   Depreciation and amortization                              3,128,221        684,064 
   (Increase) decrease in accounts receivable                   618,460       (384,544)
   (Increase) decrease in inventory                          (1,404,725)       196,997 
   (Increase) decrease in prepaid expense                       (72,314)      (133,338)
   (Increase) in other assets                                  (572,042)             0 
   Increase (decrease) in accounts payable and 
    accrued liabilities                                       2,999,923     (2,372,962)
---------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities          (2,919,636)    (4,234,980)
---------------------------------------------------------------------------------------
Cash flows from investing activities:
   Purchase of fixed assets                                  (1,063,634)       (57,906)
   Incorporation costs                                                -        (32,500)
   Patents and trademark costs                                   (6,094)       (19,349)
   Acquisition of businesses                                          0      3,067,546 
   Other                                                              0       (188,167)
---------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities          (1,069,728)     2,769,624 
---------------------------------------------------------------------------------------
Cash flows from financing activities:
   Net proceeds from issuance of common stock                         -      1,629,003 
   Draws (payments) on revolving credit note, net              (234,646)      (227,763)
   Principal payments on capital lease obligations              (43,237)        (5,430)
   Net proceeds from exercise of stock options                   32,900              0 
   Net proceeds from exercise of warrants                     2,485,968        217,500 
   Premerger tax distributions on retained earnings             (16,500)             0 
---------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities           2,224,485      1,613,310 
---------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents             (1,764,879)       147,954 
Cash and cash equivalents, beginning of period                2,689,569      1,317,024 
---------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                        924,690      1,464,978 
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------

Supplemental disclosure of cash flow information:
   Interest paid                                                420,930         32,716 
   Interest received                                             17,435         60,751 
Non-cash activity:
   Shares issued to related parties and others to 
    satisfy accrued liabilities                                       0        254,500 
   Stock issued to purchase businesses                                0     12,574,500 
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 

                                         5 
<PAGE>

                      TANISYS TECHNOLOGY, INC. AND SUBSIDIARIES
                                           
             NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                     (UNAUDITED)
                                           

NOTE 1:  BASIS OF PRESENTATION

The accompanying financial statements present the consolidated financial
position, results of operations and cash flows of Tanisys Technology, Inc. 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.

The accompanying unaudited interim consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with instructions to Form 10-Q and Article
10 of Regulation S-X.  Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.  It is recommended that these interim consolidated
condensed financial statements be read in conjunction with the Company's
restated consolidated financial statements and the notes thereto for the fiscal
year ended September 30, 1996 contained in the Company's Form 10/A Amendment No.
3 to its Registration Statement on Form 10 (SEC File No. 0-29038) filed with the
Securities and Exchange Commission on April 25, 1997, which Form 10 Registration
Statement was subsequently amended by Form 10/A Amendment No. 4 filed on May 9,
1997 and Form 10/A Amendment No. 5 filed May 12, 1997.

In the opinion of management, all adjustments, which are of a normal recurring
nature, considered necessary to present fairly the consolidated financial
position as of June 30, 1997, the consolidated results of operations for the
three and nine-month periods ended June 30, 1997 and 1996 and the consolidated
cash flows for the nine-month period ended June 30, 1997 and 1996 have been
made.

RECENT ACCOUNTING PRONOUNCEMENTS

The financial Accounting Standards Board ("FASB") issued Statement of 
Financial Accounting Standards ("SFAS") No. 125 "Accounting for Transfers and 
Servicing of Financial Assets and Extinguishments of Liabilities," ("SFAS 
125") in June 1996.  This statement will require the Company to classify its 
financial assets pledged as collateral separately in the financial 
statements.  This statement is effective for fiscal years beginning after 
December 31, 1996, and is to be applied prospectively.  Earlier or 
retroactive application is not permitted. The FASB issued SFAS No. 127, 
"Deferral of the Effective Date of Certain Provisions of FASB Statement 125" 
("SFAS 127").  SFAS 127 moves forward some, but not all, of the provisions of 
SFAS 125 to December 31, 1997.  The Company believes the adoption of this 
statement will not have a material impact on the financial condition or 
results of operation of the Company.

In February 1997, FASB issued SFAS No. 128, "Earnings per Share,"  which 
establishes standards for computing and presenting earning per share 
("EPS") for entities with publicly held common stock or potential common 
stock.  SFAS No. 128 simplifies the standards for computing EPS previously 
found in Accounting Principles Board Opinion No. 15, "Earning Per Share," and 
makes them comparable to international EPS standards.  It replaces the 
presentation of primary EPS with a presentation of basic EPS, which excludes 
dilution.  It also requires dual presentation of basic and diluted EPS on the 
face of the income statement for all entities with complex capital 
structures. SFAS No. 128 is effective for financial statements for periods 
ending December 15, 1997 and early adoption is not permitted.  Management of 
the Company does not anticipate the adoption of SFAS No. 128 will have a 
material difference from EPS currently presented.

                                         6 
<PAGE>

NOTE 2: RESTATEMENT TO THE FINANCIAL STATEMENTS

The Company previously issued financial statements reflecting the 
acquisitions of 1st Tech Corporation and DarkHorse Systems, Inc. based on a 
$3.03 per share price for the Company's common shares issued.  This price was 
based on the closing price (the "Original per Share Price") of the Company's 
common stock on May 21, 1996 of $5.05 discounted by 40% to give effect to the 
restrictions on the shares and the risks involved. Immediately prior to the 
consummation of the acquisitions, 1st Tech sold 1,150,000 shares of its 
common stock in a private placement offering for a cash price of $2.00 per 
share (the "Private Offering Price per Share"). The Company has restated its 
financial statements utilizing a $2.00 per share price in recording the 
acquisitions.  The 1,150,000 shares then were converted into 1,150,000 shares 
of the Company's common stock effective May 21, 1996.  

Goodwill originally recorded in connection with the acquisitions was determined
as the number of shares of the Company's common stock issued to stockholders of
1st Tech and DarkHorse times the Original per Share Price.  Goodwill now has
been restated utilizing the Private Offering Price per Share.

The Consolidated Balance Sheets and the Consolidated Statements of Loss and Cash
Flows have been restated to reflect the foregoing item.  The following table
sets forth selected information as originally reported and as restated for the
nine months ended June  30, 1996: 


                                     Nine months ended 
                                       June 30, 1996   
                                     ----------------- 
    Goodwill, net: 
       As originally reported              $ 9,379,042 
       Adjustment                           (2,805,628)

          Restated Goodwill, net           $ 6,573,414 
                                           ----------- 

    Net loss:
       As originally reported              $(2,515,695)
       Adjustment                              290,498 
                                           ----------- 

          Restated net loss                $(2,225,197)
                                           ----------- 

    Net loss per share:
       As originally reported              $     (0.24)
       Adjustment                                 0.03 
                                           ----------- 


          Restated net loss per share      $     (0.21)
                                           ----------- 

NOTE 3:  REVOLVING CREDIT NOTE

At July 1, 1997, the Company's revolving credit note expired and the 
financial institution informed the Company that they would continue to 
entertain the Company's requests for loans beyond the July 1 termination date 
until July 31, 1997 at the lender's sole and absolute discretion so that the 
Company could finalize a new revolving credit facility with another lender. 
(See Note 9, Subsequent Events.)

NOTE 4: RECEIVABLES

The top ten receivables represent 63.0% of the total accounts receivable 
balance at June 30, 1997.  Accounts receivable from two customers represented 
a total of $1.1 million, or 24%, of the balance of accounts receivable at 
June 30, 1997.  Both accounts are rated at "5A2" according to the Dun & 
Bradstreet rating classification. Management believes these receivables will 
be collected within the agreed upon terms, although there is no 
assurance that such will be the case.  The 

                                         7 
<PAGE>

Company's business, financial condition and results of operations will depend 
in significant part upon its ability to obtain orders from new customers, as 
well as the financial condition and success of its customers, the success of 
its customers' products and the general economy.  Factors affecting any of 
the Company's major customers and their respective customers could have a 
material adverse effect on the Company's business, financial condition and 
results of operations.

NOTE 5:  INVENTORY

Inventory consists of the following:

                        June 30,         September 30, 
                          1997               1996      
                       ----------        ------------- 
Raw materials          $2,479,158         $1,343,522 
Work-in-process           104,590            203,017 
Finished goods            625,435            257,919 
                       ----------         ---------- 
                       $3,209,183         $1,804,458 
                       ----------         ---------- 
                       ----------         ---------- 


NOTE 6:  LEASE COMMITMENTS

The Company leases certain equipment and office space under non-cancelable 
leases with expiration dates ranging from 1997 through 2004.

Future minimum lease payments under all leases at June 30, 1997 were as 
follows:

                                         CAPITAL LEASES    OPERATING LEASES 
                                         --------------    ---------------- 
    1997                                   $ 14,319           $  173,109 
    1998                                     57,275              538,288 
    1999                                     57,275              384,733 
    2000                                     41,821              379,209 
    2001                                          0              318,447 
                                           --------           ---------- 
    Total minimum lease payments            170,690           $1,793,786 

    Amounts representing interest            38,671 
                                           -------- 

    Present value of minimum capital
      lease payments                        132,019 

    Less: current portion                    52,256 
                                           -------- 

    Long-term capital lease obligation     $ 79,763 
                                           -------- 
                                           -------- 

Rent expense recorded under all operating leases was $173,670 and $32,225 for 
the three months ended June 30, 1997 and 1996, respectively.  Rent expense 
recorded under all operating leases was $362,915 and $34,135 for the nine 
months ended June 30, 1997 and 1996, respectively.





                                         8 
<PAGE>

NOTE 7:  SHARE CAPITAL, OPTIONS AND WARRANTS

STOCK OPTIONS

During the nine months ended June 30, 1997, a stockholder of the Company 
exercised stock options for the purchase of 12,500 shares of the Company's 
common stock for total gross proceeds of $32,900.

WARRANTS

During the first quarter of fiscal 1997, stockholders of the Company 
exercised warrants for the purchase of 644,118 shares of the Company's common 
stock for total gross proceeds of $1,155,000.

During the second quarter of fiscal 1997, stockholders of the Company 
exercised warrants for the purchase of 1,216,059 shares of the Company's 
common stock for total gross proceeds of $1,330,968.  The exercise prices of 
the warrants were reduced in consideration of the early exercise date so that 
the Company could repay the related party loan (see Note 8, Related Party 
Transactions).  The shares issued upon exercise of the warrants are subject 
to resale restrictions.

During the third quarter of fiscal 1997, no warrants were exercised.  
However, 200,000 warrants were issued at an exercise price of $.01 per share. 
The shares issued upon exercise of these warrants will be subject to resale 
restrictions. In addition, the Board of Directors authorized a private 
placement to accredited investors for a minimum of 1,000,000 shares of common 
stock at $2.50 per share.  (See Note 9, Private Placement, Subsequent Events).

RETAINED EARNINGS

A final distribution in the amount of $16,500 was made in April 1997 to the 
prior owners of DarkHorse Systems, Inc,  pursuant to the terms of the 
acquisition agreement.  The purpose of this distribution was to cover federal 
income taxes incurred by the prior owners as a result of their investment in 
the S-corporation.

NOTE 8:  RELATED PARTY TRANSACTIONS

The Company arranged a loan of $1 million from certain stockholders, 
including related parties.  The loan was utilized by the Company to take 
advantage of an inventory purchase opportunity.  The $1 million loan was 
repaid in full from proceeds of the exercise of outstanding stock purchase 
warrants. (See Note 7, Share Capital, Options and Warrants.)

NOTE 9:  SUBSEQUENT EVENTS

REVOLVING CREDIT NOTE

On July 24, 1997, the Company signed a new $8.5 million, three-year revolving 
credit facility with a financial institution. Borrowings under the line will 
be based on eligible accounts receivable, inventory and equipment values 
subject to the terms and conditions of the agreement. 

PRIVATE PLACEMENT

The Company completed a private placement to accredited investors for 
2,240,000 shares of common stock, generating proceeds $5.6 million. (See Note 
7, Share Capital, Options and Warrants.)

                                         9 
<PAGE>

ITEM 2.
    
    THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS CERTAIN FORWARD-LOOKING 
STATEMENTS AND INFORMATION RELATING TO THE COMPANY 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 SUBSIDIARIES OR THE COMPANY'S  MANAGEMENT, ARE INTENDED TO 
IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS REFLECT THE CURRENT 
RISKS, UNCERTAINTIES AND ASSUMPTIONS RELATED TO CERTAIN FACTORS INCLUDING, 
WITHOUT LIMITATIONS, COMPETITIVE FACTORS, GENERAL ECONOMIC CONDITIONS, 
CUSTOMER CONCENTRATIONS, CUSTOMER RELATIONSHIPS AND FINANCIAL CONDITIONS, 
RELATIONSHIPS WITH VENDORS, THE INTEREST RATE ENVIRONMENT, GOVERNMENTAL 
REGULATION AND SUPERVISION, SEASONALITY, DISTRIBUTION NETWORKS, PRODUCT 
INTRODUCTIONS AND ACCEPTANCE, TECHNOLOGICAL CHANGE, CHANGES IN INDUSTRY 
PRACTICES, ONE-TIME EVENTS AND OTHER FACTORS DESCRIBED HEREIN.  BASED UPON 
CHANGING CONDITIONS, SHOULD ANY ONE OF MORE OF THESE RISKS OR UNCERTAINTIES 
MATERIALIZE, OR SHOULD ANY UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL 
RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED HEREIN AS ANTICIPATED, 
BELIEVED, ESTIMATED, EXPECTED OR INTENDED.  THE COMPANY DOES NOT INTEND TO 
UPDATE THESE FORWARD-LOOKING STATEMENTS.

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

    The following is a discussion of the consolidated financial condition and 
results of operations of the Company for the three-month and nine-month 
periods ended June 30, 1997 and 1996.  It should be read in conjunction with 
the Interim Consolidated Condensed Financial Statements of the Company, the 
Notes thereto and other financial information included elsewhere in this 
report.  For purposes of the following discussion, references to year periods 
refer to the Company's fiscal year ended September 30, and references to 
quarterly periods refer to the Company's fiscal quarter ended June 30.
    
    The Company was organized under the laws of the Province of British 
Columbia, Canada, on January 27, 1984, as Montebello Resources Ltd., and 
pursued oil and gas exploration in British Columbia and Manitoba, Canada.  In 
October 1992, the Company changed its name to First American Capital Group 
Inc. Unsuccessful in the exploration business, the Company became dormant 
pursuant to the rules and regulations of the Vancouver Stock Exchange 
("VSE").  During the first two quarters of 1993, the Company was reorganized 
in accordance with the rules of the VSE.  As part of this reorganization, the 
Company acquired Timespan Communications Corp. ("Timespan") and its computer 
game controller technology. Timespan, a wholly owned subsidiary of the 
Company, was dissolved as of October 23, 1996.  The Company changed its name 
to Rosetta Technologies Inc. in May 1993 and to Tanisys Technology, Inc. in 
July 1994.  Until May 21, 1996, the Company focused on research and 
development of highly specialized applications of capacitive touch sensing 
technology.
    
    Effective May 21, 1996, the Company acquired, through mergers with its 
wholly owned subsidiaries, all of the outstanding common stock of 1st Tech 
Corporation ("1st Tech") and DarkHorse Systems, Inc. ("DarkHorse") and began 
operations in Austin, Texas as a consolidated group of companies providing 
custom design, engineering and manufacturing services, test solutions and 
standard and custom module products to leading original equipment 
manufacturers ("OEMs") in the computer networking and telecommunications 
industries.  In consideration for the acquisitions of 1st Tech and DarkHorse, 
the Company issued 2,950,000 and 1,200,000 shares, respectively, of Common 
Stock.  Prior but subject to the consummation of the acquisitions of 1st Tech 
and DarkHorse by the Company, 1st Tech issued 1,150,000 shares of its common 
stock for $2.00 per share in an equity financing, raising a total of $2.3 
million, the proceeds of which were used to reduce short-term debt and 
provide working capital for 1st Tech.
    
    The Company's net sales and gross profit increased dramatically in the 
first three quarters of the current fiscal year and the last two quarters of 
fiscal year 1996, due to the acquisitions of 1st Tech and DarkHorse.  In 
fiscal 1996, revenues were $15.0 million with gross profit of $2.3 million 
(15.5% of revenue) versus fiscal 1995 revenues of $.4 million and gross 
profit of $.2 million (69.4% of revenue).  This is an increase in revenues of 
$14.6 million, in excess of 4,000%, and in gross profit of $2.1 million, more 
than 800%.  Net losses increased to $3.7 million in fiscal 1996, or 24.6% of 
gross revenues, from $2.4 million in fiscal 1995, or 681.6% of gross 
revenues.  The increases in revenues, gross profit and net losses are due 
primarily to the acquisitions of 1st Tech and DarkHorse on May 21, 1996.  
Management believes that revenues and gross profits will fluctuate due to the 
continuing oversupply of memory chips, which dramatically drives down the 
prices of the 

                                      10
<PAGE>

Company's products, the continuing fluctuations in the cost of memory and 
components, the fact that many of the Company's competitors are better 
capitalized and can purchase inventory in sufficient quantities to obtain 
more favorable pricing, and other factors, including changes in pricing by 
suppliers and competitors and changes in the proportion of contract 
manufacturing done--where the customer consigns the material--versus 
manufacturing on a turnkey basis--where the Company purchases the necessary 
materials.  
    
RESULTS OF OPERATIONS

    The following table sets forth certain consolidated income data of the 
Company expressed as a percentage of net sales (unaudited) for the 
three-month and nine-month periods ended June 30, 1997 and 1996:

                                      THREE MONTHS ENDED    NINE MONTHS ENDED
                                          JUNE  30,             JUNE 30,
                                        1997      1996       1997      1996
                                       -----     -----       -----     -----
    Net sales                          100.0%    100.0%      100.0%    100.0%
    Cost of goods sold                  86.9      85.8        87.9      84.0  
                                       -----     -----       -----     -----
    Gross profit                        13.1      14.2        12.1      16.0  
                                       -----     -----       -----     -----
    Operating expenses:
      Research and development           5.3       8.8         4.6      15.7
      Sales and marketing                6.2       8.9         5.5      12.4
      General and administrative         7.7      14.1         6.8      28.5
      Depreciation and amortization      9.5      17.2         8.1      17.7
      Bad debt expense                   3.6       0.2         5.7       0.2  
                                       -----     -----       -----     -----
    Total operating expenses            32.3      49.2        30.7      74.5  
                                       -----     -----       -----     -----
     
    Operating loss                     (19.2)    (35.0)      (18.6)    (58.5)
    Other income (expense), net         (1.3)     (0.2)       (1.2)      0.9 
                                       -----     -----       -----     -----
    Net loss                           (20.5%)   (35.2%)     (19.8%)   (57.6%)
                                       -----     -----       -----     -----
                                       -----     -----       -----     -----

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 increased to $11.2 million in the third quarter of fiscal 1997 from 
$3.8 million in the same period of fiscal 1996.  Net sales for the first nine 
months of fiscal 1997 increased to $ 38.6 million from $ 3.9 million in the 
same period of fiscal 1996.  The increases in fiscal 1997 are primarily due 
to the acquisitions of 1st Tech and DarkHorse and, to a lesser degree, to 
increases in sales volume in both the memory and tester product lines.

COST OF SALES AND GROSS PROFIT
    
    Cost of sales includes the costs of all components and materials 
purchased for the manufacture of products and the direct labor and overhead 
costs associated with manufacturing. Gross profit increased to $1.5 million 
for the third quarter of fiscal 1997 from $536 thousand in the same period of 
the prior year.  Gross profit for the first nine months of fiscal 1997 
increased to $4.7 million from $619 thousand in the same period of fiscal 
1996. Gross profit margin decreased to 13.1% in third quarter fiscal 1997 
from 14.2% in third quarter fiscal 1996 and to 12.1% from 16.0% in the first 
nine months of 1997 versus the same period in 1996.  The increases in gross 
profit as well as the decreases in gross profit margin were primarily due to 
the acquisitions of 1st Tech and DarkHorse and the dramatic change in the 
types of products being sold by the Company before and after the 
acquisitions. To a lesser extent, the improvement in the Company's gross 
profit was due to the addition of consignment inventory of certain memory 
components, shortening the manufacturing response time and making it possible 
to compete on the basis of timeliness of delivery rather than on price alone, 
while not exposing the Company's assets to the risk of carrying larger 
inventories.

                                       11
<PAGE>

RESEARCH AND DEVELOPMENT

    Research and development expenses consist of the costs associated with 
the design and testing of new technologies and products.  These relate 
primarily to the costs of materials, personnel, management and employee 
compensation and engineering design consulting fees. Research and development 
expenses increased to $600 thousand in third quarter fiscal 1997 from $333 
thousand in third quarter fiscal 1996, representing an increase of 80% from 
period to period. Research and development expenses increased to $1.8 million 
in the first nine months of fiscal 1997 from $604 thousand in the same period 
of fiscal 1996, representing a 193% increase from period to period.  The 
substantial increases were primarily due to the acquisitions of the 
additional product lines of 1st Tech and DarkHorse and the related research 
and development expenditures.

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 $701 thousand in third quarter fiscal 1997 from $337 
thousand in third quarter 1996, a 108% increase.  Sales and marketing 
expenses increased to $2.1 million in the first nine months of fiscal 1997 
from $479 thousand in the same period of fiscal 1996, a 346% increase.  In 
the third quarter of fiscal years 1997 and 1996, sales and marketing expenses 
expressed as a percentage of revenues were 6% and 9%, respectively.  In the 
first nine months of fiscal years 1997 and 1996, sales and marketing expenses 
expressed as a percentage of revenues were 6% and 12%, respectively.  The 
increases in actual funds expended are connected with the acquisitions of the 
product lines of 1st Tech and DarkHorse.  The decreases in the expenses 
expressed as a percentage of revenues is primarily caused by the significant 
increases in revenues related to the acquisitions of 1st Tech and DarkHorse.  
Sales and marketing expenses are expected to remain approximately the same or 
to grow slightly when expressed as a percentage of revenue and to continue to 
increase significantly in terms of absolute dollars in future periods as 
revenues continue to grow.

GENERAL AND ADMINISTRATIVE

    General and administrative costs 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 increased to $861 
thousand in third quarter fiscal 1997 from $530 thousand in third quarter 
fiscal 1996, a 62% increase. In the first nine months of fiscal years 1997 
and 1996, general and administrative expenses increased to $2.6 million from 
$1.1 million, a 137% increase.  General and administrative expenses expressed 
as a percentage of revenues were 7.7% and 14.1% in the third quarter of 
fiscal years 1997 and 1996, respectively, and 6.8% and 28.5% in the first 
nine months of fiscal years 1997 and 1996, respectively.  The increase in 
actual funds expended in fiscal 1997 is primarily due to the acquisitions of 
1st Tech and DarkHorse.  The decrease in expenses expressed as a percentage 
of revenues is primarily caused by the significant increase in revenues 
related to the acquisitions of 1st Tech and DarkHorse and, to a lesser 
extent, to the institution of cost controls on general and administrative 
expenses.  The absolute dollar expenses associated with the general and 
administrative area are expected to increase significantly in future periods 
due to anticipated continued growth in business activity and increased costs 
associated with being a reporting company.  The general and administrative 
expenses are not expected to grow significantly in future periods when 
expressed as a percentage of sales.

BAD DEBT EXPENSE
    
    Bad debt expenses consist of amounts charged to expense because of trade 
accounts receivable becoming uncollectible.  The Company's method of 
accounting for bad debts is to use historical actual charge expenses to 
estimate the amount of current sales which will be uncollectible and provide 
for them by creating an allowance which is netted against the trade accounts 
receivable so that the net balance is the amount that it is estimated will be 
collected according to the terms of the sales.  The amount of the allowance 
account is determined by analyzing prior periods and applying the resulting 
calculated percentage to current sales as an estimate of the amount that will 
ultimately be collected. The Company writes off additional amounts related to 
specific accounts as the collection of these accounts becomes questionable.  
In the third quarter 

                                       12
<PAGE>

of fiscal 1997, the amount charged to bad debt expense was $400 thousand.  In 
the first nine months of fiscal 1997, the amount charged to bad debt expense 
was $2.2 million. Charges made in the third quarter of fiscal 1996  were $8 
thousand which equals the amount charged for the first nine months of fiscal 
1996.  The increase in fiscal 1997 bad debt expense is primarily due to a 
$1.7 million bad debt expense for one customer and to increased sales in 
conjunction with the acquisitions of 1st Tech and DarkHorse.  
    
DEPRECIATION AND AMORTIZATION

    Depreciation and amortization includes the depreciation for all fixed 
assets and the amortization of intangibles, including goodwill incurred in 
the acquisitions of 1st Tech and DarkHorse.  Depreciation and amortization 
increased to $1.1 million in third quarter fiscal 1997 from $650 thousand in 
third quarter fiscal 1996.  In the first nine months of fiscal 1997, 
depreciation and amortization increased to $3.1 million from $684 thousand in 
the first nine months of fiscal 1996.  The substantial increases are due 
primarily to the amortization of goodwill recorded in conjunction with the 
acquisitions of 1st Tech and DarkHorse.  

OTHER INCOME (EXPENSE), NET

    Other income (expense), net consists primarily of interest income less 
interest expense.  Interest expense is primarily 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 trade accounts receivable.  Interest income relates to investment of 
available cash in short-term interest bearing accounts and cash equivalent 
securities.  The Company had no debt and earned interest on its available 
cash until its May 21, 1996 acquisitions of 1st Tech and DarkHorse. 
Thereafter, the Company incurred net interest expense due to the increased 
balances of inventories and accounts receivable.  The Company expects to 
continue to require borrowings to fund growth in inventories and accounts 
receivable in the future and therefore expects to continue to reflect net 
interest expense.

PROVISION FOR INCOME TAXES

    The Company has never paid income taxes and at September 30, 1996 had a 
net operating loss carryforward of $6 million. While there can be no 
assurance that the Company will generate the taxable income required to use 
all or any part of the carryforward prior to the expiration of the 
carryforward, the Company would be able to incur taxable income in the 
carryforward period equal to the total loss carryforward without the payment 
of taxes.  The existing carryforward expires 15 years after the year in which 
it was incurred. Therefore, if the carryforward is not used to offset future 
taxable income, the net operating loss carryforward at September 30, 1996 
will expire in fiscal years 2010 and 2011.
    
    The availability of the net operating loss carryforward and future tax 
deductions to reduce taxable income is subject to various limitations under 
the Internal Revenue Code of 1986, as amended (the "Code"), in the event of 
ownership change as defined in Section 382 of the Code.  This section states 
that after reorganization or other change in corporate ownership, the use of 
certain carryovers may be significantly limited or prohibited.  There are two 
types of ownership changes that can trigger carryover limitations:  an 
ownership change involving a 5% stockholder and any tax-free reorganization.  
In either case, one or more 5% stockholders must have increased their 
percentage of ownership in the corporation by more than 50% over the 
pre-change ownership percentage, generally within three years of ownership 
change.  The Company does not believe that a Code Section 382 limitation 
currently exists.

LIQUIDITY AND CAPITAL RESOURCES

    Since inception, the Company has used funds generated from operations, 
equity financings, capital leases, vendor credits and certain bank borrowings 
to support its operations, acquire capital equipment and finance inventory 
acquisitions and accounts receivable balances.  During the third quarter 
fiscal 1997, the Company expended $2 million in net cash from financing 
activities versus $213 thousand in the third quarter fiscal 1996.  The 
$2 million in third quarter fiscal 1997 and the $213 thousand in third quarter 
fiscal 1996 were primarily to pay down the revolving credit line. For the 
first nine months of fiscal 1997, the Company generated $2.2  million in net 
cash from financing activities versus $1.6 million in the first nine months 
of fiscal 1996.  The $2.2 million in the first nine months of fiscal 1997 
consisted of $2.5 million from the exercise of warrants and options and $278 
thousand of net cash payments on the Company's revolving credit note and 
principal payments on capital lease obligations.

                                       13
<PAGE>

    Since inception the Company has utilized the funds acquired in equity 
financings of its Common Stock, in the exercise of warrants, exercise of 
stock options, capital and 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 and pay its general and 
administrative expenses.  At June 30, 1997, the Company had $925 thousand  of 
cash and a working capital deficit of $943 thousand.  On July 31, 1997 the 
Company completed a private offering  to accredited investors generating  
$5.6 million.
    
    On June 27, 1997, the Company received approval of an $8.5 million, 
three-year revolving credit facility from a different financial institution. 
The transaction was completed on July 24, 1997. Borrowings under the line of 
credit will be based on eligible accounts receivable, inventory and equipment 
and subject to the terms and condition of the credit agreement.  The line of 
credit is collateralized by substantially all the Company's assets.  The 
interest rate on this line is prime plus 2%.
    
    On June 30, 1997, the Company's financial institution informed the 
Company that they would continue to entertain the Company's requests for 
loans beyond the July 1 termination date until July 31, 1997 at the lender's 
sole and absolute discretion so that the Company could finalize a new 
revolving credit facility with another lender.
    
    Capital expenditures totaled approximately $204 thousand and $47 thousand 
in the third quarter of fiscal years 1997 and 1996, respectively.  In the 
first nine months of fiscal years 1997 and 1996, capital expenditures were 
$1.1 million and $58 thousand, respectively.  These capital expenditures were 
primarily for the purchase of enterprise information systems, manufacturing 
equipment, test equipment and the expansion of manufacturing facilities. The 
Company expects to fund capital expenditures of approximately $500,000 
thousand in the remainder of fiscal 1997 for additional manufacturing 
capacity through working capital, operating leases and capital leases.
    
    The Company entered into a 60-month operating lease for equipment valued 
at $1.5 million effective March 1, 1997.  This lease required a letter of 
credit equal to approximately 40% of the equipment cost in year one, with 
annual decreases in the letter of credit over the life of the lease.
    
    The Company believes that its existing funds, anticipated cash flow from 
operations, amounts available from future vendor credits, bank borrowings and 
equity financings will be sufficient to meet its working capital and capital 
expenditure needs for the next 12 months at the projected level of 
operations. However, if there should be a significant increase in sales 
levels which require additional investments in equipment, inventory and 
accounts receivable, the Company would be required to obtain alternate 
sources for additional debt and rely upon a future equity offering or 
offerings for such funding.  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 is produced by a 
relatively small number of customers.  In the third quarter of fiscal 1997 
and 1996, the ten largest customers accounted for approximately 54.1% and 
68.9% of net sales, respectively.  In the first nine months of fiscal 1997 
and 1996, the ten largest customers accounted for approximately 54.6% and 
67.2% of net sales, respectively.  One customer accounted for 16.6% of total 
sales in the third quarter of 1997, and one customer accounted for 13.8% of 
total sales in the first nine months of fiscal 1997.  Two customers accounted 
for 12.5% and 12.2%, respectively, of total sales in the third quarter of 
1996. The same two customers accounted for 12.2% and 11.8%. respectively, of 
total sales in the nine months ended June 30,1996.  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 1997 will continue to utilize the 
Company's products or services.  The actual customers producing the sales are 
different between the two periods, and the Company expects this type of 
variation of volume of purchases from a particular customer to continue 
throughout this fiscal year.
    
    The Company in general has no firm long-term volume commitments from its 
customers and generally enters into individual purchase orders with its 
customers. Customer purchase orders are subject to change, cancellation or 
delay with 

                                       14
<PAGE>

little or no consequence to the customer.  Therefore, the Company has 
experienced such changes and cancellations and expects to continue to do so 
in the future.  The replacement of canceled, delayed or reduced purchase 
orders with new business cannot be assured.  The Company's business, 
financial condition and results of operations will depend significantly on 
its ability to obtain purchase orders from existing and new customers, upon 
the financial condition and success of its customers, the success of 
customer's products and the general economy.  Factors affecting the 
industries of the Company's major customers could have a material adverse 
effect on the Company's business, financial condition and results of 
operations.






                                       15
<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 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.

EXHIBIT 
NUMBER                             DESCRIPTION
-------                            -----------

  3.1   Articles of Continuance dated June 30, 1993 (Exhibit 3.1 to General
        Form for Registration of Securities on Form 10, filed November 27,
        1996)

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

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

  3.4   Articles of Amendment dated April 15, 1996 (Exhibit 3.4 to General
        Form for Registration of Securities on Form 10, filed November 27,
        1996)

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

  10.31 Second Amendment to Amendment and Restatement of Credit Agreement,
        dated as of May 2, 1997, by and between 1st Tech, DarkHorse, the
        Company and The Chase Manhattan Bank (filed herewith)
  
  11.1  Statement regarding Computation of Per Share Earnings (filed
        herewith)

  27.1  Financial Data Schedule (filed herewith)

(b) Current Reports on Form 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.

                                    TANISYS TECHNOLOGY, INC.



Date:  August 13, 1997              By: /s/  JOE O. DAVIS                     
                                        --------------------------------------
                                        Joe O. Davis
                                        SENIOR VICE PRESIDENT AND
                                        CHIEF FINANCIAL OFFICER
                                        (Duly authorized and Principal 
                                           Financial Officer)




Date:  August  13, 1997             By: /s/  DONALD R. TURNER                 
                                        --------------------------------------
                                        Donald R. Turner
                                        CORPORATE CONTROLLER
                                        (Duly authorized and Principal 
                                           Accounting Officer)



                                       17