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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, 2008

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: 0-20828





DANKA BUSINESS SYSTEMS PLC

(EXACT
NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|ENGLAND & WALES                                                |  | 98-0052869                          
|(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) |  | (I.R.S. EMPLOYER IDENTIFICATION NO.)



|                                                 |  |                                          |  |                                                          
|------------------------------------------------ |  | ---------------------------------------- |  | ---------------------------------------------------------
|111 2ndAVENUE
NORTHEAST ST. PETERSBURG, FL 33701 |  | AND                                      |  | MASTERS HOUSE 107 HAMMERSMITH ROAD LONDON W14 0QH ENGLAND
|                                                 |  | (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) |  |                                                          

(727) 456-4460 in the United States

011-44-207-605-0150 in the United Kingdom





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.    Yes  x    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller Reporting Company |  | x

Indicate by a check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange
Act.     ̈  Yes    x  No

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of July 31, 2008: The registrant had 259,148,748 ordinary shares outstanding with par value of 1.25 pence, including 230,560,483 shares
represented by 57,640,120 American Depositary Shares (ADSs). Each ADS represents four ordinary shares. The ADSs are evidenced by American Depositary Receipts.









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INDEX



|                               |  |                                                                                                   |  |   
|------------------------------ |  | ------------------------------------------------------------------------------------------------- |  | --
|PART I  FINANCIAL INFORMATION |  | 4                                                                                                
|                               |  |                                                                                                  
|ITEM 1.                        |  | CONSOLIDATED CONDENSED FINANCIAL STATEMENTS                                                       |  | 4 
|                               |  |                                                                                                  
|                               |  | Consolidated Condensed Statements of Operations for the Three Months Ended June 30, 2008 and 2007 |  | 4 
|                               |  | Consolidated Condensed Balance Sheets as of June 30, 2008 and March 31, 2008                      |  | 5 
|                               |  | Consolidated Condensed Statements of Cash Flows for the Three Months Ended June 30, 2008 and 2007 |  | 6 
|                               |  | Notes to Consolidated Condensed Financial Statements                                              |  | 7 
|ITEM 2.                        |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RESULTS OF OPERATIONS            |  | 12
|ITEM 3.                        |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                        |  | 17
|ITEM 4.                        |  | CONTROLS AND PROCEDURES                                                                           |  | 17
|                               | 
|PART II  OTHER INFORMATION    |  | 18                                                                                               
|                               |  |                                                                                                  
|ITEM 1.                        |  | LEGAL PROCEEDINGS                                                                                 |  | 18
|ITEM 2.                        |  | CHANGES IN SECURITIES AND USE OF
PROCEEDS                                                         |  | 18
|ITEM 3.                        |  | DEFAULTS UPON SENIOR SECURITIES                                                                   |  | 18
|ITEM 4.                        |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                               |  | 18
|ITEM 5.                        |  | OTHER INFORMATION                                                                                 |  | 19
|ITEM 6.                        |  | EXHIBITS                                                                                          |  | 19
|                               | 
|SIGNATURE                      |  | 20                                                                                               



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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Certain statements contained herein, or otherwise made by our officers, including statements related to our future performance and our outlook for our
businesses and respective markets, projections, statements of our plans or objectives, forecasts of market trends and other matters, are forward-looking statements, and contain information relating to us that is based on our beliefs as well as
assumptions, made by, and information currently available to us. The words goal, anticipate, expect, believe, could, should, intend and similar expressions as they
relate to us are intended to identify forward-looking statements, although not all forward looking statements contain such identifying words. No assurance can be given that the results in any forward-looking statement will be achieved. For the
forward-looking statements, we claim the protection of the safe harbor for forward-looking statements provided for in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions that could cause actual results to
differ materially from those reflected in the forward-looking statements. Factors that might cause such actual results to differ materially from those reflected in any forward-looking statements include, but are not limited to, the following:
(i) the evaluation of various alternatives following the sale of our remaining operations, including, without limitation, a members voluntary liquidation; (ii) any inability to successfully implement such alternative(s); (iii) any
material adverse change in financial markets, the economy or in our financial position; (iv) any inability to record and process key data due to ineffective implementation of business processes and policies; (v) any negative impact from
the loss of any of our senior or key management personnel; (vi) any incurrence of tax or other liabilities or tax or other payments beyond our current expectations, which could adversely affect our liquidity; (vii) any negative impact of
the accreted value of our outstanding preferred stock or its continued accretion; (viii) any negative impact of our continued organization as an England and Wales registered Company following the sale of our U.S. operating business;
(ix) actions of governmental entities, including regulatory requirements; (x) actions by shareholders in connection with the distribution of the net proceeds from sale of Danka Office Imaging Company; (xi) the outcome of legal
proceedings to which we are or may become a party; and (xii) other risks including those risks identified in any of our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect our analysis only as of the date they are made. Except as required by applicable law, we undertake no obligation, and do not intend, to update these forward-looking statements to reflect events or
circumstances that arise after the date they are made. Furthermore, as a matter of policy, we do not generally make any specific projections as to future earnings, nor do we endorse any projections regarding future performance, which may be made by
others outside our Company.

ADDITIONAL INFORMATION AVAILABLE ON COMPANY WEB-SITE

Our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports may be viewed or
downloaded electronically, free of charge, from our website: http://www.dankabusinesssystemsplc.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our recent press releases are
also available to be viewed or downloaded electronically at http://www.dankabusinesssystemsplc.com. We will also provide electronic or paper copies of our SEC filings free of charge on request. Any information on or linked from our website is
not incorporated by reference into this Quarterly Report on Form 10-Q.



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PART I  FINANCIAL INFORMATION



|Item 1. | Consolidated Condensed Financial Statements
|------- | -------------------------------------------

Danka Business Systems PLC

Consolidated Condensed Statements of Operations for the Three Months Ended June 30, 2008 and 2007

(In thousands, except per American Depositary Share (ADS) amounts)

(Unaudited)



|                                                                                                                |  |                            |         |   |      |   |         |  
|--------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                |  | Three months endedJune 30, |        
|                                                                                                                |  | 2008                       |         |   | 2007 |  
|Operating expenses:                                                                                             |  |                            |         |   |      |   |         |  
|General and administrative expenses                                                                             |  | $                          | 297     |   |      | $ | 407     |  
|Other income                                                                                                    |  |                            | (143    | ) |      |   | (921    | )
|                                                                                                                |  |                            |         |   |      |   |         |  
|Total operating expenses (income)                                                                               |  |                            | 154     |   |      |   | (514    | )
|                                                                                                                |  |                            |         |   |      |   |         |  
|Operating (loss) earnings from continuing operations                                                            |  |                            | (154    | ) |      |   | 514     |  
|Interest expense                                                                                                |  |                            |        |   |      |   | (6,669  | )
|Interest income                                                                                                 |  |                            | 3       |   |      |   | 1,812   |  
|                                                                                                                |  |                            |         |   |      |   |         |  
|Loss from continuing operations                                                                                 |  |                            | (151    | ) |      |   | (4,343  | )
|(Loss) earnings from discontinued operations, net of tax provision of $81 and $923, respectively                |  |                            | (12,574 | ) |      |   | 106     |  
|Gain (loss) on sale of discontinued operations, net of tax (benefit) provision of $(3,887) and $0, respectively |  |                            | 87,420  |   |      |   | (719    | )
|                                                                                                                |  |                            |         |   |      |   |         |  
|Net earnings (loss)                                                                                             |  | $                          | 74,695  |   |      | $ | (4,956  | )
|                                                                                                                |  |                            |         |   |      |   |         |  
|Net loss available to common shareholders:                                                                      |  |                            |         |   |      |   |         |  
|Net loss from continuing operations                                                                             |  | $                          | (151    | ) |      | $ | (4,343  | )
|Dividends and accretion on participating shares                                                                 |  |                            | (6,338  | ) |      |   | (5,961  | )
|                                                                                                                |  |                            |         |   |      |   |         |  
|Net loss from continuing operations available to common shareholders                                            |  | $                          | (6,489  | ) |      | $ | (10,304 | )
|                                                                                                                |  |                            |         |   |      |   |         |  
|Basic and diluted net earnings (loss) available to common shareholders per ADS:                                 |  |                            |         |   |      |   |         |  
|Net loss from continuing operations per ADS                                                                     |  | $                          | (0.10   | ) |      | $ | (0.16   | )
|Net earnings (loss) from discontinued operations per ADS                                                        |  |                            | 1.16    |   |      |   | (0.01   | )
|                                                                                                                |  |                            |         |   |      |   |         |  
|Basic and diluted net earnings (loss) per ADS                                                                   |  | $                          | 1.06    |   |      | $ | (0.17   | )
|                                                                                                                |  |                            |         |   |      |   |         |  
|Weighted average basic and diluted ADSs                                                                         |  |                            | 64,787  |   |      |   | 64,767  |  
|                                                                                                                |  |                            |         |   |      |   |         |  

The accompanying notes are an integral part of these consolidated condensed financial statements



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Danka Business Systems PLC

Consolidated Condensed Balance Sheets as of June 30, 2008 and March 31, 2008

(In thousands, except per share data)



|                                                                 |  |              |          |   |               |   |          |  
|---------------------------------------------------------------- |  | ------------ | -------- | - | ------------- | - | -------- | -
|                                                                 |  | June 30,2008 |          |   | March 31,2008 |  
|                                                                 |  | (Unaudited)  |          |   |               |  
|Assets                                                           |  |              |          |   |               |   |          |  
|Current assets:                                                  |  |              |          |   |               |   |          |  
|Cash and cash equivalents                                        |  | $            | 44,057   |   |               | $ | 9,619    |  
|Restricted cash                                                  |  |              | 5,250    |   |               |   | 5,250    |  
|Assets held for sale-discontinued operations                     |  |              |         |   |               |   | 206,477  |  
|Prepaid expenses, deferred income taxes and other current assets |  |              | 15,384   |   |               |   | 790      |  
|                                                                 |  |              |          |   |               |   |          |  
|Total current assets                                             |  |              | 64,691   |   |               |   | 222,136  |  
|Property and equipment, net                                      |  |              | 8        |   |               |   | 9        |  
|Other assets                                                     |  |              | 20,006   |   |               |   | 1        |  
|                                                                 |  |              |          |   |               |   |          |  
|Total assets                                                     |  | $            | 84,705   |   |               | $ | 222,146  |  
|                                                                 |  |              |          |   |               |   |          |  
|Liabilities and shareholders deficit                            |  |              |          |   |               |   |          |  
|Current liabilities:                                             |  |              |          |   |               |   |          |  
|Accounts payable                                                 |  | $            | 1,870    |   |               | $ | 444      |  
|Accrued expenses and other current liabilities                   |  |              | 7,889    |   |               |   | 6,757    |  
|Taxes payable                                                    |  |              | 6,963    |   |               |   | 4,748    |  
|Liabilities held for sale-discontinued operations                |  |              |         |   |               |   | 210,879  |  
|                                                                 |  |              |          |   |               |   |          |  
|Total current liabilities                                        |  |              | 16,722   |   |               |   | 222,828  |  
|Deferred income taxes and other long-term liabilities            |  |              |         |   |               |   | 6,351    |  
|                                                                 |  |              |          |   |               |   |          |  
|Total liabilities                                                |  |              | 16,722   |   |               |   | 229,179  |  
|                                                                 |  |              |          |   |               |   |          |  
|6.5% senior convertible participating shares                     |  |              | 375,222  |   |               |   | 368,884  |  
|Shareholders deficit:                                           |  |              |          |   |               |   |          |  
|Ordinary shares, 1.25 pence stated value                         |  |              | 5,393    |   |               |   | 5,393    |  
|Additional paid-in capital                                       |  |              | 331,559  |   |               |   | 331,237  |  
|Accumulated deficit                                              |  |              | (644,191 | ) |               |   | (712,547 | )
|                                                                 |  |              |          |   |               |   |          |  
|Total shareholders deficit                                      |  |              | (307,239 | ) |               |   | (375,917 | )
|                                                                 |  |              |          |   |               |   |          |  
|Total liabilities and shareholders deficit                      |  | $            | 84,705   |   |               | $ | 222,146  |  
|                                                                 |  |              |          |   |               |   |          |  

The accompanying notes are an integral part of these consolidated condensed financial statements



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Danka Business Systems PLC

Consolidated Condensed Statements of Cash Flows for the Three Months Ended June 30, 2008 and 2007

(In thousands)

(Unaudited)



|                                                                                       |  |                            |          |   |      |   |         |  
|-------------------------------------------------------------------------------------- |  | -------------------------- | -------- | - | ---- | - | ------- | -
|                                                                                       |  | Three Months EndedJune 30, |         
|                                                                                       |  | 2008                       |          |   | 2007 |  
|Operating activities:                                                                  |  |                            |          |   |      |   |         |  
|Net earnings (loss)                                                                    |  | $                          | 74,695   |   |      | $ | (4,956  | )
|(Earnings) loss from discontinued operations                                           |  |                            | (74,846  | ) |      |   | 613     |  
|                                                                                       |  |                            |          |   |      |   |         |  
|Loss from continuing operations                                                        |  |                            | (151     | ) |      |   | (4,343  | )
|Adjustments to reconcile net earnings (loss) to net cash used in operating activities: |  |                            |          |   |      |   |         |  
|Depreciation and amortization                                                          |  |                            | 2        |   |      |   | 16      |  
|Amortization of debt issuance costs                                                    |  |                            |         |   |      |   | 1       |  
|Gain on the sale of property and equipment                                             |  |                            |         |   |      |   | (920    | )
|Changes in net assets and liabilities                                                  |  |                            |          |   |      |   |         |  
|Prepaid expenses and other current assets                                              |  |                            | 357      |   |      |   | (1,524  | )
|Other non-current assets                                                               |  |                            | (4       | ) |      |   | 309     |  
|Accounts payable                                                                       |  |                            | 1,426    |   |      |   | 44      |  
|Accrued expenses and other current liabilities                                         |  |                            | 3,349    |   |      |   | (9,305  | )
|Other long-term liabilities                                                            |  |                            |         |   |      |   | 161     |  
|                                                                                       |  |                            |          |   |      |   |         |  
|Net cash provided by (used in) continuing operating activities                         |  |                            | 4,979    |   |      |   | (15,651 | )
|Net cash used in discontinued operating activities                                     |  |                            | (7,913   | ) |      |   | (10,274 | )
|                                                                                       |  |                            |          |   |      |   |         |  
|Net cash used in operating activities                                                  |  |                            | (2,934   | ) |      |   | (25,835 | )
|                                                                                       |  |                            |          |   |      |   |         |  
|Investing activities:                                                                  |  |                            |          |   |      |   |         |  
|Proceeds from the sale of property and equipment                                       |  |                            |         |   |      |   | 1,506   |  
|                                                                                       |  |                            |          |   |      |   |         |  
|Net cash provided by continuing investing activities                                   |  |                            |         |   |      |   | 1,506   |  
|Net cash provided by (used in) discontinued investing activities                       |  |                            | 157,996  |   |      |   | (1,722  | )
|                                                                                       |  |                            |          |   |      |   |         |  
|Net cash provided by (used in) investing activities                                    |  |                            | 157,996  |   |      |   | (216    | )
|Financing activities:                                                                  |  |                            |          |   |      |   |         |  
|Borrowings under line of credit agreements                                             |  |                            |         |   |      |   | 5,000   |  
|Payments under line of credit agreements                                               |  |                            |         |   |      |   | (15,000 | )
|                                                                                       |  |                            |          |   |      |   |         |  
|Net cash used in continuing financing activities                                       |  |                            |         |   |      |   | (10,000 | )
|Net cash (used in) provided by discontinued financing activities                       |  |                            | (125,524 | ) |      |   | 26,569  |  
|                                                                                       |  |                            |          |   |      |   |         |  
|Net cash (used in) provided by financing activities                                    |  |                            | (125,524 | ) |      |   | 16,569  |  
|                                                                                       |  |                            |          |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                                   |  |                            | 29,538   |   |      |   | (9,482  | )
|Cash and cash equivalents from continuing operations, beginning of period              |  |                            | 9,619    |   |      |   | 20,054  |  
|Cash and cash equivalents from discontinued operations, beginning of period            |  |                            | 4,900    |   |      |   | (2,460  | )
|Cash and cash equivalents from discontinued operations, end of period                  |  |                            |         |   |      |   | (1,871  | )
|                                                                                       |  |                            |          |   |      |   |         |  
|Cash and cash equivalents from continuing operations, end of period                    |  | $                          | 44,057   |   |      | $ | 6,241   |  
|                                                                                       |  |                            |          |   |      |   |         |  
|Supplemental disclosures-cash flow information                                         |  |                            |          |   |      |   |         |  
|Interest paid                                                                          |  |                            | 3,592    |   |      |   | 13,277  |  
|Income taxes paid                                                                      |  |                            |         |   |      |   | 1,706   |  

The accompanying notes are an integral part of these consolidated condensed financial statements



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Danka Business Systems PLC

Notes to Consolidated Condensed Financial Statements

(All tables in thousands, except per American Depositary (ADS) amounts)

(Unaudited)

Note 1. Basis of Presentation

The
accompanying unaudited consolidated condensed financial statements of Danka Business Systems PLC (Danka or the Company) as of and for the three months ended June 30, 2008 and 2007 contains, in the opinion of management,
all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States,
which contemplates continuation of the Company as a going concern. However, as of June 30, 2008, the Companys obligations exceed its assets and has sold all of its remaining operations. These conditions raise substantial doubt about the
Companys ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

On June 27, 2008, pursuant to a stock purchase agreement (as amended, the Stock Purchase Agreement), dated as of April 8, 2008,
among Danka, Danka Holding Company and Konica Minolta Business Solutions U.S.A., Inc. (Konica Minolta), the Company sold its U.S. operations to Konica Minolta in a sale of all the outstanding capital stock of Danka Office Imaging Company
(DOIC) for a purchase price of U.S. $240 million in cash, subject to an upward or downward adjustment of up to U.S. $10 million. The sum of $10 million was held back by Konica Minolta from the amount paid at closing as security for the
Companys purchase price adjustment obligations and is included in Prepaid expenses, deferred income taxes and other current assets in the consolidated condensed balance sheet at June 30, 2008. Additionally, $25 million of the
purchase price paid by Konica Minolta at closing will be held in escrow for a period of four years following closing to satisfy any and all claims by Konica Minolta which may be made under the Stock Purchase Agreement of which $5 million and $20
million, is included in Prepaid expenses, deferred income taxes and other current assets and Other assets, respectively, in the consolidated condensed balance sheet at June 30, 2008. After the repayment of the
Companys outstanding indebtedness, including repayment of approximately $146 million under the Companys credit facilities provided by General Electric Capital Corporation (GECC), (including additional borrowings of $15
million since March 31, 2008 and early termination fees and accrued and unpaid interest of approximately $6 million), the payment of certain change-of-control and severance obligations of approximately $8 million to certain executives and the
fees and expenses incurred in connection with the sale transaction and less the holdback and escrow amounts set forth above, the net sale proceeds received by the Company were approximately $40 million.

The Board of Directors of the Company is evaluating the alternatives available with respect to the distribution of remaining net proceeds from the sale
of DOIC to Konica Minolta  primarily how such proceeds may be distributed to Danka shareholders. There is no guarantee that any future alternative chosen by the board of directors will result in any return to holders of Dankas ordinary
shares (including holders of American Depositary Shares). In addition, there is no guarantee that the holders of the Companys 6.50% senior convertible participating shares will not take action(s) available to them under applicable law, for
example seeking a winding up of the Company, to recover amounts to which they are entitled pursuant to the Companys articles of association. Such amounts due to preferred shareholders exceed the amount of the net proceeds from the sale of
DOIC.

The unaudited consolidated condensed financial statements contained herein as of and for the three months ended June 30, 2008
and 2007 do not comprise statutory accounts within the meaning of Section 240 of the United Kingdom Companies Act 1985. Statutory accounts for the year ended March 31, 2008 will be delivered to the Registrar of Companies for England and
Wales following the Company Annual General Meeting. The independent auditors report on those statutory accounts was unqualified and did not contain a statement under Section 237(2) or 237(3) of the United Kingdom Companies Act 1985.

Certain prior year amounts have been reclassified to conform to the current year presentation which presents the operations of DOIC as
discontinued.

Note 2. Recent Accounting Pronouncements

In September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements (FAS 157) which provides enhanced guidance for using fair value to measure assets and liabilities. FAS
157 clarifies the principle that fair value should be based on assumptions market participants would use when pricing an asset or liability. Under FAS 157, fair value measurements would be separately disclosed by level within a fair value hierarchy.
The adoption of FAS 157 on April 1, 2008 did not have a material impact on the Companys financial position, results of operations or cash flows.

In February 2007, the FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an Amendment of FASB Statement No. 115 (FAS
159). FAS 159 expands the use of fair value accounting but does not affect existing standards which require assets or liabilities to be carried at fair value. Under FAS 159, a company may elect to use fair value to measure accounts and loans
receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees and issued debt. Other eligible items include firm commitments for financial instruments that otherwise would not be recognized
at inception and non-cash warranty obligations where a warrantor is permitted to pay a third party to provide the warranty goods or services. If the use of fair



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value is elected, any upfront costs and fees related to the item must be recognized in earnings and cannot be deferred, e.g., debt issue costs. The fair
value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. At the adoption date, unrealized gains and losses on existing items
for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings. Subsequent to the adoption of FAS 159, changes in fair value are recognized in earnings. The adoption of FAS 159 on April 1, 2008 did
not have a material impact on the Companys financial position, results of operations or cash flows.

Note 3. Discontinued Operations

U.S. operations

On June 27,
2008, pursuant to a stock purchase agreement (as amended, the Stock Purchase Agreement), dated as of April 8, 2008, among Danka, Danka Holding Company and Konica Minolta Business Solutions U.S.A., Inc. (Konica Minolta),
the Company sold its U.S. operations to Konica Minolta in a sale of all the outstanding capital stock of Danka Office Imaging Company (DOIC) for a purchase price of U.S. $240 million in cash, subject to an upward or downward adjustment
of up to U.S. $10 million. The sum of $10 million was held back by Konica Minolta from the amount paid at closing as security for the Companys purchase price adjustment obligations and is included in Prepaid expenses, deferred income
taxes and other current assets in the consolidated condensed balance sheet at June 30, 2008. Additionally, $25 million of the purchase price paid by Konica Minolta at closing will be held in escrow for a period of four years following
closing to satisfy any and all claims by Konica Minolta which may be made under the Stock Purchase Agreement of which $5 million and $20 million, is included in Prepaid expenses, deferred income taxes and other current assets and
Other assets, respectively, in the consolidated condensed balance sheet at June 30, 2008. After the repayment of the Companys outstanding indebtedness, including repayment of approximately $146 million under the Companys
credit facilities provided by General Electric Capital Corporation (GECC), (including additional borrowings of $15 million since March 31, 2008 and early termination fees and accrued and unpaid interest of approximately $6 million),
the payment of certain change-of-control and severance obligations of approximately $8 million to certain executives and the fees and expenses incurred in connection with the sale transaction and less the holdback and escrow amounts set forth above,
the net sale proceeds received by the Company were approximately $40 million.

Summarized information for DOIC is set forth below:



|                                                             |  |                            |         |   |      |   |        
|------------------------------------------------------------ |  | -------------------------- | ------- | - | ---- | - | -------
|                                                             |  | Three Months EndedJune 30,
|                                                             |  | 2008                       |         |   | 2007
|Revenues                                                     |  | $                          | 81,452  |   |      | $ | 106,274
|Net (loss) earnings from discontinued operations, net of tax |  |                            | (12,384 | ) |      |   | 393    
|Gain on sale of discontinued operations, net of tax          |  |                            | 88,068  |   |      |   |       

In connection with the sale of DOIC, as described above, the credit facilities provided by GECC
were repaid and terminated.

In accordance with FASB Statement No, 144 Accounting for the Impairment or Disposal of Long-Lived
Assets, estimates of assets and liabilities to be sold have been reclassified from various line items within the balance sheet and aggregated into Assets held for sale-discontinued operations and Liabilities held for
sale-discontinued operations as of March 31, 2008. The following represents the carrying amounts of the major classes of assets and liabilities to be sold or transferred to Konica Minolta at March 31, 2008:



|                                                                 |  |                               |       
|---------------------------------------------------------------- |  | ----------------------------- | ------
|                                                                 |  | March 31, 2008Carrying Amount
|Assets                                                           |  |                               |       
|Cash and cash equivalents                                        |  | $                             | 4,900 
|Accounts receivable, net                                         |  |                               | 37,662
|Inventory                                                        |  |                               | 27,201
|Prepaid expenses, deferred income taxes and other current assets |  |                               | 3,833 
|Equipment on operating leases, net                               |  |                               | 6,803 
|Property and equipment, net                                      |  |                               | 16,913



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|                                                          |  |                               |        
|--------------------------------------------------------- |  | ----------------------------- | -------
|                                                          |  | March 31, 2008Carrying Amount
|Goodwill                                                  |  |                               | 93,488 
|Other intangible assets, net                              |  |                               | 454    
|Other assets                                              |  |                               | 15,223 
|                                                          |  |                               |        
|                                                          |  | $                             | 206,477
|                                                          |  |                               |        
|                                                          | 
|Liabilities                                               |  |                               |        
|Current maturities of long-term debt and notes payable    |  | $                             | 125,786
|Accounts payable                                          |  |                               | 50,025 
|Accrued expenses and other current liabilities            |  |                               | 21,789 
|Taxes payable                                             |  |                               | 3,367  
|Deferred revenue                                          |  |                               | 5,135  
|Long-term debt and notes payable, less current maturities |  |                               | 269    
|Deferred income taxes and other long-term liabilities     |  |                               | 4,508  
|                                                          |  |                               |        
|                                                          |  | $                             | 210,879
|                                                          |  |                               |        

European operations

During fiscal year 2007, the Company completed the sale of its European businesses. Pursuant to a share purchase agreement (the Share Purchase Agreement) dated as of October 12, 2006 among Danka
Business Systems PLC, certain of its subsidiaries (Danka Business Systems PLC and such subsidiaries collectively referred to hereinafter as Danka, or the Company) and Ricoh Europe B.V. (Ricoh), the Company sold
its European businesses to Ricoh in a sale of all the outstanding capital stock of those European subsidiaries set forth in the Share Purchase Agreement for a purchase price of U.S. $215 million in cash, including an upward purchase price adjustment
of U.S. $5.0 million and a holdback of $7.5 million, both of which we received during fiscal year 2008. The operating activities of the Companys European operations (including several non-operating companies not purchased by Ricoh) have been
reported as discontinued operations and the consolidated condensed financial statements have been adjusted to reflect this presentation. Summarized information for the European operations is set forth below:



|                                                      |  |                            |      |   |      |   |      |  
|----------------------------------------------------- |  | -------------------------- | ---- | - | ---- | - | ---- | -
|                                                      |  | Three Months EndedJune 30, |     
|                                                      |  | 2008                       |      |   | 2007 |  
|Net loss from discontinued operations, net of tax     |  | $                          | (190 | ) |      | $ | (287 | )
|Provision for income taxes on discontinued operations |  |                            | 81   |   |      |   | 201  |  
|Loss on sale of discontinued operations, net of tax   |  |                            | (648 | ) |      |   | (719 | )

Per the terms of the sale agreement, the Company established an escrow in the amount of $15.8
million to cover various obligations in respect of certain of the European operations property leases and banking and financing agreements. This escrow reduced the net proceeds from the sale of the European businesses. In December 2007, this
escrow was reduced to $5.3 million and is included in Restricted cash June 30, 2008 and March 31, 2008.

The Company
is subject to tax audits in certain jurisdictions that were sold during fiscal year 2007. Per the terms of the Share Purchase Agreement, the Company is liable for any adverse outcome of these audits up through the date of sale of the operations. The
tax audits are ongoing and as of June 30, 2008, the recorded liability is the Companys best estimate of the exposure from these audits. The Company intends to vigorously defend any adverse findings which may or may not be material.

Note 4. Earnings (Loss) Per Share



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The effect of the Companys 6.5% senior convertible participating shares, which represent the number
of ADSs shown in the table below are not included in the computation of diluted earnings per share for the three months ended June 30, 2008 and 2007, because their effect would be anti-dilutive. ADS equivalents from stock options shown in the
table below are not included in the computation of diluted earnings per share for the three months ended June 30, 2008 and 2007, because their effect would be anti-dilutive.



|                                             |  |                            |  |       
|-------------------------------------------- |  | -------------------------- |  | ------
|                                             |  | Three months endedJune 30,
|                                             |  | 2008                       |  | 2007  
|Potential ADSs issuance from:                |  |                            |  |       
|6.5% senior convertible participating shares |  | 29,907                     |  | 28,039
|Stock options                                |  | 3,639                      |  | 5,049 

Note 5. Contingencies

Litigation:On June 27, 2008, DCML LLC (DCML), the beneficial owner of approximately 8.1% of the Companys outstanding ordinary shares, filed a complaint in the U.S. District Court for the
Southern District of New York against the Company, its board of directors, and one of the holders of the Companys 6.50% senior convertible participating shares (collectively, the defendants) alleging that the defendants violated
Section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 thereunder in connection with the proxy statement and supplement to proxy statement issued by the Company to solicit votes with respect to the sale of DOIC, a proposed members
voluntary liquidation and related proposals, which were voted on by Danka shareholders at an extraordinary general meeting held on June 27, 2008. The complaint also alleges that the Companys board of directors breached its fiduciary
duties to ordinary shareholders by, among other things, recommending that Danka shareholders vote in favor of the sale of DOIC, the proposed members voluntary liquidation and related proposals. The complaint seeks, among other things, unspecified
compensatory damages. On July 9, 2008, the plaintiff filed an amended complaint. The Company believes that such complaint is wholly without merit and was filed for an improper purpose, and intends to defend itself vigorously against these
allegations.

The Company is also subject to legal proceedings and claims which arise in the ordinary course of its business. The Company
does not expect these legal proceedings to have a material effect upon its financial position, results of operations or liquidity.

See
Note 3. Discontinued operations for a discussion of contingencies regarding the sales of the Companys U.S. and European operations.

Note 6. Income Taxes

In assessing the realizability of deferred tax assets, management considers whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences
become deductible. Our past financial performance is a significant factor which contributes to our limited use, pursuant to Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes of projections of future
taxable income in assessing the realizability of deferred tax assets in most jurisdictions. Additionally, management considered the scheduled reversal of deferred tax liabilities and tax planning strategies in making this assessment.
Considering all relevant data, management concluded that it is not more likely than not the Company will realize the benefits of the deferred tax assets at June 30, 2008 and 2007 in most jurisdictions and therefore a valuation
allowance has been recorded to reserve a portion of its deferred tax assets at June 30, 2008 and 2007 in these jurisdictions.



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The Company files numerous income tax returns in the U.S. at the federal, state and local levels, and in
certain foreign jurisdictions. The Company has analyzed filing positions in all of the federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. With few
exceptions, the Company is no longer subject to U.S. federal, state, local, or foreign income tax examinations by taxing authorities for years prior to the fiscal year ended March 31, 2005. The Company is not currently under audit by the
Internal Revenue Service but is currently under audit in certain state and local jurisdictions, and in certain foreign jurisdictions. Returns filed in the United Kingdom for tax years ended March 31, 2006, are currently under review.

During the current fiscal period, there were no significant changes to the Companys unrecognized tax benefits. Included in the
balance of unrecognized tax benefits at June 30, 2008 is $0.8 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve months.

The Companys policy is to recognize interest and penalties related to unrecognized tax benefits as part of its provision for federal and state
income tax expense. As of June 30, 2008, the Company has accrued $0.1 million of interest and penalties related to unrecognized tax benefits.

The Companys effective tax rate differs from its 35% statutory tax rate primarily due to the decrease in the valuation allowance due to the income tax effect of the sale of DOIC as more fully described in Note 3. Discontinued
operations. During the current fiscal year period, a net income tax benefit of $3.9 million is recorded in Gain (loss) on sale of discontinued operations. During the prior year fiscal period, the Company recorded a tax provision of
$0.9 million, recorded in (Loss) earnings from discontinued operations. $0.7 million and $0.2 million related to the U.S. and European operations, respectively.



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

On June 27, 2008, Danka Business Systems PLC (Danka or the Company) completed the sale of its U.S. operating subsidiary,
Danka Office Imaging Company (DOIC). Pursuant to a stock purchase agreement (as amended, the Stock Purchase Agreement), dated as of April 8, 2008, among Danka, Danka Holding Company and Konica Minolta Business Solutions
U.S.A., Inc. (Konica Minolta), the Company sold its U.S. operations to Konica Minolta in a sale of all the outstanding capital stock of DOIC for a purchase price of U.S. $240 million in cash, subject to an upward or downward adjustment
of up to U.S. $10 million. The sum of $10 million was held back by Konica Minolta from the amount paid at closing as security for the Companys purchase price adjustment obligations and is included in Prepaid expenses, deferred income
taxes and other current assets in the consolidated condensed balance sheet at June 30, 2008. Additionally, $25 million of the purchase price paid by Konica Minolta at closing will be held in escrow for a period of four years following
closing to satisfy any and all claims by Konica Minolta which may be made under the Stock Purchase Agreement of which $5 million and $20 million, is included in Prepaid expenses, deferred income taxes and other current assets and
Other assets, respectively, in the consolidated condensed balance sheet at June 30, 2008. After the repayment of the Companys outstanding indebtedness, including repayment of approximately $146 million under the Companys
credit facilities provided by General Electric Capital Corporation (GECC), (including additional borrowings of $15 million since March 31, 2008 and early termination fees and accrued and unpaid interest of approximately $6 million),
the payment of certain change-of-control and severance obligations of approximately $8 million to certain executives and the fees and expenses incurred in connection with the sale transaction and minus the holdback and escrow amounts set forth
above, the net sale proceeds received by the Company were approximately $40 million.

The sale of DOIC to Konica Minolta constituted the
sale of Dankas remaining operations. Prior to the sale of DOIC, based on revenue, we were one of the largest independent providers of comprehensive document solutions including office imaging equipment, software, support, and related services
and supplies in the United States. We offered a wide range of state of the art office imaging products, services, supplies and solutions that primarily included digital and color copiers, digital and color multifunction peripherals,
(MFPs) printers, facsimile machines and software, contract services, including professional and consulting services, maintenance, supplies, leasing arrangements, technical support and training, collectively referred to as Danka Document
Services.

We are a public limited company organized under the laws of England and Wales and we were incorporated on March 13, 1973.

All tables presented herein are in thousands unless otherwise noted.

Results of Continuing Operations

Three Months Ended June 30, 2008 compared to the Three Months Ended
June 30, 2007

General and Administrative Expenses

General and administrative expenses (G&A) in the current year quarter decreased by $0.1 million or 27.0% from the year-ago period to $0.3 million from $0.4 million. This decrease was the result of
lower staff costs due.

Other Income

Other income for the current fiscal year quarter was primarily the result of foreign exchange gains on payables and accrued expenses while other income for the prior fiscal year quarter resulted primarily from a gain of $0.9 million on the
sale of a building in London.

Operating Earnings (Loss) from Continuing Operations

Our operating loss from continuing operations was $0.2 million for the three months ended June 30, 2008 compared to earnings of $0.5 million in the
prior year period. This decrease year over year was due to the gain on the sale of the building in the prior year offset by lower SG&A expenses in the current year period as discussed above.

Interest Expense and Interest Income

Interest
expense decreased by $6.7 million due to the payoff of our senior and subordinated notes in fiscal year 2008.



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Interest income decreased by $1.8 million. The income in the prior period resulted from interest earned
on cash balances as a result of the sale of our European operations at the end of fiscal year 2007.

Net Earnings (Loss) from Continuing Operations

Net loss from continuing operations was $0.2 million in the three months ended June 30, 2008 compared to a loss from continuing
operations of $4.3 million in the year-ago period. We incurred a net loss from continuing operations available to common shareholders of $0.10 per ADS during the current period compared to net loss from continuing operations of $0.16 per ADS in the
year-ago period.



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Liquidity and Capital Resources

The following summarizes our cash flows from continuing operations for the first three months of fiscal years 2009 and 2008 as reported in our consolidated condensed statements of cash flows in the accompanying
consolidated condensed financial statements:



|                                                    |  |                            |        |      |   |         |  
|--------------------------------------------------- |  | -------------------------- | ------ | ---- | - | ------- | -
|                                                    |  | Three Months EndedJune 30, |       
|                                                    |  | 2008                       |        | 2007 |  
|Net cash provided by (used in) operating activities |  | $                          | 4,979  |      | $ | (15,561 | )
|Net cash provided by investing activities           |  |                            |       |      |   | 1,506   |  
|Net cash used in financing activities               |  |                            |       |      |   | (10,000 | )
|Effect of discontinued operations                   |  |                            | 29,459 |      |   | 10,242  |  
|                                                    |  |                            |        |      |   |         |  
|Net increase (decrease) in cash                     |  |                            | 34,438 |      |   | (13,813 | )
|Cash and cash equivalents, beginning of period      |  |                            | 9,619  |      |   | 20,054  |  
|                                                    |  |                            |        |      |   |         |  
|Cash and cash equivalents, end of period            |  | $                          | 44,057 |      | $ | 6,241   |  
|                                                    |  |                            |        |      |   |         |  

Cash flows

Generally, cash provided by operations, cash on the balance sheet and the availability on our credit facilities were to be our primary source of funds to finance operating needs and capital expenditures. Our net cash
flow provided by operating activities from continuing operations during the first three months of fiscal year 2009 was $5.0 million due to increases in accounts payable and accrued expenses for professional fees related to the sale of our U.S.
operations. Cash used in continuing operating activities for the prior year period were $15.6 million primarily due to the payment of interest on our senior and subordinated notes outstanding during the period.

Our net cash flow provided investing activities from continuing operations was $1.5 million for the first three months of the fiscal year 2008 due to the
sale of property and equipment, principally a building in London.

Our net cash flow used in financing activities from continuing
operations during the prior year period was the payoff of our credit facility with Bank of America.

The Company also has restricted cash
at June 30, 2008 of $5.3 million related to an escrow established relating to the sale of our European operations as more fully described below and in Note 3. Discontinued Operations to the consolidated condensed financial
statements.

On June 27, 2008, the Company completed the sale of its U.S. operating subsidiary, DOIC. Pursuant to a stock purchase
agreement, dated as of April 8, 2008, among Danka, Danka Holding Company and Konica Minolta, the Company sold its U.S. operations to Konica Minolta in a sale of all the outstanding capital stock of DOIC for a purchase price of U.S. $240 million
in cash, subject to an upward or downward adjustment of up to U.S. $10 million. The sum of $10 million was held back by Konica Minolta from the amount paid at closing as security for the Companys purchase price adjustment obligations and is
included in Prepaid expenses, deferred income taxes and other current assets in the consolidated condensed balance sheet at June 30, 2008. Additionally, $25 million of the purchase price paid by Konica Minolta at closing will be
held in escrow for a period of four years following closing to satisfy any and all claims by Konica Minolta which may be made under the Stock Purchase Agreement of which $5 million and $20 million, is included in Prepaid expenses, deferred
income taxes and other current assets and Other assets, respectively in the consolidated condensed balanse sheet at June 30, 2008. After the repayment of the Companys outstanding indebtedness, including repayment of
approximately $146 million under the Companys credit facilities provided by General Electric Capital Corporation (GECC), (including additional borrowings of $15 million since March 31, 2008 and early termination fees and
accrued and unpaid interest of approximately $6 million), the payment of certain change-of-control and severance obligations of approximately $8 million to certain executives and the fees and expenses incurred in connection with the sale transaction
and minus the holdback and escrow amounts set forth above, the net sale proceeds received by the Company were approximately $40 million.

In connection with the sale of DOIC, as described above, the credit facilities provided by GECC were repaid and terminated.



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We believe cash and cash equivalents on hand, which include the net proceeds of approximately $40 million
after transaction costs from the sale of DOIC and paydown of our debt with GECC is sufficient to fund our cash requirements for the next twelve months.

The Board of Directors of the Company is evaluating the alternatives available with respect to the distribution of remaining net proceeds from the sale of DOIC to Konica Minolta  primarily how such proceeds may
be distributed to Danka shareholders. There is no guarantee that any future alternative chosen by the board of directors will result in any return to holders of Dankas ordinary shares (including holders of American Depositary Shares). In
addition, there is no guarantee that the holders of the Companys 6.50% senior convertible participating shares will not take action(s) available to them under applicable law, for example seeking a winding up of the Company, to
recover amounts to which they are entitled pursuant to the Companys articles of association. Such amounts due to the preferred shareholders exceed the amount of the net proceeds from the sale of DOIC.

Off-Balance Sheet Arrangements

We have no
off-balance sheet arrangements as defined under Item 303(a)(4) of Regulation S-K.

Other Financing Arrangements

Senior Convertible Participating Shares

On
December 17, 1999, we issued 218,000 6.50% senior convertible participating shares, or the participating shares, for $218.0 million. The participating shares are entitled to dividends equal to the greater of 6.50% per annum or ordinary
share dividends on an as converted basis. In accordance with the terms of their issue, dividends were payable in the form of additional participating shares in the period through to December 2004. The terms of the issue of the senior notes due 2010,
which were repaid in June 2007, did not permit the payment of cash dividends. Accordingly, dividends, which are cumulative, were paid in the form of additional participating shares from issuance to December 2004. At that time, we were obliged to pay
the participating share dividends in cash. However, the terms of the participating shares permit us to continue to pay payment-in-kind dividends following December 17, 2004 if our then existing principal indebtedness, which includes our credit
facility and debt securities issued in an aggregate principal amount in excess of $50.0 million in a bona fide underwritten public or private offering, prohibits us from paying cash dividends. Further, if we are not permitted by the terms of the
participating shares to pay payment-in-kind dividends following December 17, 2004 and we have insufficient distributable reserves under English law to pay cash dividends, the amount of any unpaid dividend will be added to the liquidation
return of each participating share.

The holders of the participating shares are, in general, entitled to appoint two directors to
the board. Since we did not pay dividends in cash for six successive quarters following December 2004, they are entitled to appoint a further two directors until the time we have paid cash dividends on the participating shares for four successive
quarters. As of the date of this filing, the holders of the participating shares have appointed two directors to the Companys Board of Directors.

The participating shares are currently convertible into ordinary shares at a conversion price of $3.11 per ordinary share (equal to $12.44 per ADS), subject to adjustment in certain circumstances to avoid dilution of
the interests of participating shareholders. As of June 30, 2008 the participating shares have voting rights, on an as converted basis, currently corresponding to approximately 29.9% of the total voting power of our capital stock which includes
an additional 157,038 participating shares in respect of payment-in-kind dividends.

If, by December 17, 2010, we have not converted
or otherwise redeemed the participating shares, we are required, subject to compliance with applicable laws and the instruments governing our indebtedness, and except as set out immediately following, to redeem all of the then outstanding
participating shares. If we fail to do this, we must then redeem the maximum number of such shares that can then lawfully be redeemed, assuming that the liquidation value per participating share is at that time greater than the market value of the
ordinary shares into which the participating shares are convertible. The amount to be paid on the redemption of each participating share in cash is the greater of (a) the then liquidation value or (b) the then market value of the ordinary
shares into which the participating shares are convertible, in each case plus accumulated and unpaid dividends from the most recent dividend payment date. If the price set out in (b) above is applicable, we are permitted to convert the
participating shares into the number of ordinary shares into which they are convertible instead of making the cash payment.

English
Company law (to which we are subject, as an English corporation) requires that the participating shares may be redeemed only out of our accumulated, realized profits (as described below, and generally described under English law as
distributable profits) or, subject to some restrictions, the proceeds of a new issuance of shares for the purposes of financing the redemption.



15



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We currently estimate that, as of December 17, 2010, the liquidation value of the then outstanding
participating shares will be approximately $419.8 million. To the extent that we are legally permitted to do so, and except where a majority of our board of directors decided bona fide that to do so would be materially prejudicial to the business of
the subsidiary undertaking, we are required to use our best efforts to ensure that our subsidiary undertakings distribute to us a sufficient amount of their profits, if any, to enable us to redeem the convertible participating shares. If we have
insufficient distributable profits on December 17, 2010 to redeem the participating shares in full, we will be required to use our best efforts to complete a fresh issue of shares and use the proceeds of that fresh issue to finance the
redemption. As of the date of this document, we have no distributable profits. However, in determining whether we are able to issue new shares, we may take into account then prevailing market conditions and other factors deemed reasonable by a
majority of our board of directors, and we will not be required to issue new shares to the extent prohibited by our then existing indebtedness, whether under our principal bank credit facilities or pursuant to debt securities issued in an aggregate
principal amount in excess of $50.0 million in a bona fide underwritten public offering or in a bona fide private offering.

In the event
that we are unable to redeem all of the then outstanding participating shares on December 10, 2010, we are required to redeem so many of the shares as we are able, pro rata among the holders of the participating shares. Any participating shares
that are not so redeemed shall remain outstanding, but shall thereafter be entitled to dividends at an increased rate of 8.5% per annum until redemption.

The Company had a plan of liquidation, which was not approved by the required 75% of shareholders on June 27, 2008. In the event of liquidation of Danka, participating shareholders will be entitled to receive a
distribution equal to the greater of (a) the liquidation return per share (initially $1,000 and subject to upward adjustment on certain default events by us) plus any accumulated and unpaid dividends accumulating from the most recent dividend
date or b) the amount that would have been payable on each participating share if it had been converted into ordinary shares if the market value of those shares exceed the liquidation value of the participating shares.

Tax Payments

We have not paid substantial amounts of
income tax in the prior three years because of our net operating losses in most jurisdictions. We are subject to audits by multiple tax authorities with respect to prior years and certain of these audits are in the latter stages. Where we disagree
with any of these positions adopted by the tax authorities, we may formally protest them.

Recent Accounting Pronouncements

In September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements (FAS 157) which provides enhanced guidance
for using fair value to measure assets and liabilities. FAS 157 clarifies the principle that fair value should be based on assumptions market participants would use when pricing an asset or liability. Under FAS 157, fair value measurements would be
separately disclosed by level within a fair value hierarchy. The adoption of FAS 157 on April 1, 2008 did not have a material impact on the Companys financial position, results of operations or cash flows.

In February 2007, the FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding
an Amendment of FASB Statement No. 115 (FAS 159). FAS 159 expands the use of fair value accounting but does not affect existing standards which require assets or liabilities to be carried at fair value. Under FAS 159, a
company may elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees and issued debt. Other eligible items include firm commitments
for financial instruments that otherwise would not be recognized at inception and non-cash warranty obligations where a warrantor is permitted to pay a third party to provide the warranty goods or services. If the use of fair value is elected, any
upfront costs and fees related to the item must be recognized in earnings and cannot be deferred, e.g., debt issue costs. The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar
instruments that it elects not to measure based on fair value. At the adoption date, unrealized gains and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings.
Subsequent to the adoption of FAS 159, changes in fair value are recognized in earnings. The adoption of FAS 159 on April 1, 2008 did not have a material impact on the Companys financial position, results of operations or cash flows.



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|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Not applicable



|Item 4. | Controls and Procedures
|------- | -----------------------

We maintain disclosure
controls and procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commissions rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (principal executive officer) and Principal Accounting Officer (principal
financial officer), to allow timely decisions regarding required disclosure. We have established a Disclosure Committee, consisting of certain members of management, to assist in this evaluation. The Disclosure Committee meets on a regular quarterly
basis, and as needed.

Our management, including our Chief Executive Officer and Principal Accounting Officer, evaluated the effectiveness
of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act), at June 30, 2008. Based on that evaluation, our Chief Executive Officer and Principal Accounting Officer concluded that,
at June 30, 2008, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

As a result of the sale of the Companys remaining operations, the Company is now comprised of limited accounting, administrative and legal
functions. As a result, our internal controls over financial reporting have changed. However, in the opinion of management, these changes in our internal controls over financial reporting during the quarter ended June 30, 2008 have not
materially affected, and are not reasonably likely to materially affect our internal controls over financial reporting.



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APPROVAL OF NON-AUDIT SERVICES

The audit committee has approved Ernst & Young LLP and its affiliates to perform services relating to the Companys 401(k) plan during the three months ended June 30, 2008.

PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

Litigation:On
June 27, 2008, DCML LLC (DCML), the beneficial owner of approximately 8.1% of the Companys outstanding ordinary shares, filed a complaint in the U.S. District Court for the Southern District of New York against the Company,
its board of directors, and one of the holders of the Companys 6.50% senior convertible participating shares (collectively, the defendants) alleging that the defendants violated Section 14(a) of the Securities Exchange Act of
1934 and Rule 14a-9 thereunder in connection with the proxy statement and supplement to proxy statement issued by the Company to solicit votes with respect to the sale of DOIC, a proposed members voluntary liquidation and related proposals, which
were voted on by Danka shareholders at an extraordinary general meeting held on June 27, 2008. The complaint also alleges that the Companys board of directors breached its fiduciary duties to ordinary shareholders by, among other things,
recommending that Danka shareholders vote in favor of the sale of DOIC, the proposed members voluntary liquidation and related proposals. The complaint seeks, among other things, unspecified compensatory damages. On July 9, 2008, the plaintiff
filed an amended complaint. The Company believes that such complaint is wholly without merit and was filed for an improper purpose, and intends to defend itself vigorously against these allegations.

The Company is also subject to legal proceedings and claims which arise in the ordinary course of its business. The Company does not expect these legal
proceedings to have a material effect upon its financial position, results of operations or liquidity.



|Item 2. | Changes in Securities and Use of Proceeds
|------- | -----------------------------------------

Not
applicable.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

Not applicable.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

On June 27, 2008, an extraordinary general meeting of the shareholders of Danka Business Systems PLC was held to consider and vote on ordinary and special resolutions to approve the sale of the Companys U.S. operation and to
place the Company into a members voluntary liquidation. At the meeting, the following actions were taken by the shareholders:

Ordinary
resolution for the approval to split the voting on the sale of the Companys U.S. operations and the members voluntary liquidation. The voting on resolution was as follows:



|        |  |             |  |       |  
|------- |  | ----------- |  | ----- | -
|FOR     |  | 270,584,890 |  | 79.00 | %
|AGAINST |  | 71,949,180  |  | 21.00 | %
|ABSTAIN |  | 4,380       |  | 0.00  | %

Ordinary resolution for approval of the sale of the Companys U.S. operations on the terms of
and subject to the conditions of the Share Purchase Agreement, dated April 8, 2008. The voting on resolution was as follows:



|        |  |             |  |       |  
|------- |  | ----------- |  | ----- | -
|FOR     |  | 270,230,864 |  | 78.89 | %
|AGAINST |  | 72,302,406  |  | 21.11 | %
|ABSTAIN |  | 4,380       |  | 0.00  | %

Special resolution for approval that the Company be wound up voluntarily. The voting on resolution
was as follows:



|        |  |             |  |       |  
|------- |  | ----------- |  | ----- | -
|FOR     |  | 245,291,445 |  | 70.42 | %
|AGAINST |  | 103,033,996 |  | 29.58 | %
|ABSTAIN |  | 6,297       |  | 0.00  | %



18



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##### Table of Contents

|Item 5. | Other Information
|------- | -----------------

None.



|Item 6. | Exhibits
|------- | --------

(a) Exhibits.



|            |  |                                                                                                                               
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                   
|31.1        |  | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|            | 
|31.2        |  | Certification of PAO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|            | 
|32.1        |  | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            | 
|32.2        |  | Certification of PAO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



19



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##### Table of Contents

SIGNATURE

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



|                      |  |                           
|--------------------- |  | --------------------------
|                      |  | Danka Business Systems PLC
|                      |  | (Registrant)              
|                      | 
|Date: August 14, 2008 |  | /s/ A.D. Frazier          
|                      |  | A.D. Frazier              
|                      |  | Chief Executive Officer   

Exhibit Index



|            |  |                                                                                                                               
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                   
|31.1        |  | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|            | 
|31.2        |  | Certification of PAO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|            | 
|32.1        |  | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            | 
|32.2        |  | Certification of PAO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



20