<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                  FORM 10-Q/A

                                 AMENDMENT #1


(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, 2001 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)
<TABLE>
<S>                                                                          <C>
ENGLAND                                                                      98-0052869
------------------------------------------------------------------         --------------------------------------
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)               (I.R.S. EMPLOYER IDENTIFICATION NO.)

11201 DANKA CIRCLE NORTH           MASTERS HOUSE
ST. PETERSBURG, FLORIDA     AND    107 HAMMERSMITH ROAD
                                   LONDON, ENGLAND W14 0QH                   33716
------------------------------------------------------------------         --------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                                     (ZIP CODE)
</TABLE>


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  727-576-6003

                                NOT APPLICABLE
-------------------------------------------------------------------------------
         (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)


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 [_]

The registrant had 247,570,566 Ordinary Shares outstanding as of June 30, 2001
<PAGE>

                                     INDEX
<TABLE>
<CAPTION>
                                                                                 Page
                                                                                 ----
<S>                                                                              <C>
PART I - FINANCIAL INFORMATION

     Item 1 - Consolidated Financial Statements (Unaudited)

              Consolidated Statements of Operations for the three months ended
              June 30, 2001 and 2000                                               3

              Condensed Consolidated Balance Sheets as of June 30, 2001
              and March 31, 2001                                                   5

              Consolidated Statements of Cash Flows for the three months
              ended June 30, 2001 and 2000                                         6

              Consolidated Statements of Shareholders' Equity for the
              three months ended June 30, 2001 and 2000                            7

              Notes to Consolidated Financial Statements                           8

    Item 2 -  Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                           12


PART II - OTHER INFORMATION

     Item 1 - Legal Proceedings                                                   19
     Item 2 - Changes in Securities and Use of Proceeds                           19
     Item 3 - Defaults upon Senior Securities                                     19
     Item 4 - Submission of Matters to a Vote of Security Holders                 20
     Item 5 - Other Information                                                   20
     Item 6 - Exhibits and Reports on Form 8-K                                    20

  Signature                                                                       21
</TABLE>



                                       2
<PAGE>

PART I - FINANCIAL INFORMATION
Item 1.  Consolidated Financial Statements

DANKA BUSINESS SYSTEMS PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per American Depositary Share ("ADS") amounts)
(Unaudited)

<TABLE>
<CAPTION>
                                                                        FOR THE THREE MONTHS ENDED
                                                            -----------------------------------------------
                                                                   JUNE 30,                   JUNE 30,
                                                                     2001                       2000
------------------------------------------------------      --------------------       --------------------
<S>                                                         <C>                        <C>
Revenue:
Retail equipment sales                                      $            133,086       $            155,311
Retail service, supplies and rentals                                     247,528                    289,234
Wholesale                                                                 21,054                     26,259
------------------------------------------------------      --------------------       --------------------
Total revenue                                                            401,668                    470,804
------------------------------------------------------      --------------------       --------------------
COSTS AND OPERATING EXPENSES:
Cost of retail equipment sales                                           101,668                    105,856
Retail service, supplies and rental costs                                142,864                    170,512
Wholesale costs of revenue                                                17,265                     22,040
Selling, general and administrative expenses                             135,690                    160,204
Amortization of intangible assets                                          2,669                      3,475
Restructuring charges (credits)                                               --                     (8,158)
Other expense                                                              2,702                      1,619
------------------------------------------------------      --------------------       --------------------
Total costs and operating expenses                                       402,858                    455,548
------------------------------------------------------      --------------------       --------------------
OPERATING (LOSS) EARNINGS FROM CONTINUING OPERATIONS                      (1,190)                    15,256
Interest expense                                                         (15,871)                   (25,921)
Interest income                                                              701                      1,083
------------------------------------------------------      --------------------       --------------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                      (16,360)                    (9,582)
Provision (benefit) for income taxes                                      (3,204)                    (3,414)
------------------------------------------------------      --------------------       --------------------
LOSS FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY
 ITEMS                                                                   (13,156)                    (6,168)
Discontinued operations, net of tax                                      113,052                      4,928
------------------------------------------------------      --------------------       --------------------
(LOSS) EARNINGS BEFORE EXTRAORDINARY ITEMS                                99,896                     (1,240)
Extraordinary gain from early retirement of debt, net
of tax                                                                    26,762                        ---
------------------------------------------------------      --------------------       --------------------
NET (LOSS) EARNINGS                                         $            126,658       $             (1,240)
======================================================      ====================       ====================
</TABLE>

                                       3
<PAGE>

<TABLE>
<S>                                                         <C>                        <C>
BASIC (LOSS) EARNINGS AVAILABLE TO COMMON SHAREHOLDERS PER ADS:
  Net loss per ADS, continuing operations                   $              (0.28)      $              (0.17)
  Net earnings per ADS, discontinued operations                             1.83                       0.08
  Net earnings per ADS, extraordinary item                                  0.43                        ---
                                                            --------------------       --------------------
  Net (loss) earnings per ADS                               $               1.98       $              (0.09)
                                                            ====================      =====================
  Weighted average ADSs                                                   61,893                     58,908

DILUTED (LOSS) EARNINGS AVAILABLE TO COMMON SHAREHOLDERS PER ADS:
  Net loss per ADS, continuing operations                   $              (0.28)      $              (0.17)
  Net earnings per ADS, discontinued operations                             1.83                       0.08
  Net earnings per ADS, extraordinary item                                  0.43                        ---
                                                            --------------------       --------------------
  Net (loss) earnings per ADS                               $               1.98       $              (0.09)
                                                            ====================       ====================
  Weighted average ADSs                                                   61,893                     58,908
</TABLE>

Note:  Certain prior year amounts have been reclassified to conform with the
       current year presentation.

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

                                       4
<PAGE>

DANKA BUSINESS SYSTEMS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
                                                                                JUNE 30,        MARCH 31,
                                                                                 2001             2001
------------------------------------------------------------------------    ------------     ------------
<S>                                                                         <C>              <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                                   $     51,426     $     69,085
Accounts receivable, net                                                         322,609          346,398
Inventories                                                                      196,416          199,523
Prepaid expenses, deferred income taxes
     and other current assets                                                     58,195           81,026
Assets of discontinued operations                                                     --          113,405
------------------------------------------------------------------------    ------------     ------------
TOTAL CURRENT ASSETS                                                             628,646          809,437
Equipment on operating leases, net                                                76,234           94,085
Property and equipment, net                                                       73,722           66,470
Intangible assets, net                                                           236,678          244,171
Other assets                                                                      30,351           68,780
------------------------------------------------------------------------    ------------     ------------
TOTAL ASSETS                                                                $  1,045,631     $  1,282,943
========================================================================    ============     =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt and notes payable                      $     26,096     $    517,447
Accounts payable                                                                 130,777          136,604
Accrued expenses and other current liabilities                                   192,233          182,459
Deferred revenue                                                                  40,235           34,969
Liabilities of discontinued operations                                                --           22,230
------------------------------------------------------------------------    ------------     ------------
TOTAL CURRENT LIABILITIES                                                        389,341          893,709
Convertible subordinated notes                                                        --          200,000
Long-term debt and notes payable, less current maturities                        349,028            1,731
Deferred income taxes and other long-term liabilities                             29,135           29,432
------------------------------------------------------------------------    ------------     ------------
TOTAL LIABILITIES                                                                767,504        1,124,872
------------------------------------------------------------------------    ------------     ------------
6.50% convertible participating shares, redeemable,
  $1.00 stated value                                                             227,818          223,713
------------------------------------------------------------------------    ------------     ------------
SHAREHOLDERS' EQUITY (DEFICIT):
Ordinary shares, 1.25 pence stated value                                           5,130            5,130
Additional paid-in capital                                                       325,399          325,399
Retained earnings (accumulated deficit)                                         (180,075)        (302,619)
Accumulated other comprehensive (loss) income                                   (100,145)         (93,552)
------------------------------------------------------------------------    ------------     ------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                                              50,309          (65,642)
------------------------------------------------------------------------    ------------     ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                        $  1,045,631     $  1,282,943
========================================================================    ============     =============
</TABLE>

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

                                       5
<PAGE>

DANKA BUSINESS SYSTEMS PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                           --------------------------------------------------
                                                                                         FOR THE THREE MONTHS ENDED
                                                                           --------------------------------------------------
                                                                                  JUNE 30,                     JUNE 30,
                                                                                    2001                         2000
-----------------------------------------------------------                ---------------------         --------------------
<S>                                                                        <C>                           <C>
OPERATING ACTIVITIES
Net earnings (loss)                                                        $            126,658          $            (1,240)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities of continuing operations
  Extraordinary gain on debt retirement                                                 (26,762)                          --
  Net earnings and gain from sale of discontinued operations                           (113,052)                      (4,928)
  Depreciation and amortization                                                          22,600                       33,494
  Deferred income tax                                                                     6,640                       (4,694)
  Loss on sale of property and equipment and equipment on
    operating lease                                                                       3,641                        3,840
  Restructuring charges (credits)                                                            --                       (8,158)
  Change in net assets from discontinued operations                                          --                        2,440
  Changes in assets and liabilities:
    Accounts receivable                                                                  23,788                       22,465
    Inventories                                                                           3,107                       12,883
    Prepaid expenses and other current assets                                             4,721                       (2,147)
    Other non-current assets                                                            (51,105)                       1,855
    Accounts payable                                                                     (5,827)                     (17,692)
    Accrued expenses and other current liabilities                                       17,259                      (32,250)
    Deferred revenue                                                                      5,266                       (2,481)
    Other long-term liabilities                                                            (296)                         726
-----------------------------------------------------------                ---------------------         --------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                      16,638                        4,113
-----------------------------------------------------------                ---------------------         --------------------
INVESTING ACTIVITIES
Capital expenditures                                                                    (13,368)                     (19,589)
Proceeds from sale of property and equipment                                                 36                          416
Proceeds from sale of DSI                                                               290,000                           --
-----------------------------------------------------------                ---------------------         --------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                     276,668                      (19,173)
-----------------------------------------------------------                ---------------------         --------------------
FINANCING ACTIVITIES
Net payments under line of credit agreements                                           (270,379)                       3,512
Principal borrowings (payments) on other debt                                           (25,027)                          89
Payment of debt issue costs                                                             (17,161)                          --
-----------------------------------------------------------                ---------------------         --------------------
NET CASH PROVIDED BY (USED IN) IN FINANCING ACTIVITIES                                 (312,567)                       3,601
-----------------------------------------------------------                ---------------------         --------------------
EFFECT OF EXCHANGE RATES                                                                  1,602                          506
-----------------------------------------------------------                ---------------------         --------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    (17,659)                     (10,953)
Cash and cash equivalents, beginning of period                                           69,085                       64,861
-----------------------------------------------------------                ---------------------         --------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                   $             51,426          $            53,908
-----------------------------------------------------------                ---------------------         --------------------
</TABLE>

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

                                       6
<PAGE>

DANKA BUSINESS SYSTEMS PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
                                                   NUMBER OF
                                                   ORDINARY
                                                    SHARES                              RETAINED     ACCUMULATED
                                                 (4 ORDINARY              ADDITIONAL    EARNINGS       OTHER
                                                 SHARES EQUAL  ORDINARY    PAID-IN    (ACCUMULATED  COMPREHENSIVE
                                                    1 ADS)      SHARES     CAPITAL      DEFICIT)    (LOSS) INCOME    TOTAL
-----------------------------------------------  ----------    --------  -----------  ------------  -------------  ---------
<S>                                              <C>           <C>       <C>          <C>           <C>            <C>
BALANCES AT MARCH 31, 2001                          247,571     $5,130    $325,399     $(302,619)    $ (93,552)    $(65,642)

Net earnings                                            ---        ---          ---      126,658           ---      126,658

Currency translation adjustment                         ---        ---          ---          ---        (6,593)      (6,593)
                                                                                                                   --------
   Comprehensive income (loss)                                                                                      120,065
Dividends and accretion of participating shares         ---        ---          ---       (4,114)          ---       (4,114)
-----------------------------------------------  ----------     ------    ---------    ---------     ---------     --------
BALANCES AT JUNE 30, 2001                           247,571     $5,130    $ 325,399    $(180,075)    $(100,145)    $ 50,309
===============================================  ==========     ======    =========    =========     =========     ========
</TABLE>

<TABLE>
<CAPTION>
                                                   NUMBER OF
                                                   ORDINARY
                                                    SHARES                              RETAINED     ACCUMULATED
                                                 (4 ORDINARY              ADDITIONAL    EARNINGS       OTHER
                                                 SHARES EQUAL  ORDINARY    PAID-IN    (ACCUMULATED  COMPREHENSIVE
                                                    1 ADS)      SHARES     CAPITAL      DEFICIT)    (LOSS) INCOME    TOTAL
-----------------------------------------------  ----------    --------  -----------  ------------  -------------  ---------
<S>                                              <C>           <C>       <C>          <C>           <C>            <C>
BALANCES AT MARCH 31, 2000                          234,573     $4,892    $317,056     $ (66,226)    $ (74,722)    $181,000

Net loss                                                ---        ---         ---        (1,240)          ---       (1,240)
Currency translation adjustment                         ---        ---         ---           ---        (5,293)      (5,293)
                                                                                                                 ----------
   Comprehensive income (loss)                                                                                       (6,533)
Dividends and accretion of participating shares         ---        ---         ---        (3,870)          ---       (3,870)
Shares issued under employee purchase plans           1,057         40       2,650           ---           ---        2,690
-----------------------------------------------  ----------    --------  -----------  ------------  -------------  ---------
BALANCES AT JUNE 30, 2000                           235,630     $4,932    $319,706     $ (71,336)    $ (80,015)    $173,287
===============================================  ==========     ======    =========    =========     =========     ========
</TABLE>


                                       7
<PAGE>

DANKA BUSINESS SYSTEMS PLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (UNAUDITED)


  NOTE 1.  BASIS OF PRESENTATION

     The accompanying condensed consolidated balance sheet as of June 30, 2001,
  the consolidated statements of operations for the three months ended June 30,
  2001 and 2000, the consolidated statements of cash flows for the three months
  ended June 30, 2001 and 2000, and the consolidated statement of shareholders'
  equity for the three months ended June 30, 2001 and 2000, are unaudited.  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 results of
  operations for the interim periods are not necessarily indicative of the
  results which may be expected for the entire fiscal year.  The consolidated
  financial statements should be read in conjunction with the consolidated
  financial statements and the notes thereto included in our Annual Report
  contained in Form 10-K/A for the year ended March 31, 2001.  Certain prior
  year amounts have been reclassified to conform to current year presentations.

  NOTE 2.  RESTRUCTURING CHARGES (CREDITS)

  FISCAL 2001 CHARGE:

     We recorded a pre-tax restructuring charge of $27.5 million during the
  third quarter of the fiscal year ended March 31, 2001.  The restructuring
  charge included $21.8 million related to severance, representing the reduction
  of approximately 1,200 positions worldwide.  Cash outlays related to these
  reductions during the first quarter totaled $2.6 million.  We expect to
  substantially complete these workforce reductions by the third quarter of
  fiscal 2002.  The restructuring charge is also comprised of $5.7 million for
  future lease obligations on facility closures and exit costs.  We identified
  50 facilities to be closed and/or consolidated with other Danka facilities.
  In the fourth quarter of fiscal year 2001 we determined that 10 of the
  facilities previously identified for closure would remain open because of
  changes in our business plan.  We reversed $1.4 million of reserves related to
  these 10 facilities.  Cash outlays related to the remaining facilities during
  the first quarter totaled $0.1 million.  The remaining lease obligations
  related to these facility closures are expected to be substantially completed
  during fiscal 2002.  The following table summarizes the restructuring charge:


<TABLE>
<CAPTION>
2001 RESTRUCTURING CHARGE:
                                                                RESERVES AT                     OTHER            RESERVE
                                                                 MARCH 31,        CASH         NON-CASH          AT JUNE
(in 000's)                                                         2001          OUTLAYS       CHANGES           30, 2001
                                                             -------------------------------------------------------------
<S>                                                             <C>            <C>           <C>                <C>
Severance                                                           $16,743       $(2,553)             --          $14,190
Future lease obligations on facility closures and                     4,172           (81)             --            4,091
   other exit costs
                                                             -------------------------------------------------------------
Total restructuring charge                                          $20,915       $(2,634)             --          $18,281
                                                             =============================================================
</TABLE>


  NOTE 3. DISCONTINUED OPERATION

     On June 29, 2001, we completed the sale of Danka Services International
  ("DSI") to Pitney Bowes Inc. for $290 million in cash, pursuant to an asset
  purchase agreement dated April 9, 2001.  DSI was our facilities management and
  outsourcing business.  Our shareholders approved the sale at an Extraordinary
  General meeting

                                       8
<PAGE>

  on June 29, 2001. We also entered into agreements for us to provide services
  and supplies to Pitney Bowes on a worldwide basis for an initial term of two
  years.


     $5 million of the DSI purchase price has been set aside in an escrow
  account.  The purchase price is subject to adjustment depending on the value
  of DSI's net assets as of the closing of the sale.  If the value of DSI's net
  assets as of the closing date (as determined by reference to an audited
  balance sheet for DSI that we must prepare and provide to Pitney Bowes no more
  than 90 days after the closing date) exceeds $81.7 million, Pitney Bowes will
  pay us an amount equal to the excess on a dollar-for-dollar basis and the $5
  million in escrow will be released to us.  If the value of DSI's net assets as
  of the closing date is less than $81.7 million, an amount equal to the
  shortfall will be paid to Pitney Bowes on a dollar-for-dollar basis from the
  escrow account and, if the amount of the escrow account is insufficient to
  meet the shortfall, we will pay the difference to Pitney Bowes.  Any money
  remaining in the escrow account following payment of any shortfall to Pitney
  Bowes will be released to us.

     The sale of DSI resulted in a gain, subject to post-closing adjustments, of
  $108.9 million after income taxes of $73.8 million.  Assets and liabilities of
  DSI at March 31, 2001, have been segregated in the condensed consolidated
  balance sheets.  A summary of the operating results of discontinued
  operations, excluding the above gain, are as follows:

<TABLE>
<CAPTION>
                                                                 FOR THE THREE MONTHS ENDED
(in 000's)                                                  JUNE 30, 2001            JUNE 30, 2000
                                                           ---------------------------------------
<S>                                                        <C>                       <C>
Revenue                                                        $ 74,234                  $69,407
Earnings before income taxes                                   $  6,664                  $ 7,810
Provision for income taxes                                        2,474                    2,882
                                                               --------                  -------
Net earnings from discontinued operations                         4,190                    4,928
Gain from sale of discontinued operations
    after income taxes of $73.8 million                         108,862                       --
                                                               --------                  -------
Discontinued operations, net of tax                            $113,052                  $ 4,928
                                                               ========                  =======
</TABLE>


  NOTE 4.  DEBT

     On June 29, 2001, we completed an exchange offer for our 6.75% convertible
  subordinated notes due April 1, 2002.  We accepted tenders from holders of a
  total of $184,012,000 in aggregate principal amount (92%) of the 6.75%
  convertible subordinated notes.  Of the notes tendered pursuant to the
  exchange offer, $118,484,000 in principal amount was tendered for a limited
  cash option, $1,008,000 in principal amount was tendered for a new zero coupon
  senior subordinated note option and $64,520,000 in principal amount was
  tendered for a new 10% note option.  In aggregate, we paid $24,000,000 in cash
  and issued $47,593,000 in principal amount of new zero coupon senior
  subordinated notes due April 1, 2004 and $64,520,000 in principal amount of
  10% subordinated notes due April 1, 2008 as consideration under the exchange
  offer.  The senior subordinated notes are guaranteed by Danka Holding Company
  and Danka Office Imaging Company, which are both our 100% owned U.S.
  subsidiaries.

     The exchange offer was accounted for as a troubled debt restructuring and
  resulted in an extraordinary gain of $26.8 million after income taxes of $11.5
  million.

     In addition, on June 29, 2001, we entered into an amended and restated
  senior credit facility with our existing senior bank lenders to provide us
  with financing through March 31, 2004.  The facility, which consists of a $100
  million revolver, a $190 million term loan and $30 million letters of credit
  commitments, is an amendment and restatement of our previous credit agreement.
  The term component of the facility requires principal installments aggregating
  $5.0 million in fiscal year 2002, $16.0 million in fiscal years 2003, and
  $24.0 million in fiscal year 2004.  Interest on the revolver and term loan
  components of the new facility are at LIBOR plus 5% or base rate plus 4%.  The
  interest rate will increase by 0.5% on December 29, 2001, June 29, 2001 and
  quarterly thereafter.

                                       9
<PAGE>

     Our indebtedness under the new facility is secured by substantially all of
  our assets in the United States, Canada, U.K., Netherlands, and Germany.  The
  new facility contains negative and affirmative covenants which place
  restrictions on us regarding the disposition of assets, capital expenditures,
  additional indebtedness and permitted liens, prohibit the payment of dividends
  (other than dividends on our participating shares) and requires us to maintain
  certain financial ratios.  The new facility requires that we comply with
  minimum levels of adjusted consolidated net worth, cumulative EBITDA, a ratio
  of consolidated EBITDA to interest expense, and maximum levels of capital
  expenditures.  The covenants are effective for our second quarter ending
  September 30, 2001.

    We incurred $11.2 million in bank fees and $3.6 million in third party fees
  relating to the new facility.  These fees will be amortized over the term of
  the new facility.  We are also required on (June 29, 2002) to pay our banks a
  fee equal to 1.5% of the then total commitments and on June 29, 2003 a fee
  equal to 4.0% of the then commitments.

  NOTE 5.  EARNINGS PER SHARE

     The following table reconciles the numerator and denominator of the basic
  and diluted earnings (loss) from continuing operations available to common
  shareholders per ADS computations for the three months ended June 30, 2001 and
  2000:

<TABLE>
<CAPTION>
                                               FOR THE THREE MONTHS ENDED             FOR THE THREE MONTHS ENDED
                                                     JUNE 30, 2001                           JUNE 30, 2000
                                        ------------------------------------------------------------------------------
                                           EARNINGS                               EARNINGS
                                          (LOSS) FROM                           (LOSS) FROM
                                          CONTINUING                             CONTINUING
                                          OPERATIONS      SHARES     PER-SHARE   OPERATIONS      SHARES       PER-SHARE
(In 000's except per share amounts)       (NUMERATOR)  (DENOMINATOR)   AMOUNT   (Numerator)   (DENOMINATOR)     AMOUNT
                                        -------------------------------------------------------------------------------
<S>                                      <C>           <C>           <C>       <C>            <C>             <C>
Net loss form continuing operations
  before extraordinary items                $(13,156)                              $ (6,168)

BASIC EARNINGS (LOSS) AVAILABLE TO COMMON
 SHAREHOLDERS PER ADS:
  Dividends and accretion on participating
   shares                                     (4,137)                                (3,890)
                                            --------                               --------
  Earnings (loss)                            (17,293)       61,893     $(0.28)      (10,058)       58,908       $(0.17)
                                                                       ======                                   =======
EFFECT OF DILUTIVE SECURITIES:
  Stock options                                                 --                                     --
                                                            ------                                 ------
DILUTED EARNINGS (LOSS) AVAILABLE TO
 COMMON SHAREHOLDERS PER ADS:
  Earnings (loss)                           $(17,293)       61,893     $(0.28)     $(10,058)       58,908       $(0.17)
                                            ========        ======     ======      ========        ======       ======
</TABLE>

     The effect of our 6.75% Convertible Subordinated Notes and our 6.5%
  Convertible Participating Shares are not included in the computation of
  diluted earnings per share for the three months ended June 30, 2001 and 2000
  because they are not dilutive.


  NOTE 6.  SEGMENT REPORTING

                                       10
<PAGE>

     Our reportable segments are Danka Americas and  Danka International.  Our
  reportable segments do not include the discontinued operations of DSI.  Danka
  Americas distributes photocopiers, facsimiles and other related office imaging
  equipment together with related parts, supplies and services on a direct basis
  to retail customers.  The geographical areas covered by Danka Americas include
  the United States, Canada and Latin America.  Danka International distributes
  photocopiers, facsimiles and other related office imaging equipment.  These
  products, together with related services, parts and supplies, are marketed
  primarily on a direct basis to retail customers.  Danka International also
  provides photocopiers, facsimiles and other related office imaging equipment
  and supplies on a wholesale basis to independent dealers.  Danka International
  has an extensive sales and service network throughout Europe and additional
  operations in Australia.   We measure segment performance as earnings from
  operations, which is defined as earnings before interest expense and income
  taxes, as shown on the our consolidated statements of operations.  Other
  items, which includes Corporate Headquarters expenses and eliminations, are
  shown for purposes of reconciling to our total consolidated amounts as shown
  in the following tables for the three months ended June 30, 2001 and 2000:


<TABLE>
<CAPTION>
                                                                DANKA         DANKA                  CONSOLIDATED
                                                               AMERICAS   INTERNATIONAL    OTHER         TOTAL
THREE MONTHS ENDED JUNE 30                                       $000        $000          $000          $000
-----------------------------------------------------------------------------------------------------------------
<S>                                                            <C>        <C>             <C>        <C>
2001
Total revenue                                                   250,055         151,613        --         401,668
Operating earnings (loss) from continuing operations              4,968           3,715    (9,873)         (1,190)
Interest expense, net                                                --              --    15,170          15,170
Provisions (benefit) for income taxes                                --              --    (3,204)         (3,204)
Earnings (loss) from continuing operations, before                   --              --        --
 extraordinary items                                                                                      (13,156)

2000
Total revenue                                                   300,037         170,767        --         470,804
Operating earnings (loss) from continuing operations             13,266           6,863    (4,873)         15,256
Interest expense, net                                                --              --    24,838          24,838
Provisions (benefit) for income taxes                                --              --    (3,414)         (3,414)
Earnings (loss) from continuing operations, before                   --              --        --
 extraordinary items                                                                                       (6,168)
</TABLE>


NOTE 7.  NEW ACCOUNTING PRONOUNCEMENTS

GOODWILL AND OTHER INTANGIBLE ASSETS:

     In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets",
which will be effective for the first quarter of the fiscal year 2003. Statement
No. 142 establishes accounting and reporting requirements for goodwill and other
intangible assets, and modifies disclosures previously required under other
accounting standards. We have not yet evaluated what impact the adoption this
new statement may have on our results of operation, financial position, or
liquidity.


                                       11
<PAGE>


NOTE 8. Supplemental Consolidating Financial Data for Subsidiary Guarantors

     On June 29, 2001, we completed an exchange offer for our 6.75% convertible
subordinated notes due April 1, 2002. We issued new zero coupon senior
subordinated noyes due April 1, 2004 as consideration notes are fully and
unconditionally guaranteed on a joint and several basis by our 100% owned
subsidiaries, Danka Holding Company and Danka Office Imaging Company
(collectively, the "Subsidiary Guarantors"). The Subsidiary Guarantors represent
substantially all of our operations conducted in the United States of America.


     The following supplemental consolidating financial data the combined
Subsidiary Guarantors. Management believes separate complete financial
statements of the respective Subsidiary Guarantors would not provide additional
material information that would be useful in assessing the financial composition
of the Subsidiary Guarantors. No single Subsidiary Guarantor has any significant
legal restriction on the ability of investors or creditors to obtain access to
its assets in the event of default on the guarantee other that subordination of
the guarantees are subordinated to all our existing and future senior
indebtedness. The indenture governing the new zero coupon senior subordinated
notes contains limitations on the amount of additional indebtedness, including
senior indebtedness, that we may incur.

     We account for investment in subsidiaries on the equity method for purposes
of the supplemental consolidating presentation. Earnings of subsidiaries are
therefore reflected in Danka Business Systems PLC's ("Parent Company")
investment in subsidiaries. The principal elimination entries eliminate
investments in subsidiaries and intercompany balances and transactions.

                                      12
<PAGE>

<TABLE>
<CAPTION>
                                                                Supplemental Consolidating Statement of Operation
                                                                               June 30, 2001
                                                     ---------------------------------------------------------------------
                                                       Parent      Subsidiary    Subsidiary                  Consolidated
                                                       Company     Guarantors        Non-      Eliminations     Total
                                                                                  Guarantors
                                                     -----------   -----------   --------------------------  -------------
<S>                                                  <C>           <C>           <C>           <C>           <C>
Revenue
Retail equipment sales                                         -        72,113        60,973              -       133,086
Retail service, supplies and rentals                           -       148,963        98,565              -       247,528
Wholesale                                                                             21,054                       21,054
                                                     -----------   -----------   -----------   ------------   -----------
Total revenue                                                  -       221,076       180,592              -       401,668

Cost and operating expenses
Cost of retail equipment sales                                 -        58,362        43,306              -       101,668
Retail service, supplies and rentals costs                     -        78,131        64,733              -       142,864
Wholesale costs of revenue                                     -             -        17,265              -        17,265
Selling, general and administrative expenses               1,148        86,282        48,260              -       135,690
Amortization of intangible assets                              -           946         1,723              -         2,669
Restructuring charges (credits)                         (121,973)            -             -        121,973             -
Other expense                                             (1,379)          713         1,989          1,379         2,702
                                                     -----------   -----------   -----------   ------------   -----------
Total costs and operating expenses                      (122,204)      224,434       177,276        123,352       402,858
                                                     -----------   -----------   -----------   ------------   -----------
Operating (loss) earnings from continuing                                                                          (1,190)
  operations                                             122,204        (3,358)        3,316       (123,352)
Interest expense                                         (27,800)      (20,017)       (4,564)        36,510       (15,871)
Interest income                                           14,238           619        22,354        (36,510)          701
                                                     -----------   -----------   -----------   ------------   -----------
(Loss) earnings from continuing operations
before income taxes                                      108,642       (22,756)       21,106       (123,352)      (16,360)
Provision (benefit) for income taxes                          38        (7,352)        4,110              -        (3,204)
                                                     -----------   -----------   -----------   ------------   -----------
(Loss) earnings from continuing operations
   before extraordinary items                            108,604       (15,404)       16,996       (123,352)      (13,156)
Discontinued operations, net of tax                       (8,708)       83,784        37,976              -       113,052
                                                     -----------   -----------   -----------   ------------   -----------
(Loss) earnings before extraordinary items                99,896        68,380        54,972       (123,352)       99,896
Extraordinary gain from early retirement of debt,
 net of taxes                                             26,762             -             -              -        26,762
                                                     -----------   -----------   -----------   ------------   -----------
Net (loss) earnings                                      126,658        68,380        54,972       (123,352)      126,658
                                                     ===========   ===========   ===========   ============   ===========
</TABLE>

                                      13
<PAGE>

<TABLE>
<CAPTION>
                                                         Supplemental Consolidating Statement of Operation
                                                                        June 30, 2000
                                                 ------------  --------------------------  -------------  -------------
                                                    Parent     Subsidiary    Subsidiary                    Consolidated
                                                   Company     Guarantors         Non-     Eliminations       Total
                                                                             Guarantors
                                                 -----------   -----------   --------------------------   -------------
<S>                                              <C>           <C>           <C>          <C>             <C>
Revenue
Hardware                                                   -        96,746        58,565              -         155,311
Retail service supply and rentals                          -       171,860       117,374              -         289,234
Wholesale                                                                -        26,259              -          26,259
                                                 -----------   -----------   -----------   ------------   -------------
Total revenue                                              -       268,606       202,198              -         470,804

Cost and operating expenses
Cost of retail equipment sales                             -        66,274        39,582              -         105,856
Retail service, supplies and rentals costs                 -        98,152        72,360              -         170,512
Wholesale costs of revenue                                               -        22,040              -          22,040
Selling, general and administrative expense            1,073       100,508        58,623              -         160,204
Amortization of intangible assets                          -         1,154         2,321              -           3,475
Restructuring charges (credits)                            -        (5,052)      (3,106)              -         (8,158)
Equity (income) loss                                 (21,456)            -             -         21,456               -
Other (income) expense                                 1,922             -         1,619         (1,922)          1,619
                                                 -----------   -----------   -----------   ------------   -------------
Total costs and operating expenses                   (18,461)      261,036       193,439         19,534         455,548
                                                 -----------   -----------   -----------   ------------   -------------
Operating (loss) earnings from continuing             18,461         7,570         8,759        (19,534)         15,256
operations
Interest expense                                     (23,275)      (22,834)       (5,428)        25,616         (25,921)
Interest income                                        3,612         1,083        22,004        (25,616)          1,083
                                                 -----------   -----------   -----------   ------------   -------------
(Loss) earnings from continuing operations            (1,202)
before income taxes                                                (14,181)       25,335        (19,534)         (9,582)
Provision (benefit) for income taxes                      38        (4,624)        7,431         (6,259)         (3,414)
                                                 -----------   -----------   -----------   ------------   -------------
(Loss) earnings from continuing operations            (1,240)       (9,557)       17,904        (13,275)         (6,168)
Discontinued operations, net of tax                        -         3,381         1,547              -           4,928
                                                               -----------   -----------   ------------   -------------
Net earnings (loss)                                   (1,240)       (6,176)       19,451        (13,275)         (1,240)
                                                 ===========   ===========   ===========   ============   =============
</TABLE>

                                      14
<PAGE>

<TABLE>
<CAPTION>
                                                                 Supplemental Consolidating Balance Sheet Information
                                                                              June 30, 2001
                                                     ----------    -----------------------------------------------------------
                                                        Parent      Subsidiary      Subsidiary                   Consolidated
                                                       Company      Guarantors     Non-Guarantors Eliminations       Total
                                                     ----------    ------------    -------------- ------------   -------------
<S>                                                  <C>           <C>             <C>            <C>            <C>
    Assets
    Cash and cash equivalents                             4,037           7,363          40,026              -          51,426

    Accounts receivable, net                                  -         150,016         172,593              -         322,609
    Inventories                                               -          77,129         119,287              -         196,416
    Prepaid expenses, deferred income                     5,000          43,683           9,512              -          58,195
    taxes and
        other current assets
                                                     ----------    ------------    ------------   ------------   -------------
    Total current assets                                  9,037         278,191         341,418              -         628,646

    Equipment on operating leases, net                        -          35,236          40,998              -          76,234
    Property and equipment, net                               -          59,318          14,404              -          73,722
    Intangible assets, net                                    -          74,157         162,521              -         236,678
    Investments in subsidiaries                         598,675           1,014               -       (599,689)              -
    Other assets                                          3,981          42,309        (15,939)              -          30,351
                                                     ----------    ------------    ------------   ------------   -------------
    Total assets                                        611,693         490,225         543,402       (599,689)      1,045,631
                                                     ----------    ------------    ------------   ------------   -------------

    Liabilities and shareholders' equity (deficit)
    Current maturities of long-term debt                 15,988             161           9,947              -          26,096
    and notes payable
    Accounts payable                                        184          75,234          55,359              -         130,777
    Accrued expenses and other current                   13,115          65,841         109,559          3,718         192,233
    liabilities
    Deferred revenue                                          -          18,718          21,517              -          40,235
    Due to (from) affiliates                            (47,827)        380,508        (328,899)        (3,782)              -
                                                     ----------    ------------    ------------   ------------   -------------
    Total current liabilities                           (18,540)        540,462        (132,517)           (64)        389,341

    Convertible subordinated notes                            -         200,000        (200,000)             -               -

    Long-term debt and notes payable, less              352,106             936          (4,014)             -         349,028
    current maturities
      Deferred income taxes and other long                    -         (18,436)         47,571              -          29,135
    term liabilities
                                                     ----------    ------------    ------------   ------------   -------------
     Total liabilities                                  333,566         722,962        (288,960)           (64)        767,504

     6.50% Convertible participating                    227,818               -               -              -         227,818
     shares - redeemable $1.00 stated value

     Common stock                                         5,130             258         565,483       (565,741)          5,130
     Additional paid-in-capital                         325,399         106,644         103,297       (209,941)        325,399
     Accumulated earnings (deficit)                    (180,075       (339,639)         433,616        (93,977)       (180,075)
     Accumulated other comprehensive loss              (100,145)              -        (270,034)       270,034        (100,145)
                                                     ----------    ------------    ------------   ------------   -------------
    Total shareholders'equity (deficit)                 50, 309        (232,737)        832,362       (599,625)         50,309
                                                     ----------    ------------    ------------   ------------   -------------
    Total liabilities and shareholders' equity          611,693         490,225         543,402       (599,689)      1,045,631
     (deficit)
                                                     ===========   ============    ============   ============   =============
</TABLE>

                                      15
<PAGE>

<TABLE>
<CAPTION>
                                                                Supplemental Consolidating Balance Sheet Information
                                                                                      March 31, 2001
                                                         -----------------------------------------------------------------------
                                                          Parent      Subsidiary      Subsidiary                   Consolidated
                                                          Company     Guarantors         Non-      Eliminations       Total
                                                                                      Guarantors
                                                         ----------   -----------    -------------- ------------   -------------
<S>                                                      <C>          <C>            <C>            <C>            <C>
     Assets
     Cash and cash equivalents                               5,471         27,723          35,891              -          69,085
     Accounts receivable, net                                    -       171, 429         174,969              -         346,398
     Inventories                                                 -         88,287         111,236              -         199,523
     Prepaid expenses, deferred income taxes
       and other current assets                              3,350         68,285           9,391              -          81,026
     Asset of discontinue operations                             -         64,928          48,477              -         113,405
                                                         ---------    -----------    ------------   ------------   -------------
     Total current assets                                    8,821        420,652         379,964              -         809,437

     Equipment on operating leases, net                          -         39,737          54,348              -          94,085
     Property and equipment, net                                 -         58,563           7,907              -          66,470
     Goodwill                                                    -         76,664         167,507              -         244,171
     Investments in subsidiaries                           483,410          1,014               -       (484,424)
     Other non-current assets                                   78         51,658          91,477        (74,433)         68,780
                                                         ---------    -----------    ------------   ------------   -------------
     Total assets                                          492,309        648,288         701,203       (558,857)      1,282,943
                                                         =========    ===========    ============   ============   =============

     Liabilities and shareholders equity (deficit)
     Current maturieis of long-term and notes
       payable                                             464,967         44,199           8,281              -         571,447
     Account payable                                             -         83,094          53,510              -         136,604
     Accrued expenses and other current liabilities          8,793         68,062         105,604              -         182,459
     Deferred revenue                                            -         19,810          15,159              -          34,969
     Due to (from) affilities                             (339,522)       518,928        (179,406)             -               -
     Liabilities of discontinue operations                       -         10,088          12,142              -          22,230
                                                         ---------    -----------    ------------   ------------   -------------
     Total current liabilities                             134,238        744,181          15,290              -         893,709

     Due to (from) affiliates long-term                          -        200,000        (200,000)             -
     6.75% Convertible subordinated notes
       notes payable                                       200,000              -               -              -         200,000
     Long-term debt and notes payable, less current
       maturities                                                -            780             951              -           1,731
     Deferred income taxes and other long-term                   -          4,445          48,044        (23,057)         29,432
       liabilities
                                                         ---------    -----------    ------------   ------------   -------------
     Total Liabilities                                     334,238        949,406        (135,715)       (23,057)      1,124,872

     6.50% Convertible participating shares -
        redeemable                                         223,713              -               -              -         223,713

     Common Stock                                            5,130            258         565,480       (565,738)          5,130
     Additional paid-in-capital                            325,399        106,644         103,297       (209,941)        325,399
     Accumulated earnings (deficit)                       (302,619)      (408,020)        378,644         29,376        (302,619)
     Accumulated other comprehensive loss                  (93,552)             -        (210,503)       210,503         (93,552)
                                                         ---------    -----------    ------------   ------------   -------------
     Total shareholders' equity (deficit)                  (65,642)      (301,118)        836,918       (535,800)        (65,642)
                                                         ---------    -----------    ------------   ------------   -------------
     Total liabilities and shareholders' equity
       (deficit)                                           492,309        648,288         701,203       (558,857)      1,282,943
                                                         =========    ===========    ============   ============   =============
                                                                 -              -               -              -               -
</TABLE>

                                      16
<PAGE>

<TABLE>
<CAPTION>
                                                         Supplemental Consolidating Statement of Cash Flows
                                                                     June 30, 2001
                                                 --------------------------------------------------------------------------
                                                   Parent     Subsidiary       Subsidiary                     Consolidated
                                                  Company     Guarantors           Non-       Eliminations       Total
                                                                               Guarantors
                                                 ----------   -----------     -------------   ------------   --------------
<S>                                              <C>          <C>             <C>             <C>            <C>
Net cash provided (used in) by operating
     activities                                     263,973      (154,847)         (92,488)             -            16,638

Investing Activities
Capital Expenditure                                       -       (11,192)          (2,176)             -           (13,368)
Proceeds from sale of property and equipment             31             -                5              -                36
Proceeds from sale of DSI                                 -       189,561          100,439              -           290,000
                                                 ----------   -----------     ------------    -----------    --------------
   Net cash provided by investing activities             31       178,369           98,268              -           276,668

Financing Activities
Net (payment) borrowing of debt                    (248,218)      (43,882)          (3,306)             -          (295,406)
Payment of debt issue costs                         (17,161)            -                -              -           (17,161)
                                                 ----------   -----------     ------------    -----------    --------------
   Net cash used in financing activities           (265,379)      (43,882)          (3,306)             -          (312,567)
                                                 ----------   -----------     ------------    -----------    --------------
Effect of exchange rates                                (59)            -            1,661              -             1,602
                                                 ----------   -----------     ------------    -----------    --------------
Net increase (decrease) in cash and cash
     equivalents                                     (1,434)      (20,360)           4,135              -           (17,659)
Cash and cash equivalents, beginning of period        5,471        27,723           35,891              -            69,085
                                                 ----------   -----------     ------------    -----------    --------------
Cash and cash equivalents, end of period              4,037         7,363           40,026              -            51,426
                                                 ==========   ===========     ============    ===========    ==============
</TABLE>

<TABLE>
<CAPTION>
                                                         Supplemental Consolidating Statement of Cash Flows
                                                                         JUNE 30, 2000
                                                 --------------------------------------------------------------------------
                                                   Parent     Subsidiary      Subsidiary                      Consolidated
                                                  Company     Guarantors     Non-Guarantors   Eliminations       Total
                                                 ----------   -----------    --------------   ------------   --------------
<S>                                              <C>          <C>             <C>             <C>            <C>
Net cash provided by (used in) operating
     activities                                       1,988         6,088           (3,962)             -             4,113

Investing Activities
Capital expenditures                                      -        (9,630)          (9,960)             -           (19,589)
Proceeds from sale of property and equipment             31           114              271              -               416
                                                 ----------   -----------    -------------    -----------    --------------
   Net cash provided by (used in) investing
     activities                                          31        (9,515)          (9,689)             -           (19,173)
Financing Activities
Net (payment) borrowing of debt                      (3,472)          (11)           7,084              -             3,601
                                                 ----------   -----------    -------------    -----------    --------------
   Net cash provided by (used in) financing
     activities                                      (3,472)          (11)           7,084              -             3,601
                                                 ----------   -----------    -------------    -----------    --------------
Effect of exchange rates                               (946)            -            1,452                              506
                                                 ----------   -----------    -------------    -----------    --------------
Net increase (decrease) in cash and cash
     equivalents                                     (2,399)       (3,438)          (5,116)             -           (10,953)
Cash and cash equivalents, beginning of period        2,759        31,572           30,530              -            64,861
                                                 ----------   -----------    -------------    -----------    --------------
Cash and cash equivalents, end of period                360        28,134           25,414              -            53,908
                                                 ==========   ===========    =============    ===========    ==============
</TABLE>

                                      17
<PAGE>

  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

     We are one of the world's largest independent suppliers, by revenue, of
  photocopiers and office imaging equipment.  We primarily market these products
  and photocopier services, parts and supplies direct to  customers in
  approximately 30 countries.  Most of the products that we distribute are
  manufactured by Canon, Heidelberg, NexPress, Ricoh and Toshiba. Throughout
  Europe, we also market private label photocopiers, facsimile machines and
  related supplies directly to customers under our Infotec trademark.  In
  addition, we  market photocopiers and related parts and supplies on a
  wholesale basis to independent dealers through our international operations.

     On June 29, 2001 we completed a three part financial restructuring plan
  that reduced and refinanced our indebtedness to provide us with liquidity on a
  long-term basis.  The three parts of the plan were:

     .  the sale of our Danka Services International "DSI" business,
     .  an exchange offer for our 6.75% convertible subordinated notes due
        April 1, 2002, and
     .  the refinancing of our senior bank debt.

     We sold DSI to Pitney Bowes Inc. for $290.0 million in cash, subject to
  adjustment depending on the value of DSI's net assets on closing.  We used the
  net proceeds of DSI to repay part of our senior bank debt, to finance cash
  payable under the exchange offer, to finance the costs of the exchange offer
  and to finance costs associated with the refinancing of our senior bank debt.

     We accepted tenders from holders of a total of $184.0 million in aggregate
  principal amount (92%) of the 6.75% convertible subordinated notes pursuant to
  the exchange offer for $24.0 million in cash and approximately $112.1 million
  in new notes with extended maturities.

     We refinanced the remaining balance of our senior bank debt through an
  amended and restated credit facility with our existing senior bank lenders.
  The facility consists of $100.0 million revolver, $190.0 million term loan and
  $30.0 million letters of credit commitments.

  RESULTS OF CONTINUING OPERATIONS

     The following table sets forth for the periods indicated the percentage of
  total revenue represented by certain items in the our consolidated statements
  of operations:

<TABLE>
<CAPTION>
                                                                                      THREE  MONTHS ENDED JUNE 30,
                                                                                     -------------------------------
                                                                                         2001                2000
                                                                                        -----               -----
<S>                                                                                     <C>                 <C>
Revenue:
  Retail equipment sales......................................................           33.1%               33.0%
  Retail service, supplies and rentals........................................           61.7                61.4
  Wholesale...................................................................            5.2                 5.6
                                                                                        -----               -----
Total revenue.................................................................          100.0               100.0
Cost of revenue...............................................................           65.2                63.4
                                                                                        -----               -----
GROSS PROFIT..................................................................           34.8                36.6
Selling, general and administrative expenses..................................           33.8                34.0
Amortization of intangible assets.............................................            0.7                 0.7
Restructuring charges (credit)................................................             --                (1.7)
Other expense.................................................................            0.7                 0.3
                                                                                        -----               -----
OPERATING (LOSS) EARNINGS FROM CONTINUING OPERATIONS..........................           (0.3)                3.2
Interest expense..............................................................           (4.0)               (5.5)
Interest income...............................................................            0.2                 0.2
                                                                                        -----               -----
(LOSS) EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES................           (4.1)               (2.0)
Provision (benefit)for income taxes...........................................           (0.8)               (0.7)
                                                                                        -----               -----
(LOSS) EARNINGS FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY ITEMS.........           (3.3)               (1.3)
                                                                                        =====               =====
</TABLE>

                                      18
<PAGE>

        The following table sets forth for the periods indicated the gross
   profit margin percentage for each of the Company's revenue classifications:


<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED JUNE 30,
                                                                       ---------------------------
                                                                           2001            2000
                                                                           ----            ----
<S>                                                                        <C>           <C>
Retail equipment sales......................................               23.6%           31.8%
Retail service, supplies and rentals........................               42.3            41.0
Wholesale...................................................               18.0            16.1
</TABLE>


   QUARTER ENDED JUNE 30, 2001 COMPARED TO QUARTER ENDED JUNE 30, 2000:

        The comparative information included in this section represents results
   from continuing operations.  In our consolidated statement of operations, the
   operating results and the gain from the sale of DSI are presented as
   discontinued operations and the gain resulting from the exchange offer of our
   convertible subordinated notes is presented as an extraordinary item.

   Revenue

        Total revenue for the first quarter of fiscal 2002 declined by
   approximately 15% to $401.7 million from $470.8 million in the prior year
   comparable quarter.  Our total revenue in the current year first quarter was
   negatively impacted by foreign currency movements which reduced revenue by
   approximately $12 million. Including a negative impact of approximately $4
   million due to foreign currency movements, retail equipment sales declined by
   $22.2 million, which was primarily due to a reduced number of sales
   representatives although partially offset by a 24% increase in sales
   productivity.  Retail service, supplies and rentals revenue declined by $41.7
   million due to the negative impact of foreign currency ($6 million) and the
   decline in our analog service base.  Wholesale revenue for the first quarter
   of fiscal 2002 declined by $5.5 million due to a movement away from lower
   margin transactions.

   Gross Profit

        Our gross profit margin decreased from 36.6% in the prior year first
   quarter to 34.8% in the current year first quarter. The decrease in margin in
   the current year compared to the prior year first quarter was primarily due
   to lower retail equipment margins.  Retail equipment margins decreased to
   23.6% in the quarter ended June 30, 2001 from 31.8% in the comparable quarter
   of last year primarily due to market conditions within the industry.  Retail
   service, supplies and rental margins increased to 42.3% in the quarter ended
   June 30, 2001 from 41.0% in the prior year first quarter primarily due to the
   impact in the quarter ended June 30, 2000 of $2.5 million of severance costs
   associated with the reduction of U.S. field service employees and a $5.5
   million write-off of rental equipment.  Wholesale margins increased to 18.0%
   in the quarter ended June 30, 2001 from 16.1% in the comparable quarter of
   the prior year, primarily due to an emphasis in booking higher margin
   transactions.


   Selling, General and Administrative Expenses

        Selling, general and administrative expenses ("SG&A") declined by $24.5
   million to $135.7 million from $160.2 million in the comparable quarter in
   the prior year, while as a percentage of total revenue, SG&A expenses
   decreased from 34.0% to 33.8%. Excluding an unusual charge of $6.0 million
   related to the exit of certain facilities in the current year first quarter,
   SG&A declined $30.5 million to 32.3% of total revenue.  Lower

                                      19
<PAGE>

   expense amounts were primarily attributable to lower selling expenses
   resulting from lower sales and a decrease in our U.S. sales force of
   approximately 400 employees.


   Amortization of Intangible Assets

        Amortization of our intangible assets decreased to $2.7 million for the
   three months ended June 30, 2001 from $3.5 million for the prior year
   comparable period, primarily due to the write off of goodwill in the second
   and fourth quarters of fiscal 2001.


   Other Expense

        Other expense included foreign currency losses of $1.2 million and a
   $1.5 million provision relating to the proposed sale of our Ameritrend
   business.  Prior year other expense include foreign currency losses of $1.6
   million.


   Earnings from Operations

        For the three months ended June 30, 2001, operating earnings from
   continuing operations decreased to a loss of $1.2 million, compared to
   earnings of $15.3 million in the prior year comparable quarter.  Excluding a
   $6.0 million charge for the exit of facilities in the current year's first
   quarter and a $8.2 million credit for the reversal of restructuring reserves
   in the comparable quarter of the prior year, earnings from operations
   declined $2.3 million due to lower gross profit margins that were only
   partially offset by lower operating expenses.


   Interest Expense and Interest Income

        Interest expense decreased by $10.0 million to $15.9 million for the
   first quarter of the current year from $25.9 million in the comparable
   quarter of the prior fiscal year. The decrease was due to lower interest
   rates and a reduction in average borrowings.  Interest income remained
   relatively flat compared to the comparable quarter of the prior fiscal year.


   Income Taxes

        We recorded an income tax benefit of $3.2 million for the first quarter
   of fiscal year 2002 compared to a $3.4 million tax benefit in the first
   quarter of fiscal year 2001.  The combined effective income tax rate was
   19.6% for the first quarter of fiscal year 2002 as compared to 35.6% for the
   first quarter of fiscal year 2001.  The decrease in the tax rate is primarily
   due to losses in certain international locations that did not provide a tax
   benefit.


   Net Earnings (Loss) from Continuing Operations, before Extraordinary Items

        For the three months ended June 30, 2001, we incurred a net loss from
   continuing operations of $13.2 million compared to a net loss from continuing
   operations of $6.2 million in the prior year comparable quarter for the above
   mentioned reasons. We incurred a net loss from continuing operations of $0.28
   per ADS in the current year first quarter compared to, net loss from
   continuing operations of $0.17 per ADS in the prior year comparable quarter.

                                      20
<PAGE>

   EXCHANGE RATES

   Fluctuations in the exchange rates between the pound sterling and the United
   States dollar affect the dollar equivalent of the pound sterling market price
   of our ordinary shares on the London Stock Exchange and, as a result, are
   likely to affect the market price of our American depositary shares.

     We operate in approximately 30 countries worldwide.  Fluctuations in
   exchange rates between the United States dollar and the currencies in each of
   the countries in which we operate affect:

   .  the results of our international operations reported in United States
      dollars; and

   .  the value of the net assets of our international operations reported in
      United States dollars.

     The results of operations are affected by the relative strength of
   currencies in the countries where our products are sold.  Approximately 44%
   of our revenue in first quarter ended June 30, 2001 was generated outside the
   United States.  In the first quarter ended June 30, 2001, approximately 28%
   of our revenue was generated in euro countries, 7% in the United Kingdom, and
   9% in other foreign locations.  During the first quarter ended June 30, 2001,
   both the euro currency and the United Kingdom pound weakened against the
   dollar by approximately 4%.  This negatively impacted revenue by
   approximately $7 million and was also the primary reason for the $6.6 million
   increase in cumulative translation losses in shareholders' equity for first
   quarter ended June 30, 2001.  Our results of operations and financial
   condition have been, and may continue to be, adversely affected by the
   fluctuations in foreign currencies and by translation of the financial
   statements of our non-United States subsidiaries, including our European and
   Latin American subsidiaries, from local currencies to the dollar.  Generally,
   we do not hedge our exposure to changes in foreign currency.  Gains and
   losses included in the consolidated statements of operations from foreign
   currency transactions were not material in the three months ended June 30,
   2001 and 2000.

   EURO

     On January 1, 1999, eleven of the fifteen member countries of the
   European Union established fixed conversion rates between existing currencies
   and one common currency, referred to as the euro.  Our operating subsidiaries
   affected by the euro conversion implemented changes to their information
   technology systems, accounting records, financial instruments, and customer
   contracts where necessary to allow for dual currency functionality.  Dual
   currency functionality allows the business to invoice and to be invoiced in
   either local currencies or the euro.  On an ongoing basis we are also
   evaluating the impact of the euro on our pricing and distribution.  It is
   likely that the euro will lead to more uniform pricing in all of our European
   markets.  Our euro conversion did not, nor is it expected to have in the
   future, any material impact on our financial condition, results of operations
   or our ability to continue to operate in markets affected by the euro.  All
   costs related to the conversion to the euro, which are not significant, are
   expensed as incurred.

   LIQUIDITY AND CAPITAL RESOURCES

     We have a $320.0 million credit facility with a consortium of international
   bank lenders through March 31, 2004. The credit facility requires that we
   comply with minimum levels of adjusted consolidated net worth, cumulative
   consolidated EBITDA, a ratio of consolidated EBITDA to interest expense, and
   maximum levels of capital expenditures.  The covenants are effective for our
   second quarter ending September 30, 2001.

     As of June 30, 2001, we owed approximately $240.0 million under the credit
   facility.  The available unused commitments as of June 30, 2001 are $50.0
   million under the revolving credit facility and $2.5 million under the letter
   of credit facility. The credit facility limits us from incurring other
   significant indebtedness beyond certain agreed upon limits. We were incurring
   interest on our indebtedness under the credit facility during the first
   quarter ended June 30, 2001 at a weighted average rate of 7.64% per annum.
   Effective interest rates under the new credit facility are LIBOR, plus 5
   percent. The interest rate will increase by 0.5% on December 29, 2001, June
   29, 2001 and quarterly thereafter. The term component of the facility
   requires, principal installments of $5.0 million in fiscal year 2002, $16.0
   million in fiscal year 2003, and $24.0 million in fiscal year 2004, with
   payment due in full on March 31, 2004.

                                      21
<PAGE>

     Our indebtedness under the credit facility is secured by substantially all
   of our assets in the United States, Canada, U.K., the Netherlands and
   Germany.  The credit facility contains negative and affirmative covenants
   which restrict our ability to incur additional indebtedness and create liens,
   prohibit the payment of dividends, other than payment-in-kind dividends on
   our participating shares, and require us to maintain certain financial ratios
   as described above.  We are not permitted to make any acquisitions of
   businesses, except with the approval of our bank lenders.  We cannot dispose
   of any of our assets outside the ordinary course of our business without the
   approval of our bank lenders.  On June 30, 2002, we are required to pay our
   banks a fee equal to 1.5% of the total commitment under the credit facility
   and on June 30, 2003 a fee equal to 4.0% of the current commitment.


     In June 2001, we issued approximately $47.6 million of zero coupon senior
   subordinated notes due April 1, 2004 and approximately $64.5 million of 10%
   subordinated notes due April 1, 2008 as consideration pursuant to an exchange
   offer for our 6.75% convertible subordinated notes due April 1, 2004. The
   senior subordinated notes are guaranteed by Danka Holding Company and Danka
   Office Imaging Company, which are both our 100% owned U.S. subsidiaries. The
   senior subordinated notes and the 10% notes include convenants which restrict
   our ability to dispose of assets or merge. The senior subordinated notes also
   include convenants which restrict us from incurring additional indebtedness,
   create liens, and limit the payment of dividends, other than payment-in-kind
   dividends on our participating shares.

     In March 1995, we issued $200 million in principal of 6.75% convertible
   subordinated notes. Following completion of the exchange offer referred to
   above, approximately $16 million of the 6.75% notes remain outstanding. The
   outstanding notes are due for repayment in full on April 1, 2002.

     On December 17, 1999, we issued 218,000 new 6.50% senior convertible
   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.  Dividends are cumulative and are
   paid in the form of additional participating shares for the first five years.
   The participating shares are currently convertible into ordinary shares at a
   conversion price of $3.11 per ordinary share (equal to $12.44 per American
   depositary share), subject to adjustment in certain circumstances to avoid
   dilution of the interests of participating shareholders.  The participating
   shares have voting rights, on an as converted basis, currently corresponding
   to approximately 23.7% of the total voting power of our capital stock.  As of
   June 30, 2001, we had issued an additional 20,813 participating shares as
   payment-in-kind dividends.

     We are not permitted to pay dividends (other than payment-in-kind dividends
   on our participating shares) under the credit agreement and do not anticipate
   the payment of a dividend on ordinary shares in the foreseeable future.

     We are an English company and, under English law, we are allowed to pay
   dividends to shareholders only if:

   .  we have accumulated, realized profits that have not been previously
      distributed or capitalized, in excess of our accumulated, realized losses
      that have not previously been written off in a reduction or reorganization
      of capital; and

   .  our net assets are not less than the aggregate of our share capital and
      our non-distributable reserves, either before, or as a result of,
      dividends or other distributions.

     At this time, we have insufficient profits to pay dividends to
   shareholders.  Since December 2000, we have satisfied our obligation to make
   payment-in-kind dividends on our participating shares by capitalizing part of
   our share premium account, which is a reserve required by English company law
   and which consists of premiums paid to us on the issuance of our shares.

     The Internal Revenue Service has completed an examination of our federal
   income tax returns for the fiscal years ended March 31, 1996 and 1995.  We
   received a notice of proposed deficiency in November 1999.  The principal
   adjustments relate to the timing of certain deductions associated with leased
   equipment financing.  We

                                      22
<PAGE>

   have filed a protest and are meeting with the Appellate Division of the
   Internal Revenue Service to resolve this issue. If the Internal Revenue
   Service were to prevail, net operating losses available for carry back to
   these years would increase by corresponding amounts. Discussions are ongoing
   and we expect that the issue will be resolved favorably for us and its
   resolution will not have a material impact on our financial position, results
   of operations or liquidity.

     The Internal Revenue Service is in the process of completing an audit of
   our federal income tax returns for the fiscal years 1998 and 1997. The
   proposed adjustments relate to the timing of certain deductions associated
   with the acquisition of Kodak's office imaging division, research and
   development costs and deductions associated with leased equipment financing.
   It is not anticipated that the resolution of this audit will have a material
   impact on our financial position, results of operations or liquidity.

     Fiscal authorities in the Netherlands are engaged in an audit of our Dutch
   operations.  We do not believe that this audit, or any result thereof, will
   have a material impact on our financial position, results of operations or
   liquidity.

     Our net cash flow provided by operating activities was $16.6 million, and
   $4.1 million for the first quarter of fiscal year 2002 and 2001,
   respectively. The increase in fiscal year 2002 first quarter operating cash
   flow was primarily due to increases in accrued expenses. Net cash flow
   provided by (used in) investing activities was $276.7 million and $(19.2)
   million for the first quarter of fiscal year 2002 and 2001, respectively. The
   increase in fiscal year 2001 first quarter cash flow from investing
   activities was primarily due to the $290.0 million in cash proceeds received
   from the sale of DSI and a $6.2 million reduction in capital expenditures.
   Net cash flow provided by (used in) financing activities was ($312.6) million
   and $3.6 million for first quarter of fiscal year 2002 and 2001,
   respectively. The decrease in first quarter fiscal year 2002 cash flow from
   financing activities was due to repayment of borrowings primarily from the
   sale of DSI.

   MARKET RISK MANAGEMENT

   Interest Rate Risk:

   Our exposure to interest rate risk primarily relates to our variable rate
   bank debt.  As outlined above in "Liquidity and Capital Resources," at June
   30, 2001 we had an outstanding balance of $240.0 million under our new credit
   facility.  We incurred interest on our previous credit facility at a weighted
   average rate of 7.64% per annum during the three months ended June 30, 2001.

   Based on the outstanding balance under our credit agreement, a change of 100
   basis points in the average interest rate, with all other variables remaining
   constant, would cause an increase/decrease in our interest expense of
   approximately $2.4 million on an annual basis.


   SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

   Certain statements contained in this Form 10-Q, or otherwise made by officers
   of the Company, including statements related to our future performance and
   our outlook for our businesses and respective markets, projections,
   statements of management's plans or objectives, forecasts of market trends
   and other matters, are forward-looking statements, and contain information
   relating to us that is based on the beliefs of management as well as
   assumptions, made by, and information currently available to, management.
   The words "goal", "anticipate", "expect", "believe" and similar expressions
   as they relate to us or our management, are intended to identify forward-
   looking statements.  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 Act of 1995.
   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

                                      23

<PAGE>

   might cause such actual results to differ materially from those reflected in
   any forward looking statements include, but are not limited to (i) any
   material adverse change in financial markets or our own position, (ii) our
   continuing ability to achieve or maintain cost savings, (iii) increased
   competition resulting from other high-volume and digital copier distributors
   and the discounting of such copiers by competitors, (iv) any inability to
   procure, or any inability to continue to gain access to and successfully
   distribute, new products, including digital products and high-volume copiers,
   or to continue to bring current products to the marketplace at competitive
   costs and prices, (v) any negative impact from the loss of any key upper
   management personnel, (vi) the ultimate outcome and impact of pending
   lawsuits, (vii) the ultimate outcome and impact of pending tax audits and
   examinations, (viii) any inability to achieve minimum equipment leasing
   commitments under our current borrowing arrangements, (ix) fluctuations in
   foreign currencies and (x) other risks including those risks identified in
   any of our other filings with the Securities and Exchange Commission. Readers
   are cautioned not to place undue reliance on these forward-looking
   statements, which reflect management's analysis only as of the date they are
   made. We undertake no obligation and do not intend to update these forward-
   looking statements to reflect events or circumstances that arise after the
   date such statements 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 the our company.

                                      24
<PAGE>

   PART II - OTHER INFORMATION


   ITEM 1. LEGAL  PROCEEDINGS.

        The Company is subject to legal proceedings and claims which arise in
   the ordinary course of business that will not have a material adverse effect
   upon the Company's financial position, results of operation or liquidity.

   ITEM 2.  CHANGES IN SECURITIES.

        On June 29, 2001, we completed an exchange offer for our 6.75%
  convertible subordinated notes due April 1, 2002. We accepted tenders from
  holders of a total of $184,012,000 in aggregate principal amount (92%) of the
  6.75% convertible subordinated notes. Of the notes tendered pursuant to the
  exchange offer, $118,484,000 in principal amount was tendered for a limited
  cash option, $1,008,000 in principal amount was tendered for a new zero coupon
  senior subordinated note option and $64,520,000 in principal amount was
  tendered for a new 10% note option. In aggregate, we paid $24,000,000 in cash
  and issued $47,593,000 in principal amount of new zero coupon senior
  subordinated notes due April 1, 2004 and $64,520,000 in principal amount of
  10% subordinated notes due April 1, 2008 as consideration under the exchange
  offer. The senior subordinated notes are guaranteed by Danka Holding Company
  and Danka Office Imaging Company, which are both our 100% owned U.S.
  subsidiaries.

   ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

        Not applicable.

                                      25
<PAGE>

   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

        An extraordinary general meeting of the shareholders of Danka Business
   Systems PLC was held on June 29, 2001 to approve the sale of Danka Services
   International to Pitney Bowes Inc. for $290.0 million in cash.  The voting on
   the resolution was as follows:


              FOR                 101,520,787
                                  -----------
              AGAINST                  17,430
                                  -----------
              ABSTAIN                       0
                                  -----------



   ITEM 5.  OTHER INFORMATION.

        The annual general meeting of Danka Business Systems PLC will be held on
   or about October 9, 2001.

   ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

            (a)  Exhibits.

            (b)  Reports on Form 8-K:

            During the three months ended June 30, 2001, we filed the following
   reports on Form 8-K with the Securities and Exchange Commission:

            Form 8-K filed April 9, 2001:  Item 5 - reporting the execution,
   effective March 28, 2001, of the eleventh amendment to our then current
   credit agreement for our senior bank debt.

            Form 8-K filed May 1, 2001:  Item 5 - reporting the signing of an
   asset purchase agreement with Pitney Bowes, Inc. in April 9, 2001 for the
   sale of Danka Services International

            Form 8-K filed June 11, 2001:  Item 5 - reporting the execution,
   effective June 7, 2001, of the twelfth amendment to our then current credit
   agreement for our senior bank debt and the announcement of our results for
   the three months and twelve months ended March 31, 2001.

            Form 8-K filed June 15, 2001: Item 5 - filing guarantor/non-
   guarantor financial statements in relations to the guarantees provided by
   Danka Holding Company and Danka Office Imaging Company of Danka Business
   Systems PLC's obligations under its zero coupon senior subordinated notes due
   April 1, 2004.

                                      26
<PAGE>

                                   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 20, 2001             /s/ F. Mark Wolfinger
           -----------------           --------------------------------------
                                       F. Mark Wolfinger, Executive Vice
                                       President and Chief Financial Officer
                                       (Chief Financial Officer and Principal
                                            Accounting Officer)

                                      27