SECURITIES AND EXCHANGE COMMISSION

                           WASHINGTON, D.C. 20549

                                 FORM 10-Q

        [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended March 31, 2003

                        Commission File No. 0-26912


                          VODAVI TECHNOLOGY, INC.
           (Exact name of registrant as specified in its charter)

                 DELAWARE                                86-0789350
     (State or other jurisdiction of                  (I.R.S. Employer
      incorporation or organization)                 Identification No.)

4717 EAST HILTON AVENUE, STE. 400, PHOENIX, ARIZONA          85034
    (Address of principal executive offices)              (Zip Code)

                               (480) 443-6000
            (Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X].

The number of shares  outstanding of registrant's  Common Stock,  $.001 par
value per share, as of April 29, 2003 was 4,349,788.
<PAGE>
                          VODAVI TECHNOLOGY, INC.
                       QUARTERLY REPORT ON FORM 10-Q
                    FOR THE QUARTER ENDED MARCH 31, 2003

                             TABLE OF CONTENTS

                                                                            Page
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheets - March 31, 2003 and
         December 31, 2002                                                     3

         Consolidated Statements of Operations - Three Months Ended
         March 31, 2003 and 2002                                               4

         Consolidated Statements of Cash Flows - Three Months Ended
         March 31, 2003 and 2002                                               5

         Notes to Consolidated Financial Statements                            6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                             9

Item 3.  Quantitative and Qualitative Disclosures about Market Risk           15

Item 4.  Controls and Procedures                                              15

PART II. OTHER INFORMATION                                                    16

SIGNATURES                                                                    17

                                     2
<PAGE>
                       PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                          VODAVI TECHNOLOGY, INC.
                        CONSOLIDATED BALANCE SHEETS
                     IN THOUSANDS, EXCEPT SHARE AMOUNTS

<TABLE>
<CAPTION>
                                                     March 31, 2003    December 31,
                                                       (Unaudited)         2002
                                                     --------------    ------------
<S>                                                  <C>               <C>
CURRENT ASSETS:
  Cash                                                  $     221       $   1,141
  Accounts receivable, net of reserves for
    doubtful accounts and sales returns of
    $413 and $422, respectively                             7,152           6,671
  Inventory                                                 5,935           5,550
  Income tax receivable                                       300             300
  Deferred income taxes                                       436             436
  Prepaids and other current assets                           685             731
                                                        ---------       ---------
    Total current assets                                   14,729          14,829

PROPERTY AND EQUIPMENT, net                                 1,733           1,631

GOODWILL, net                                                 725             725

DEFERRED TAXES                                                160             160

OTHER LONG-TERM ASSETS                                         39              43
                                                        ---------       ---------
                                                        $  17,386       $  17,388
                                                        =========       =========
CURRENT LIABILITIES:
  Accounts payable                                      $     861       $   1,250
  Accrued liabilities                                       1,286           1,533
  Accounts payable to stockholder                           4,252           3,965
  Revolving credit facility                                   222              --
                                                        ---------       ---------
    Total current liabilities                               6,621           6,748
                                                        ---------       ---------

DEFERRED RENT OBLIGATIONS                                      16              18
                                                        ---------       ---------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Preferred stock, $.001 par value;
    1,000,000 shares authorized,
    no shares issued                                           --              --
  Common stock, $.001 par value;
    10,000,000 shares authorized;
    4,668,488 shares issued                                     5               5
  Additional paid-in capital                               13,503          13,503
  Accumulated deficit                                      (2,000)         (2,127)
  Treasury stock, 318,700 shares at cost                     (759)           (759)
                                                        ---------       ---------
                                                           10,749          10,622
                                                        ---------       ---------
                                                        $  17,386       $  17,388
                                                        =========       =========
</TABLE>

            The accompanying notes are an integral part of these
                       consolidated balance sheets.

                                     3
<PAGE>
                          VODAVI TECHNOLOGY, INC.
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                   IN THOUSANDS EXCEPT PER SHARE AMOUNTS
                                (Unaudited)

<TABLE>
<CAPTION>
                                                                 Three Months Ended
                                                                      March 31,
                                                                --------------------
                                                                  2003        2002
                                                                --------    --------
<S>                                                             <C>         <C>
REVENUE, net                                                    $  9,063    $  8,790

COST OF GOODS SOLD                                                 5,884       5,639
                                                                --------    --------

GROSS MARGIN                                                       3,179       3,151
                                                                --------    --------
OPERATING EXPENSES:
Engineering and product development                                  553         489
Selling, general and administrative                                2,389       2,352
                                                                --------    --------
                                                                   2,942       2,841
                                                                --------    --------

OPERATING INCOME                                                     237         310

INTEREST EXPENSE                                                      25          31
                                                                --------    --------

INCOME BEFORE INCOME TAXES AND CHANGE IN ACCOUNTING PRINCIPLE        212         279

INCOME TAX PROVISION                                                  85         112
                                                                --------    --------

INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE                         127         167

CHANGE IN ACCOUNTING PRINCIPLE,
  net of tax                                                          --      (1,263)
                                                                --------    --------

NET INCOME (LOSS)                                               $    127    $ (1,096)
                                                                ========    ========
EARNINGS PER COMMON SHARE:
Basic
  Income before change in accounting principle                  $   0.03    $   0.04
  Change in accounting principle                                      --       (0.30)
                                                                --------    --------
  Net income (loss)                                             $   0.03    $  (0.26)
                                                                ========    ========
Diluted
  Income before change in accounting principle                  $   0.03    $   0.04
  Change in accounting principle                                      --       (0.29)
                                                                --------    --------
  Net income (loss)                                             $   0.03    $  (0.25)
                                                                ========    ========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic                                                              4,350       4,273
                                                                ========    ========
Diluted                                                            4,445       4,317
                                                                ========    ========
</TABLE>

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

                                     4
<PAGE>
                          VODAVI TECHNOLOGY, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                               IN THOUSANDS
                                (Unaudited)

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                                                          March 31,
                                                                    --------------------
                                                                      2003        2002
                                                                    --------    --------
<S>                                                                 <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                 $    127    $ (1,096)
  Adjustments to reconcile net income (loss) to net cash
    flows provided by operating activities:
      Depreciation and amortization                                      121         175
      Deferred rent obligations                                           (2)         (8)
      Change in accounting principle                                      --       1,263
  Changes in working capital:
      Accounts receivable, net                                          (481)         (6)
      Inventory                                                         (385)        973
      Income tax receivable                                               --         839
      Prepaids and other current assets                                   46           4
      Other long-term assets and deferred taxes                            4         (19)
      Accounts payable and payables to stockholder                      (102)        604
      Accrued liabilities                                               (247)       (422)
                                                                    --------    --------
        Net cash flows provided by (used in) operating
          activities                                                    (919)      2,307
                                                                    --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Cash paid to acquire property and equipment                           (223)       (353)
  Cash paid to acquire DataSpeak Systems, Inc.                            --        (624)
                                                                    --------    --------
        Net cash flows used in investing activities                     (223)       (977)
                                                                    --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net advances (payments) on revolving credit facility                   222        (528)
                                                                    --------    --------
        Net cash flows provided by (used in) financing activities        222        (528)
                                                                    --------    --------

INCREASE (DECREASE) IN CASH                                             (920)        802

CASH, beginning of period                                              1,141         340
                                                                    --------    --------

CASH, end of period                                                 $    221    $  1,142
                                                                    ========    ========
SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid for interest                                            $     25    $     31
                                                                    ========    ========
</TABLE>

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

                                     5
<PAGE>
                          VODAVI TECHNOLOGY, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               MARCH 31, 2003
                                 UNAUDITED

(a)  INTERIM FINANCIAL REPORTING

The accompanying  unaudited Consolidated Financial Statements have been prepared
by Vodavi Technology, Inc. and subsidiaries ("Vodavi" or the "Company") pursuant
to the rules and regulations of the Securities and Exchange  Commission  ("SEC")
and,  in the opinion of the  Company,  include all  adjustments  (consisting  of
normal recurring accruals and adjustments)  necessary for a fair presentation of
results  of  operations,  financial  position,  and cash flows as of and for the
periods presented.

The  preparation of financial  statements and related  disclosures in conformity
with accounting  principles  generally  accepted in the United States of America
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities  at the date of the  financial  statements  and revenue and expenses
during the period  reported.  Actual results could differ from those  estimates.
Estimates are used in accounting  for,  among other things,  customer  incentive
programs,  allowances for bad debts and sales returns,  inventory  obsolescence,
product warranty,  depreciation,  taxes and other  contingencies.  Estimates and
assumptions are reviewed periodically and the effects of revisions are reflected
in the Consolidated Financial Statements in the period they are determined to be
necessary.

The  results  for the three  months  ended  March 31,  2003 are not  necessarily
indicative of financial  results for the full year.  These financial  statements
should be read in conjunction with the audited Consolidated Financial Statements
and notes thereto  included in Vodavi's  Annual Report on Form 10-K for the year
ended December 31, 2002.






                      [SPACE INTENTIONALLY LEFT BLANK]

                                       6
<PAGE>
(b)  CALCULATION OF EARNINGS PER SHARE

In  accordance  with SFAS No. 128,  "Earnings Per Share",  the Company  displays
basic and diluted earnings per share (EPS).  Basic EPS is determined by dividing
net income by the weighted  average  number of common  shares  outstanding.  The
basic weighted average number of common shares outstanding excludes all dilutive
securities.  Diluted EPS is  determined  by dividing  net income by the weighted
average number of common shares and dilutive securities outstanding.

A reconciliation  of the numerator and denominator  (weighted  average number of
shares outstanding) of the basic and diluted EPS computation is as follows:

                                                    For the Quarterly Period
                                                        Ended March 31,
                                                    ------------------------
                                                       2003          2002
                                                     --------      --------
Income before change in accounting principal         $    127      $    167
Change in accounting principle                             --        (1,263)
                                                     --------      --------
Net income (loss)                                    $    127      $ (1,096)
                                                     ========      ========
Weighted average common shares for basic
  earnings per share                                    4,350         4,273
Effect of dilutive stock options (1)                       95            44
                                                     --------      --------
Weighted average common shares for
  diluted earnings per share                            4,445         4,317
                                                     ========      ========

----------
(1)  Dilutive  securities are calculated using the treasury stock method and the
     average  market  price during the period.  Options on 619,833,  and 612,814
     shares had an exercise  price greater than the average  market price during
     the  quarterly  period  ended  March 31, 2003 and 2002,  respectively,  and
     therefore did not enter into the earnings per share calculation.

(c)  STOCK OPTION PLANS

Statement of  Financial  Accounting  Standard  (SFAS) No. 123,  "Accounting  for
Stock-Based Compensation",  encourages entities to recognize as expense over the
vesting  period the fair value of all  stock-based  awards on the date of grant.
Alternatively,  SFAS No. 123 allows entities to continue to apply the provisions
of APB Opinion No. 25,  "Accounting for Stock Issued to Employees",  and provide
pro forma earnings per share  disclosures for employee stock option grants as if
the  fair-value-based  method as defined in SFAS No. 123 had been  applied.  The
Company applies the intrinsic value method under APB No. 25 and provides the pro
forma disclosure provisions of SFAS No. 123.

No  stock-based  employee  compensation  cost is  reflected in net income as all
options  granted  under the Plan had an exercise  price equal to or greater than
the market price of the  underlying  common  stock on the date of grant.  If the
Company had accounted for its stock-based  compensation  plan using a fair value
based method of  accounting  as  prescribed  in SFAS No. 123, the  Company's net
income and earnings per share would have been reported as follows:

                                       7
<PAGE>
                                           For the Quarterly Period
                                                Ended March 31,
                                           ------------------------
                                             2003            2002
                                           --------        --------
                                                (In Thousands,
                                           Except Per Share Amounts)
Net income (loss):
  As reported                              $    127        $ (1,096)
  Fair Value of options granted,
    net of taxes                                (36)            (28)
                                           --------        --------
  Pro forma                                $     91        $ (1,124)
                                           ========        ========
Earnings (loss) per share:
  As reported - Basic                      $   0.03        $  (0.26)
  As reported - Diluted                    $   0.03        $  (0.25)
  Pro forma - Basic and Diluted            $   0.02        $  (0.26)

(d)  SEGMENT REPORTING

The Company  operates in one reportable  segment,  the  distribution of business
telecommunications  equipment.  Accordingly,  the  Company  has  only  presented
financial information for its one reportable segment.

(e)  CHANGE IN ACCOUNTING PRINCIPLE AND RECENT ACCOUNTING PRONOUNCEMENTS

In  2001,   the  FASB  issued   Statement  No.  141,   ACCOUNTING  FOR  BUSINESS
COMBINATIONS, and Statement No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. These
statements modified accounting for business combinations after June 30, 2001 and
affected  the  Company's  treatment  of  goodwill  and other  intangible  assets
effective January 1, 2002. The Statements  require that goodwill existing at the
date of adoption be reviewed for possible  impairment and that impairment  tests
be performed at least annually, with impaired assets written-down to fair value.
Additionally,  existing  goodwill  and  intangible  assets must be assessed  and
classified  consistent with the  Statements'  criteria.  Intangible  assets with
estimated  useful  lives will  continue  to be  amortized  over  those  periods.
Amortization  of goodwill and intangible  assets with  indeterminate  lives will
cease.

The Company  determined  that upon  adoption of these  Statements  on January 1,
2002, the entire $1.6 million carrying amount of the goodwill was impaired.  The
goodwill impairment was recognized in 2002 as a change in accounting  principle,
net of $375,000 of income taxes.

In October  2001,  the FASB issued SFAS No. 144  "Accounting  for  Impairment or
Disposal of Long-Lived Assets".  SFAS No. 144 addresses financial accounting and
reporting for the  impairment or disposal of long-lived  assets.  This statement
also extends the reporting  requirements to report  separately,  as discontinued
operations,  components  of an entity that have  either been  disposed of or are
classified as held-for-sale. We adopted the provisions of SFAS No. 144 effective
January 1, 2002.  The adoption of this  statement did not have any impact on our
financial condition or results from operations.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities." SFAS No. 146 requires companies to recognize
costs associated with exit or disposal  activities when they are incurred rather
than at the date of a  commitment  to an exit or  disposal  plan.  SFAS No.  146
replaced  EITF Issue No.  94-3,  "Liability  Recognition  for  Certain  Employee
Termination  Benefits  and Other  Costs to Exit an Activity  (including  Certain
Costs  Incurred  in a  Restructuring),"  and  will  apply  to exit  or  disposal
activities  initiated after December 31, 2002. The  requirements of SFAS No. 146
will not be required  unless and until the company has a future exit or disposal
activity.

In November 2002, the FASB issued FASB  Interpretation  Number 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantee of the Indebtedness of Others". This Interpretation  elaborates on the
disclosures  to be made by a  guarantor  in its  interim  and  annual  financial
statements about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize,  at the inception of a
guarantee,  a  liability  for the fair  value of the  obligation  undertaken  in
issuing  the  guarantee.   The  initial   recognition  and  initial  measurement

                                       8
<PAGE>
provisions in this  interpretation  apply to guarantees issued or modified after
December  31,  2002.  We  have  adopted  the   disclosure   provisions  of  this
interpretation as of December 31, 2002.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensations  - A  Transition  and  Disclosure - an Amendment to SFAS No. 123."
SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation",  to
provide alternative methods of transition for an entity that voluntarily changes
to  the  fair  value  based  method  of  accounting  for  stock-based   employee
compensation.  It also amends the  disclosure  provisions  of that  Statement to
require  prominent  disclosure  about the effects on  reported  net income of an
entity's  accounting  policy  decisions  with  respect to  stock-based  employee
compensation.  Finally,  this  Statement  amends APB  Opinion  No. 28,  "Interim
Financial  Reporting",  to require  disclosure  about  those  effects in interim
financial information.  We have adopted the disclosure  requirements of SFAS No.
148 as of December 31, 2002.

(f)  COMMITMENTS AND CONTINGENCIES

The Company is subject to certain asserted and unasserted claims  encountered in
the normal course of business. The Company believes that the resolution of these
matters will not have a material  adverse  effect on its  financial  position or
results of  operations.  The Company  cannot provide  assurance,  however,  that
damages that result in a material  adverse  effect on its financial  position or
results of operations will not be imposed by these matters.

(g)  SUBSEQUENT EVENTS

In April  2003,  the  Company  entered  into a credit  agreement  with  Comerica
Bank-California ("Comerica"), which established a $5.0 million revolving line of
credit facility and a $1.0 million term loan (the "Credit  Facility").  Advances
under the  Credit  Facility  are based upon  eligible  accounts  receivable  and
inventory  of  the  Company's  wholly  owned  subsidiary  Vodavi  Communications
Systems,  Inc. and are secured by substantially all of the Company's assets. The
Credit  Facility  contains  covenants  that are  customary  for  similar  credit
facilities and also prohibits our operating  subsidiaries  from paying dividends
to our company without the consent of Comerica.

The $5.0 million  revolving  line of credit bears  interest at Comerica's  prime
rate and requires  monthly  payments of interest only with all unpaid  principal
and accrued  interest  due at its  expiration  in April 2005.  If the Company is
unable  to reduce  the  principal  balance  on the line of credit to zero for at
least thirty consecutive days during any fiscal year, then any remaining balance
will  be  converted  into a term  loan,  or  term  balance,  as  defined  in the
agreement.  In addition to interest  on the term  balance,  the Company  will be
required to make monthly payments of principal in an amount  sufficient to fully
amortize the term balance over a thirty-six month period.

The $1.0  million  term loan is available to the Company only for the purpose of
acquiring  its  common  stock.  The term  loan  must be  advanced  on or  before
September 30, 2003 unless  extended by Comerica.  Advances on the term loan will
bear interest at Comerica's prime rate plus 0.5%. In addition to interest on the
term loan, the Company will be required to make monthly payments of principal in
an amount  sufficient to fully amortize the term loan over a sixty-month  period
with all unpaid principal and accrued interest due in thirty-six months.

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

BUSINESS OVERVIEW

We  design,  develop,  market,  and  support  a  broad  range  of  business
telecommunications   solutions,   including   telephony   products,   voice
processing products, and computer-telephony  products for a wide variety of
business  applications.   Our   telecommunications   solutions  incorporate
sophisticated  features,  such as automatic call  distribution and Internet
protocol,   or  IP,  gateways.   Our  voice  processing   products  include
interactive voice response systems,  automated attendant, and voice and fax
mail.  Our  computer-telephony  products  enable  users  to  integrate  the
functionality of their telephone  systems with their computer  systems.  We
market our products  primarily  in the United  States as well as in foreign
countries  through a distribution  model consisting  primarily of wholesale
distributors and direct dealers.

                                       9
<PAGE>
CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations  discusses our  consolidated  financial  statements,  which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States. The preparation of these financial statements requires us to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and the disclosure of contingent  assets and liabilities at the date
of the financial  statements  and the reported  amounts of revenues and expenses
during the reporting period. On an on-going basis, we evaluate our estimates and
judgments,  including  those related to customer  incentives,  bad debts,  sales
returns,  excess and obsolete  inventory,  and contingencies and litigation.  We
base our estimates and judgments on historical  experience  and on various other
factors that are reasonable under the  circumstances,  the results of which form
the  basis  for  making  judgments  about the  carrying  values  of  assets  and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.

     We believe  the  following  critical  accounting  policies  affect our more
significant  judgments and estimates used in the preparation of our consolidated
financial statements:

CUSTOMER INCENTIVES

     We record reductions to revenue for customer incentive programs,  including
special pricing agreements,  price protection for our distributors,  promotions,
and other  volume-related  rebate  programs.  Such  reductions  to  revenue  are
estimates,  which are based on a number of factors,  including  our  assumptions
related to customer redemption rates, sales volumes, and inventory levels at our
distributors. If actual results differ from our original assumptions,  revisions
are made to our  estimates  that could result in  additional  reductions  to our
reported revenue in the period the revisions are made.  Additionally,  if market
conditions  were to  decline,  we may take  actions  to  increase  the  level of
customer  incentive  offerings that could result in an incremental  reduction of
revenue in the period in which we offer the incentive.

BAD DEBTS

     We maintain allowances for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments.  If the financial
condition of our customers  were to  deteriorate,  resulting in an impairment of
their  ability  to  make  payments,   additional  allowances  may  be  required.
Additionally,  we have a significant  concentration of accounts  receivable with
our largest  distributor,  Graybar Electric Company,  Inc. As of March 31, 2003,
Graybar  accounted  for  31% of our  total  accounts  receivable.  If  Graybar's
financial  condition were to  deteriorate,  resulting in their inability to make
payments  to us,  it could  have a  material  adverse  impact  on our  financial
condition and results of operations.

SALES RETURNS

     We  maintain  allowances  for  estimated  sales  returns.   While  we  have
distribution  agreements with our largest  distributors that limit the amount of
sales  returns on active  products,  we  generally  allow  unlimited  returns of
products that we discontinue. Accordingly, the timing and amount of revisions to
our  estimates  for sales  returns is largely  influenced  by our  decisions  to
discontinue  product  lines and our ability to predict the  inventory  levels of
such products at our largest distributors. Revisions to these estimates have the
effect of increasing or decreasing the reported  amount of revenue in the period
in which the revisions are made. We generally do not accept product returns from
our direct dealers unless the product is damaged.

EXCESS AND OBSOLETE INVENTORY

     We  record  our  inventory  at the  lower  of cost  or  market  value.  Our
assessment of market value is determined by, among other things,  historical and
forecasted  sales  activity,  the  condition of specific  inventory  items,  and
competitive pricing considerations.  When the assessed market value is less than
the historical cost, provision is made in the financial statements to write-down
the carrying amount of the respective inventory items to market value. If actual
results are less favorable than our original  assumptions for determining market
value, additional inventory write-downs may be required.

                                       10
<PAGE>
     The  above  listing  is not  intended  to be a  comprehensive  list  of our
accounting policies. See our audited consolidated financial statements and notes
thereto  included in our Annual Report on Form 10-K for the year ended  December
31, 2002, which contains accounting  policies and other disclosures  required by
generally accepted accounting principles in the United States of America.

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated the percentage of
total revenue  represented by certain  revenue and expense items.  The table and
the  discussion  below  should  be read in  conjunction  with  the  consolidated
financial statements and notes thereto that appear elsewhere in this report.

                                                            Three Months Ended
                                                                 March 31,
                                                            ------------------
                                                             2003        2002
                                                            ------      ------
Revenue ................................................     100.0%      100.0%
Cost of goods sold .....................................      64.9        64.2
                                                            ------      ------
Gross margin ...........................................      35.1        35.8

Operating expenses:
Engineering and product development ....................       6.1         5.6
Selling, general, and administrative ...................      26.4        26.7
                                                            ------      ------
                                                              32.5        32.3
Operating income (loss) ................................       2.6         3.5
Interest expense, net ..................................       0.3         0.3
                                                            ------      ------
Pretax income (loss) ...................................       2.3         3.2
Income tax expense (benefit) ...........................       0.9         1.3
                                                            ------      ------
Income (loss) before change in accounting principle ....       1.4         1.9
Change in accounting principle .........................        --       (14.4)
                                                            ------      ------
Net income (loss) ......................................       1.4%      (12.5)%
                                                            ======      ======

QUARTERLY PERIOD ENDED MARCH 31, 2003 COMPARED WITH QUARTERLY PERIOD ENDED
MARCH 31, 2002

REVENUE

     Revenue  for the  three-month  period  ended March 31,  2003  totaled  $9.1
million,  an increase of 3.1%,  from revenue of $8.8 million for the same period
of 2002. Sales to our supply house customers  accounted for  approximately  $5.0
million,  or 54.9% of our total revenue  during the 2003 first quarter  compared
with $4.8 million, or 54.5% of our total revenue in the 2002 first quarter.  The
increase in sales to our supply  house  customers  in the 2003 first  quarter is
principally  related to sales of our new STS  digital  telephone  system that we
introduced  in January 2003.  While the STS  telephone  system has been accepted
well into the marketplace, sales of this product have had the effect of reducing
the level of sales of similar  products that we sell through supply  houses.  We
expect this trend to continue as we focus our marketing efforts on the STS.

     Sales through our INFINITE direct dealer program  totaled $3.9 million,  or
43.3% of our total  revenue  for the first  quarter of 2003  compared  with $3.7
million,  or 42.0% of our total  revenue for the same period a year ago.  During
2003,  we  continued  our  program to focus on selling to fewer,  but larger and
better-established,  dealers  who are  more  effective  at  selling  our  larger
systems.

                                       11
<PAGE>
GROSS MARGIN

     Our gross margin was  approximately  $3.2 million for each of the quarterly
periods ended March 31, 2003 and 2002. Our gross margin as a percentage of total
revenue  decreased to 35.1% during 2003 from 35.8% during 2002.  The decrease in
our gross margin percentage during 2003 is a direct result of the product mix of
sales to our supply house customers with a heavier  emphasis of sales of our new
STS  telephone  system,  which  generates a lower  overall gross margin than our
other products.

ENGINEERING AND PRODUCT DEVELOPMENT

     Engineering  and product  development  expenditures  increased  slightly to
$553,000  during the first  quarter of 2003 from  $489,000 in the same period of
2002.  We continue to invest in the  development  of our next  generation IP Key
Telephone  System,  the  convergence  of and  enhancements  to our  existing Key
Telephone Systems, and enhancements to our voice processing products.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

     Selling,  general,  and  administrative  expenses were  approximately  $2.4
million for each of the first quarters of 2003 and 2002.

INTEREST EXPENSE

     Interest  expense  decreased  to $25,000 for the first three months of 2003
from  $31,000  for the same  period a year ago.  Our  interest  expense  for the
current  period was  positively  impacted  by a  reduction  in both the  average
outstanding balance and the applicable borrowing rate from a year ago.

INCOME TAXES

     We provided for federal and state  income taxes using an effective  rate of
40.1% during the first quarter of 2003 and 2002.

LIQUIDITY AND CAPITAL RESOURCES

     Our net working capital  position was  approximately  $8.1 million at March
31, 2003 and December  31, 2002.  We had a cash balance of $221,000 at March 31,
2003 compared with a cash balance of $1.1 million at December 31, 2002.  Factors
that decreased our cash position  during the first three months of 2003 included
increases in inventory of $385,000 and accounts  receivable  of $481,000 and the
pay down of accounts  payable and accrued  liabilities of $102,000 and $247,000,
respectively.  We also used  approximately  $223,000 during the first quarter of
2003 for the purchase of property and equipment  primarily related to tooling of
our new products.  Sources of cash  included  positive  operating  cash flow and
advances of $222,000 on our revolving line of credit.

     Our accounts  receivable days sales outstanding,  calculated on a quarterly
basis, was  approximately 71 days as of March 31, 2003 compared to 70 days as of
December 31, 2002. The timing of payments received from our largest distributors
significantly  influences our days sales outstanding and our liquidity.  Our two
largest distributors  comprised 48% of our total accounts receivable as of March
31, 2002 and 43% of our total accounts receivable as of December 31, 2002.

     Our inventory  turnover,  measured in terms of days sales  outstanding on a
quarterly  basis,  was 91 days as of March 31,  2003  compared  to 87 days as of
December 31, 2002. The increase in inventory days outstanding is a direct result
of carrying more product lines in our inventory, including our new STS telephone
system.  We  expect  our  inventory  turnover  to  improve  as  we  continue  to
rationalize our product lines.

     Trade payables and accrued  liabilities,  including payables to third-party
and related-party manufacturers, were approximately $6.4 million as of March 31,
2003 compared with $6.7 million as of December 31, 2002.  The level of our trade
payables and accrued  liabilities  between periods is largely  influenced by the
timing of payments  we make to our largest  suppliers  for  inventory  items and
payments to cover payroll and customer rebates.  We generally pay trade payables
within 45 days  from the  invoice  date,  except  for  payments  to our  largest
supplier, which are 60 days from the invoice date.

     We had a $15.0  million  credit  facility  with  General  Electric  Capital
Corporation that expired in April 2003. The line of credit bore interest at 2.5%
over the 30-day  commercial paper rate, or 3.75% as of March 31, 2003.  Advances
under the line of credit  were  based  upon  eligible  accounts  receivable  and
inventory of our wholly owned subsidiary Vodavi  Communications  Systems,  Inc.,
and were  secured by  substantially  all of our assets.  The  revolving  line of
credit contained  covenants that are customary for similar credit facilities and

                                       12
<PAGE>
also prohibited our operating  subsidiaries from paying dividends to our company
without the consent of GE Capital.  As of March 31, 2003,  we were in compliance
with all of the covenants.

     In  April  2003,  we  entered  into  a  credit   agreement   with  Comerica
Bank-California, which established a $5.0 million revolving line of credit and a
$1.0  million  term  loan.  Advances  under the credit  facility  are based upon
eligible accounts receivable and inventory of our wholly owned subsidiary Vodavi
Communications Systems, Inc. and are secured by substantially all of our assets.
The credit  facility  contains  covenants  that are customary for similar credit
facilities and also prohibits our operating  subsidiaries  from paying dividends
to our company without the consent of Comerica.

     The $5.0  million  revolving  line of credit bears  interest at  Comerica's
prime  rate and  requires  monthly  payments  of  interest  only with all unpaid
principal  and accrued  interest due at its  expiration in April 2005. If we are
unable  to reduce  the  principal  balance  on the line of credit to zero for at
least thirty consecutive days during any fiscal year, then any remaining balance
will  be  converted  into a term  loan,  or  term  balance,  as  defined  in the
agreement.  In addition to interest on the term balance,  we will be required to
make monthly payments of principal in an amount sufficient to fully amortize the
term balance over a thirty-six month period.

     The $1.0  million  term loan is  available  to us only for the  purpose  of
acquiring  our common  stock.  It must be drawn upon on or before  September 30,
2003 unless  extended by Comerica.  Advances on the term loan will bear interest
at Comerica's prime rate plus 0.5%. In addition to interest on the term loan, we
will be required to make monthly  payments of principal in an amount  sufficient
to fully  amortize  the term  loan over a  sixty-month  period  with all  unpaid
principal and accrued interest due in thirty-six months.

     We  have  no  special  purpose  entities  or off  balance  sheet  financing
arrangements,  commitments, or guarantees other than certain long-term operating
lease agreements for our office and warehouse facilities and short-term purchase
commitments to our  third-party  suppliers.  The following  table sets forth all
known  commitments as of March 31, 2003 and the year in which those  commitments
become due or are expected to be settled (IN THOUSANDS):

                                                          Accounts
                                                         Payable &
                Operating      Credit       Purchase      Accrued
  Year           Leases       Facility    Commitments    Liabilities      Total
--------        --------      --------    -----------    -----------    --------
2003            $    821      $    222      $  5,171      $  6,399      $ 12,613
2004               1,095            --            --            --         1,095
2005                 881            --            --            --           881
2006                 818            --            --            --           818
2007                 785            --            --            --           785
Thereafter         3,142            --            --            --         3,142
                --------      --------      --------      --------      --------
Total           $  7,542      $    222      $  5,171      $  6,399      $ 19,334
                ========      ========      ========      ========      ========

     From time to time we are subject to certain asserted and unasserted  claims
encountered in the normal course of business.  We believe that the resolution of
these matters will not have a material adverse effect on our financial  position
or results of operations.  We cannot provide  assurance,  however,  that damages
that result in a material adverse effect on our financial position or results of
operations will not be imposed in these matters.

     We believe that our working capital and credit facilities are sufficient to
fund our capital needs during the next 12 months.  Although we currently have no
acquisition targets, we intend to continue to explore acquisition  opportunities
as they arise and may be required to seek additional  financing in the future to
meet such opportunities.

                                       13
<PAGE>
INTERNATIONAL MANUFACTURING SOURCES

     We currently  obtain a substantial  majority of our products  under various
manufacturing arrangements with third-party manufacturers in Asia, including LGE
who owns  approximately  20% of our outstanding  common stock. As of the date of
this  report,  we  do  not  believe  that  the  current  economic  or  political
environment in Asia will have any adverse impact on our operations.  However, we
do face risks associated with international  manufacturing  sources.  For a more
detailed discussion of these risks, please see Item 1, "Special  Considerations"
included in our annual report on form 10-K for the year ended December 31, 2002.

IMPACT OF RECENTLY ISSUED STANDARDS

In  2001,   the  FASB  issued   Statement  No.  141,   ACCOUNTING  FOR  BUSINESS
COMBINATIONS, and Statement No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. These
statements modified accounting for business combinations after June 30, 2001 and
affected  the  Company's  treatment  of  goodwill  and other  intangible  assets
effective January 1, 2002. The Statements  require that goodwill existing at the
date of adoption be reviewed for possible  impairment and that impairment  tests
be performed at least annually, with impaired assets written-down to fair value.
Additionally,  existing  goodwill  and  intangible  assets must be assessed  and
classified  consistent with the  Statements'  criteria.  Intangible  assets with
estimated  useful  lives will  continue  to be  amortized  over  those  periods.
Amortization  of goodwill and intangible  assets with  indeterminate  lives will
cease.

The Company  determined  that upon  adoption of these  Statements  on January 1,
2002, the entire $1.6 million carrying amount of the goodwill was impaired.  The
goodwill impairment was recognized in 2002 as a change in accounting  principle,
net of $375,000 of income taxes.

In October  2001,  the FASB issued SFAS No. 144  "Accounting  for  Impairment or
Disposal of Long-Lived Assets".  SFAS No. 144 addresses financial accounting and
reporting for the  impairment or disposal of long-lived  assets.  This statement
also extends the reporting  requirements to report  separately,  as discontinued
operations,  components  of an entity that have  either been  disposed of or are
classified as held-for-sale. We adopted the provisions of SFAS No. 144 effective
January 1, 2002.  The adoption of this  statement did not have any impact on our
financial condition or results from operations.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities." SFAS No. 146 requires companies to recognize
costs associated with exit or disposal  activities when they are incurred rather
than at the date of a  commitment  to an exit or  disposal  plan.  SFAS No.  146
replaced  EITF Issue No.  94-3,  "Liability  Recognition  for  Certain  Employee
Termination  Benefits  and Other  Costs to Exit an Activity  (including  Certain
Costs  Incurred  in a  Restructuring),"  and  will  apply  to exit  or  disposal
activities  initiated after December 31, 2002. The  requirements of SFAS No. 146
will not be required  unless and until the Company has a future exit or disposal
activity.

In November 2002, the FASB issued FASB  Interpretation  Number 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantee of the Indebtedness of Others". This Interpretation  elaborates on the
disclosures  to be made by a  guarantor  in its  interim  and  annual  financial
statements about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize,  at the inception of a
guarantee,  a  liability  for the fair  value of the  obligation  undertaken  in
issuing  the  guarantee.   The  initial   recognition  and  initial  measurement
provisions in this  interpretation  apply to guarantees issued or modified after
December  31,  2002.  We  have  adopted  the   disclosure   provisions  of  this
interpretation as of December 31, 2002.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensations  - A  Transition  and  Disclosure - an Amendment to SFAS No. 123."
SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation",  to
provide alternative methods of transition for an entity that voluntarily changes
to  the  fair  value  based  method  of  accounting  for  stock-based   employee
compensation.  It also amends the  disclosure  provisions  of that  Statement to
require  prominent  disclosure  about the effects on  reported  net income of an
entity's  accounting  policy  decisions  with  respect to  stock-based  employee
compensation.  Finally,  this  Statement  amends APB  Opinion  No. 28,  "Interim
Financial  Reporting",  to require  disclosure  about  those  effects in interim
financial information.  We have adopted the disclosure  requirements of SFAS No.
148 as of December 31, 2002.

                                       14
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

This report contains forward-looking statements,  including statements regarding
our business  strategies,  our  business,  and the industry in which we operate.
These forward-looking statements are based primarily on our expectations and are
subject  to a number of risks and  uncertainties,  some of which are  beyond our
control.  Actual  results  could  differ  materially  from  the  forward-looking
statements  as a result of numerous  factors,  including  those set forth in our
Form 10-K for the year ended December 31, 2002, as filed with the Securities and
Exchange Commission.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We  do  not  participate  in  any  activities   involving  derivative  financial
instruments  or  other  financial  and  commodity  instruments.  We do not  hold
investment  securities that would require  disclosure of market risk. Our market
risk  exposure  is  limited to  interest  rate risk  associated  with our credit
facility.  We incur  interest on loans made under a revolving  line of credit at
variable  interest rates of 2.5% over the 30-day  commercial paper rate, a total
of 3.75% at March 31,  2003.  The  principal  of loans under this line of credit
were paid in full when the credit  facility  expired on April 11, 2003. At March
31, 2003 we had  outstanding  borrowings on the line of credit of  approximately
$222,000.

ITEM 4. CONTROLS AND PROCEDURES

Based on their evaluation,  as of a date within 90 days prior to the date of the
filing of this  report,  of the  effectiveness  of our  disclosure  controls and
procedures,  our Chief Executive  Officer and Chief Financial  Officer have each
concluded  that  our  disclosure  controls  and  procedures  are  effective  and
sufficient to ensure that we record, process,  summarize, and report information
required  to  be  disclosed  by us in  our  periodic  reports  filed  under  the
Securities  Exchange Act within the time periods specified by the Securities and
Exchange Commission's rules and forms.

Subsequent to the date of their evaluation,  there have not been any significant
changes in our internal  controls or in other  factors that could  significantly
affect  these  controls,   including  any  corrective   action  with  regard  to
significant deficiencies and material weaknesses.

                                       15
<PAGE>
                           PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS
        Not applicable.

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
        Not applicable.

Item 3. DEFAULTS UPON SENIOR SECURITIES
        Not applicable.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
        Not applicable.

Item 5. OTHER INFORMATION
        Not applicable.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K
        Exhibits:

        10.53  Credit Agreement dated as of April 10, 2003 by and between Vodavi
               Communication Systems, Inc. and Comerica Bank - California.

         99.1  Certification  of the Chief Executive  Officer of the Registrant,
               pursuant to 18 U.S.C Section 135, as adopted  pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

         99.2  Certification  of the Chief Financial  Officer of the Registrant,
               pursuant  to 18 U.S.C.  Section of 1350,  as adopted  pursuant to
               Section 906 of the Sarbanes-Oxley Act of 2002.

         Reports on Form 8-K:
         Not applicable

                                       16
<PAGE>
                                 SIGNATURES

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.

                            VODAVI TECHNOLOGY, INC.

Dated: April 29, 2003       /s/ Gregory K. Roeper
                            ----------------------------------------------------
                            Gregory K. Roeper
                            President and Chief Executive Officer
                            (Principal Executive Officer)


Dated: April 29, 2003       /s/ David A. Husband
                            ----------------------------------------------------
                            David A. Husband
                            Chief Financial Officer and Vice President - Finance
                            (Principal Financial and Accounting Officer)

                                       17
<PAGE>
                               CERTIFICATION

     I, Gregory K. Roeper, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Vodavi Technology,
Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial condition,  results of operations,  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a) designed  such  disclosure  controls and  procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the period in which  this  quarterly  report is being
     prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
     and procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

          c)  presented  in this  quarterly  report  our  conclusions  about the
     effectiveness  of the  disclosure  controls  and  procedures  based  on our
     evaluation as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee of the  registrant's  board of directors  (or persons  performing  the
equivalent function):

          a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize,  and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

          b) any fraud,  whether or not material,  that  involves  management or
     other employees who have a significant  role in the  registrant's  internal
     controls; and

     6. The registrant's other certifying  officers and I have indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date: April 29, 2003

                           /s/ Gregory K. Roeper
                           -----------------------------------------------------
                           Gregory K. Roeper
                           Chief Executive Officer and President

                                       18
<PAGE>
                               CERTIFICATION

     I, David A. Husband, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Vodavi Technology,
Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial condition,  results of operations,  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a) designed  such  disclosure  controls and  procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the period in which  this  quarterly  report is being
     prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
     and procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

          c)  presented  in this  quarterly  report  our  conclusions  about the
     effectiveness  of the  disclosure  controls  and  procedures  based  on our
     evaluation as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee of the  registrant's  board of directors  (or persons  performing  the
equivalent function):

          a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize,  and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

          b) any fraud,  whether or not material,  that  involves  management or
     other employees who have a significant  role in the  registrant's  internal
     controls; and

     6. The registrant's other certifying  officers and I have indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date: April 29, 2003

                           /s/ David A. Husband
                           -----------------------------------------------------
                           David A. Husband
                           Chief Financial Officer and Vice President -- Finance

                                       19