SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

                  For the quarterly period ended September 30, 1997

                           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.)

                8300 E. Raintree Drive, Scottsdale, Arizona 85260
                -------------------------------------------------
              (Address of principal executive offices)   (Zip Code)

                                 (602) 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
                                       ---    --- 

The number of shares  outstanding of registrant's  Common Stock, $.001 per value
per share, as of October 31, 1997 was 4,342,238.
<PAGE>
                             VODAVI TECHNOLOGY, INC.
                          QUARTERLY REPORT ON FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 1997



                                TABLE OF CONTENTS


                                                                       Page #
PART I.           FINANCIAL INFORMATION

Item 1.           Financial Statements

                  Consolidated Balance Sheets - September 30,
                  1997 and December 31, 1996.                             3

                  Consolidated Statements of Operations - Three
                  and Nine Month Periods Ended September 30, 1997
                  and 1996.                                               4

                  Consolidated Statements of Cash Flows - Nine Month
                  Periods Ended September 30, 1997 and 1996.              5

                  Notes to Consolidated Financial Statements.             6

Item 2.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                     7

PART II. OTHER INFORMATION                                               11

                  SIGNATURES                                             12
<PAGE>
             PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements


                             VODAVI TECHNOLOGY, INC.
                           CONSOLIDATED BALANCE SHEETS
                                  In thousands


                                        September 30, December 31,
                                            1997          1996
                                            ----          ----
                                        (Unaudited)
CURRENT ASSETS:
     Cash                                $  1,203       $  1,152  
     Accounts Receivable, net               8,925          7,790  
     Inventory, net                         6,942          7,229  
     Prepaids                                 741            420  
                                         --------       --------  
                                           17,811         16,591  
                                                                  
PROPERTY AND EQUIPMENT, net                 2,808          2,465  
                                                                  
GOODWILL, net                               2,433          2,547  
                                                                  
OTHER LONG-TERM ASSETS, net                 1,131            815  
                                                                  
                                         --------       --------  
                                         $ 24,183       $ 22,418  
                                         ========       ========  
                                                                  
CURRENT LIABILITIES:                                              
     Current Portion of Long-Term Debt   $    386       $    258  
     Accounts Payable                       3,113          4,464  
     Accrued Liabilities                    2,566          2,518  
                                         --------       --------  
                                            6,065          7,240  
                                         --------       --------  
                                                                  
LONG-TERM DEBT                              7,684          5,777  
                                         --------       --------  
                                                                  
STOCKHOLDERS' EQUITY:                                             
     Common Stock                               4              4  
     Additional Paid-In Capital            12,308         12,308  
     Accumulated Deficit                   (1,878)        (2,911) 
                                         --------       --------  
                                           10,434          9,401  
                                         --------       --------  
                                         $ 24,183       $ 22,418  
                                         ========       ========  
                                                        

              The accompanying notes are an integral part of these
                          consolidated balance sheets.
                                       3
<PAGE>
                             VODAVI TECHNOLOGY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       In thousands, except share amounts
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                Three Months Ended      Nine Months Ended
                                                   September 30,          September 30,
                                                   -------------          -------------
                                                1997         1996         1997         1996
                                             ----------   ----------   ----------   ----------
<S>                                          <C>          <C>          <C>          <C>       
REVENUE, net                                 $   12,731   $   11,706   $   36,176   $   33,961

COST OF GOODS SOLD                                8,462        7,824       24,033       22,659

                                             ----------   ----------   ----------   ----------
   GROSS MARGIN                                   4,269        3,882       12,143       11,302

OPERATING EXPENSES
 Engineering and product development                553          578        1,535        1,613
 Selling, general and administrative              3,029        2,919        8,572        8,586
                                             ----------   ----------   ----------   ----------

OPERATING INCOME                                    687          385        2,036        1,103

INTEREST EXPENSE                                    152          213          489          655
                                             ----------   ----------   ----------   ----------

INCOME BEFORE INCOME TAXES                          535          172        1,547          448

PROVISION FOR INCOME TAXES                          114          119          514          325
                                             ----------   ----------   ----------   ----------


NET INCOME                                   $      421   $       53        1,033          123
                                             ==========   ==========   ==========   ==========

NET INCOME PER SHARE                         $     0.10   $     0.01   $     0.24   $     0.03
                                             ==========   ==========   ==========   ==========

WEIGHTED AVERAGE SHARES
   OUTSTANDING                                4,406,821    4,410,849    4,342,238    4,410,849
                                             ==========   ==========   ==========   ==========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.
                                       4
<PAGE>
                             VODAVI TECHNOLOGY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  In thousands
                                   (Unaudited)


                                                        Nine Months Ended
                                                          September 30,
                                                        -----------------
                                                         1997        1996
                                                       --------    --------
OPERATING ACTIVITIES:
  Net Income                                           $  1,033    $    123
  Adjustments
    Depreciation and amortization                           500         768
    Rent levelization                                        36          50
    Changes in working capital:
       Accounts receivable                               (1,188)     (1,114)
       Inventory                                            287       3,090
       Prepaid expenses                                    (320)        (35)
       Other long term assets                              (287)       (109)
       Accounts payable                                  (1,351)       (356)
       Accrued liabilities                                   47         120

                                                       --------    --------
NET CASH FLOWS - OPERATING ACTIVITIES                    (1,243)      2,537
                                                       --------    --------


INVESTING ACTIVITIES:
  Purchase of Fixed Assets                                 (387)       (416)

                                                       --------    --------
NET CASH FLOWS - INVESTING ACTIVITIES                      (387)       (416)
                                                       --------    --------

FINANCING ACTIVITIES:
  Payments on capital leases                               (158)        (36)
  Debt financing costs paid                                 (68)       --
  Borrowings from GE Capital                             36,214      29,505
  Payments to GE Capital                                 34,307     (32,354)

                                                       --------    --------
NET CASH FLOWS - FINANCIAL ACTIVITIES                     1,681      (2,885)
                                                       --------    --------

INCREASE (DECREASE) IN CASH                                  51        (764)

CASH, beginning of period                                 1,152       1,944
                                                       --------    --------

CASH, end of period                                    $  1,203    $  1,180
                                                       ========    ========


The accompanying notes are an integral part of these consolidated statements.
                                       5
<PAGE>
                             VODAVI TECHNOLOGY, INC.
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED
                               SEPTEMBER 30, 1997


a)   Vodavi Technology,  Inc. (the Company),  a Delaware  corporation,  designs,
     develops,  markets,  and  supports  a  broad  range  of  telecommunications
     systems,  commercial grade  telephones,  computer-telephony  products,  and
     voice  processing  products,  including  voice  mail,  fax  mail,  Internet
     messaging,  and interactive voice response  systems,  for a wide variety of
     commercial applications.

b)   The  accompanying  unaudited  consolidated  financial  statements have been
     prepared  by  the  Company  without  audit,   pursuant  to  the  rules  and
     regulations  of the  Securities and Exchange  Commission.  These  financial
     statements reflect all adjustments (consisting of normal recurring accruals
     and  adjustments)  which are, in the opinion of  management,  necessary  to
     fairly  state the  financial  position  as of  September  30,  1997 and the
     operating  results  and cash  flows for the  periods  presented.  Operating
     results for the interim periods presented are not necessarily indicative of
     the  operating  results  that may be expected  for the entire  year.  These
     financial  statements  should  be read in  conjunction  with the  Company's
     December 31, 1996 financial statements and accompanying notes thereto.

c)   In the fourth quarter of 1996, certain events occurred that resulted in the
     Company  recording an  impairment  loss related to the goodwill  associated
     with  Enhanced  Systems,  Inc.  (Enhanced).  See  footnotes  1 and 4 to the
     Company's financial statements for the year ended December 31, 1996.

d)   Net income per share for the periods ended September 30, 1997 and 1996 were
     determined by dividing net income by the weighted  average number of common
     and common equivalent shares outstanding.

     In February 1997, the Financial  Accounting Standard Board issued statement
     of Financial  Accounting Standard (SFAS) No. 128, "Earnings Per Share." The
     new standard  requires duel presentation of both basic and diluted earnings
     per share  (EPS) on  the face of the  earnings  statement  and  requires  a
     reconciliation of both basic and diluted EPS  calculations.  This statement
     is effective for financial  statements  for both interim and annual periods
     ending after  December 15, 1997.  This  statement will be effective for the
     Company's  1997 fiscal year. EPS as reported in this Form 10-Q would not be
     materially different under the provisions of SFAS No. 128.
                                       6
<PAGE>
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

Results of Operations

         Three Months Ended September 30, 1997 and 1996:

The  following  table  summarizes  the  operating  results  of the  Company as a
percentage of revenue for the periods indicated.

                                                              Three Months Ended
                                                                September 30,
                                                                -------------
                                                                1997     1996
                                                               ------   ------

Revenue                                                        100.0%   100.0%
Cost of goods sold                                              66.5%    66.8%
                                                               ------   ------
  Gross margin                                                  33.5%    33.2%
Operating expenses:
  Engineering and product development                            4.3%     4.9%
  Selling, general and administrative                           23.8%    24.9%
                                                               ------   ------
Operating income                                                 5.4%     3.4%
Interest expense                                                 1.2%     1.8%
                                                               ------   ------
Pre-tax income                                                   4.2%     1.6%
Income taxes                                                     0.9%     1.0%
                                                               ------   ------
Net income                                                       3.3%     0.6%
                                                               ======   ======


         Revenue

Revenue during the third quarter of 1997 increased  approximately  $1.0 million,
or 9.0%, to $12.7  million from $11.7 million in the third quarter of 1996.  The
increase is primarily  attributable to the Company's new OEM  relationship  with
Fujitsu Business Communications Systems, Inc.

         Gross Margin

Gross margin remained  relatively  constant at approximately 33.5% of revenue in
the third quarter of 1997 as compared with 33.2% in the third quarter of 1996.

         Engineering and Product Development

Expenditures  related to engineering and product development declined $25,000 in
the third quarter of 1997 as compared with the third quarter of 1996.

         Selling, General and Administrative

Selling,  general and  administrative  expenses  increased $110,000 in the third
quarter of 1997 as compared  with the third  quarter of 1996. As a percentage of
revenue, selling, general and administrative expenses declined to 23.8 % revenue
in the third  quarter of 1997 as  compared  with  24.9% in the third  quarter of
1996. The recognition of the impairment
                                       7
<PAGE>
loss related to Enhanced in the fourth  quarter of 1996 has  eliminated  ongoing
goodwill amortization of approximately $115,000 per quarter.

         Interest Expense

Interest  expense was  approximately  $152,000 in the third  quarter of 1996,  a
decrease of $61,000,  or 28.6%,  over the third quarter of 1996. The decrease is
attributable  to a decrease in average  borrowings and the effect of the reduced
interest rate in the Company's new credit facility.

         Income Taxes

The Company has provided  for income  taxes using an effective  rate of 21.3% in
the third quarter of 1997.  During the third quarter of 1997,  the effective tax
rate was  reduced to  account  for the impact of  certain  credits  claimed  for
federal and state income tax  purposes.  The  provision for income taxes for the
third  quarter of 1996  reflects the impact of the non-tax  deductible  goodwill
amortization related to Enhanced.

         Nine Months Ended September 30, 1997 and 1996:

The  following  table  summarizes  the  operating  results  of the  Company as a
percentage of sales for the periods indicated.

                                                             Nine Months Ended
                                                               September 30,
                                                             -----------------
                                                               1997     1996
                                                               ----     ----

Revenue                                                       100.0%   100.0%
Cost of goods sold                                             66.4%    66.7%
  Gross margin                                                 33.6%    33.3%
                                                              ------   ------
Operating Expenses:
  Engineering and product development                           4.2%     4.7%
  Selling, general and administrative                          23.7%    25.3%
                                                              ------   ------
Operating income                                                5.7%     3.2%
Interest expense                                                1.4%     1.9%
                                                              ------   ------
Pre-tax income                                                  4.3%     1.3%
Income taxes                                                    1.4%    1.0%
                                                              ------   ------
Net income                                                      2.9%     0.3%
                                                              ======   ======


         Revenue

Revenue was  approximately  36.2  million for the first nine months of 1997,  an
increase  of $2.2  million,  or 6.5%,  over the first nine  months of 1996.  The
Company   attributes   approximately  $1.5  million  of  this  increase  to  OEM
relationships entered into in 1997.
                                       8
<PAGE>
         Gross Margin

Gross margin remained relatively constant at 33.6% of revenue for the first nine
months of 1997 as compared with 33.3% in the first nine months of 1996.

         Engineering and Product Development

Expenditures  related to engineering and product development declined $78,000 in
the first nine months of 1997 as compared with the first nine months of 1996.

         Selling, General and Administrative

Selling,  general and administrative expenses declined $14,000 in the first nine
months of 1997 as compared  with the first nine months of 1996.  As a percentage
of revenue,  selling,  general and administrative  expenses declined to 23.7% in
the first nine months of 1997 as compared with 25.2% in the first nine months of
1996. The  recognition of the impairment  loss related to Enhanced in the fourth
quarter of 1996 has eliminated  ongoing  goodwill  amortization of approximately
$115,000 per quarter.

         Interest Expense

Interest expense was approximately  $489,000 in the first nine months of 1997, a
decrease of $166,000, or 25.3%, over the first nine months of 1996. The decrease
is  attributable  to a  decrease  in  average  borrowings  and the effect of the
reduced interest rate in the Company's new credit facility.

         Income Taxes

The Company has provided  for income  taxes using an effective  rate of 33.2% in
the first nine months of 1997.  During the third quarter of 1997,  the effective
tax rate was  reduced to account for the impact of certain  credits  claimed for
Federal and State income tax  purposes.  The  provision for income taxes for the
first six months of 1996 reflects the impact of the non-tax deductible  goodwill
amortization related to Enhanced.

Liquidity and Capital Resources

The  Company's  cash  and  cash  equivalents  remained  relatively  constant  at
approximately  $1.2  million at September  30, 1997 and  December 31, 1996.  The
Company's  cash accounts are swept  regularly and applied  against the Company's
line of credit (as  described  below).  The  Company's  borrowings  against  its
available operating line of credit at September 30, 1997 were approximately $7.2
million,  which  represents a $1.8 million  increase from its borrowings of $5.4
million at December 31, 1996.  The increased  borrowings  are  attributed to the
increases in overall  working  capital.  At September 30, 1997,  the Company had
approximately $2.4 million available to it under its operating line of credit.
                                       9
<PAGE>
The Company  maintains a $12.0  million  line of credit  with  General  Electric
Capital Corporation (GE Capital) which expires in April 2000. The line of credit
bears  interest  at 2.5% over the  30-day  commercial  paper  rate,  or 8.08% at
September 30, 1997.

Advances  under the line of credit are based upon the  accounts  receivable  and
inventories of Vodavi Communications Systems (VCS), a wholly owned subsidiary of
the Company,  and are secured by substantially all of the assets of the Company.
The revolving line of credit  contains  covenants that are customary for similar
credit facilities and also prohibits the Company's  operating  subsidiaries from
paying  dividends to the Company without the consent of GE Capital.  The Company
was in compliance with the covenants at September 30, 1997.

As of September  30, 1997,  the Company has financed  approximately  $800,000 in
capital  expenditures with vendors and third-party leasing companies.  The terms
of these financings  generally provide for interest rates ranging from 9% to 13%
with 24-month repayment periods.

As of September 30, 1997, the Company had commitments in connection with its new
product developments.  Such commitments aggregate approximately $100,000 and are
payable  through  December  31,  1997.  The  commitments   include  payments  in
connection with the development of the Company's wireless product.

The Company  believes  that its working  capital and credit  facilities  will be
sufficient to finance its internal growth for the foreseeable  future.  Although
the Company  currently  has no  acquisition  targets,  it intends to continue to
explore  acquisition  opportunities  as they arise and may be  required  to seek
additional financing in the future to meet such opportunities.
                                       10
<PAGE>
                           PART II - OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

Reference is made to the  disclosure  included  under this Item in the Company's
Quarterly  Report on Form 10-Q for the quarter  ended June 30, 1997, as filed on
August 11, 1997.

Item 2.  CHANGES IN SECURITIES
         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
         a)   Exhibits

         10.31 OEM Agreement dated August 15, 1997 between Vodavi Communications
              Systems, Inc. and Fujitsu Business Communication Systems, Inc.

         27.1 Financial Data Schedule

         b)   Reports on Form 8-K
              Not applicable
                                       11
<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:   November 13, 1997 /s/Glenn R. Fitchet
                           -------------------------------------
                           Glenn R. Fitchet
                           President and Chief Executive Officer
                           (Principal Executive Officer)

Dated:   November 13, 1997 /s/Gregory K. Roeper
                           -------------------------------------
                           Gregory K. Roeper
                           Vice President Finance and
                           Chief Financial Officer
                           (Principal Financial
                           and Accounting Officer)
                                       12