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 March 31, 1999

                           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)


                                 (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 [ ]

The number of shares  outstanding of registrant's  Common Stock, $.001 par value
per share, as of May 10, 1999 was 4,342,238.
<PAGE>
                             VODAVI TECHNOLOGY, INC.
                          QUARTERLY REPORT ON FORM 10-Q
                      FOR THE QUARTER ENDED MARCH 31, 1999

                                TABLE OF CONTENTS

                                                                       Page
PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

          Consolidated Balance Sheets - March 31, 1999
          and December 31, 1998.                                         3

          Consolidated Statements of Operations - Three Months
          Ended March 31, 1999 and 1998.                                 4

          Consolidated Statements of Cash Flows - Three Months
          Ended March 31, 1999 and 1998.                                 5

          Notes to Consolidated Financial Statements.                    6

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                            6

PART II.  OTHER INFORMATION                                             10

          SIGNATURES                                                    11

                                       2
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                             VODAVI TECHNOLOGY, INC.
                           CONSOLIDATED BALANCE SHEETS
                                  In thousands

                                                     March 31,      December 31,
                                                       1999            1998
                                                       ----            ----
                                                    (Unaudited)
CURRENT ASSETS:
     Cash                                            $    697        $    796
     Accounts receivable, net                           8,626           8,888
     Inventory, net                                     5,644           6,385
     Prepaid expenses and other                         1,020             697
                                                     --------        --------
                                                       15,987          16,766

PROPERTY AND EQUIPMENT, net                             2,568           2,663

GOODWILL, net                                           2,207           2,244

OTHER LONG-TERM ASSETS, net                               911           1,169
                                                     --------        --------

                                                     $ 21,673        $ 22,842
                                                     ========        ========

CURRENT LIABILITIES:
     Current portion of long term debt               $     36        $    124
     Accounts payable                                   3,762           2,355
     Accrued liabilities                                1,912           1,854
                                                     --------        --------
                                                        5,710           4,333
                                                     --------        --------

LONG-TERM DEBT                                          5,125           7,910
                                                     --------        --------

STOCKHOLDERS' EQUITY:
     Common stock                                           4               4
     Additional paid-in capital                        12,308          12,308
     Accumulated deficit                               (1,474)         (1,713)
                                                     --------        --------
                                                       10,838          10,599
                                                     --------        --------

                                                     $ 21,673        $ 22,842
                                                     ========        ========

              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)

                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                        1999             1998
                                                        ----             ----

REVENUE, net                                          $   11,307      $   12,005

COST OF GOODS SOLD                                         7,456           8,129
                                                      ----------      ----------

         GROSS MARGIN                                      3,851           3,876

OPERATING EXPENSES
   Engineering and product development                       283             555
   Selling, general and administrative                     3,043           2,911
                                                      ----------      ----------

OPERATING INCOME                                             525             410

INTEREST EXPENSE                                             138             208
                                                      ----------      ----------

INCOME BEFORE INCOME TAXES                                   387             202

PROVISION FOR INCOME TAXES                                   148              78
                                                      ----------      ----------

NET INCOME                                            $      239      $      124
                                                      ==========      ==========

DILUTED EARNINGS PER SHARE                            $     0.06      $     0.03
                                                      ==========      ==========

WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED                                  4,342,238       4,342,238
                                                      ==========      ==========

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

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

                                                          Three months ended
                                                               March 31,
                                                       -------------------------
                                                        1999             1998
                                                        ----             ----
OPERATING ACTIVITIES:
Net income                                             $    239        $    124
  Adjustments:
    Depreciation and amortization                           199             186
    Changes in working capital:
         Accounts receivable                                262             401
         Inventory                                          742             725
         Prepaid expenses and other                        (323)            142
         Other long term assets                             261              20
         Accounts payable                                 1,407          (2,311)
         Accrued liabilities                                 56            (110)
                                                       --------        --------

NET CASH FLOWS - OPERATING ACTIVITIES                     2,843            (823)
                                                       --------        --------

INVESTING ACTIVITIES:
  Purchase of fixed assets                                  (70)           (180)
                                                       --------        --------

NET CASH FLOWS - INVESTING ACTIVITIES                       (70)           (180)
                                                       --------        --------

FINANCING ACTIVITIES:
  Payments on capital leases                                (89)           (104)
  Borrowings from GE Capital                              9,057          13,665
  Payments to GE Capital                                (11,840)        (12,676)
                                                       --------        --------

NET CASH FLOWS - FINANCING ACTIVITIES                    (2,872)            885
                                                       --------        --------

DECREASE IN CASH                                            (99)           (118)

CASH, beginning of period                                   796             634
                                                       --------        --------

CASH, end of period                                    $    697        $    516
                                                       ========        ========

              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
                                 MARCH 31, 1999

a) Vodavi  Technology,  Inc. (the  Company),  a Delaware  corporation,  designs,
develops,  markets, and supports a broad range of telecommunications  solutions,
including   digital   telephone   systems,   voice   processing   systems,   and
computer-telephony products for a wide variety of business 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 March 31,  1999 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, 1998 financial statements and accompanying notes thereto.

(c) Diluted  earnings  per share for the  periods  ended March 31, 1999 and 1998
were determined by dividing net income by the weighted  average number of common
and common equivalent shares  outstanding,  as outlined in Financial  Accounting
Standard (SFAS) No. 128, Earnings Per Share.


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

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1999 AND 1998:

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

                                                      Three Months Ended
                                                           March 31,
                                                      -------------------
                                                       1999         1998
                                                       ----         ----

Revenue                                                100.0%       100.0%
Cost of goods sold                                      65.9%        67.7%
                                                       -----        -----

Gross margin                                            34.1%        32.3%
Operating expenses:
     Engineering and product development                 2.5%         4.6%
     Selling, general and administrative                26.9%        24.3%
                                                       -----        -----

Operating income                                         4.7%         3.4%
Interest expense                                         1.2%         1.7%
                                                       -----        -----

Pre-tax income                                           3.5%         1.7%
Income taxes                                             1.3%          .6%
                                                       -----        -----

Net income                                               2.2%         1.1%
                                                       =====        =====

                                       6
<PAGE>
     REVENUE

Revenue was approximately $11.3 million in the first quarter of 1999, a decrease
of approximately $700,000, or 5.8%, over the first quarter of 1998. The decrease
in  revenue  primarily  reflects  the  Company's  continuing  effort  to  reduce
inventory in the wholesale  distributor  supply channel while focusing its sales
and  marketing  efforts on  "pulling"  the  product  out of the  channel  verses
"pushing" it into the channel through discounting.

     GROSS MARGIN

Gross margin increased to approximately 34.1% of revenue in the first quarter of
1999 as compared with 32.3% in the first  quarter of 1998.  The  improvement  in
gross margin in the first quarter of 1999 is primarily attributable to decreased
discounts  provided to wholesale  customers  during that period as compared with
discounts  given during the first  quarter of 1998.  Gross margin also  improved
slightly  during  the  first  quarter  of  1999 as a  result  of a  decrease  of
approximately  $81,000 for import duties and a decrease of approximately $41,000
for royalties expense.

     ENGINEERING AND PRODUCT DEVELOPMENT

Expenditures  related  to  engineering  and  product  development  decreased  to
approximately  $283,000,  or 2.5% of  revenue,  in the first  quarter of 1999 as
compared with approximately  $555,000,  or 4.6% of revenue, in the first quarter
of 1998.  The decrease was due to the  elimination  of several  engineering  and
product development positions within the Company during fiscal 1998. The Company
believes the  elimination of these  positions will have no effect on new product
development.

     SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses remained relatively flat during the
first quarter of 1999 as compared with the first quarter of 1998.

     INTEREST EXPENSE

Interest  expense was  approximately  $138,000 in the first  quarter of 1999,  a
decrease of $70,000,  or 33.7%,  over the first quarter of 1998. The decrease is
attributable  to a  decrease  in  average  borrowings  as a  result  of  reduced
inventory levels.

     INCOME TAXES

The Company has provided  for income  taxes using an effective  rate of 38.2% in
the first quarter of 1999, as compared with 38.6% in the first quarter of 1998.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash of approximately  $697,000 at March 31, 1999. 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 March 31, 1999,  were  approximately  $4.9 million,
which  represents a decrease of $2.8 million from its borrowings of $7.7 million
at December 31, 1998. At March 31, 1999,  availability  was $4.1  million,  with
$200,000  reserved for standby letters of credit and $1.25 million  reserved for
maintaining  the minimum  availability  covenant,  with a net  available of $2.7
million.

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 7.35% at March
30,  1999.  Advances  under  the line of  credit  are  based  upon the  accounts
receivable and inventory balances of Vodavi Communications  Systems, Inc. (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  

                                       7
<PAGE>
for  similar  credit  facilities  and also  prohibits  the  Company's  operating
subsidiaries  from paying  dividends  to the  Company  without the consent of GE
Capital.  At March 31,  1999,  the  Company  was in  compliance  with all of the
covenants.

The Company has financed  approximately  $800,000 in capital  expenditures  with
third-party leasing companies.  The terms of these financings  generally provide
for interest rates at approximately 13% with 24-month repayment  periods.  As of
March 31, 1999,  the net remaining  balance under these leases is  approximately
$36,000.

The  Company  believes  that its  working  capital  and  credit  facilities  are
sufficient to finance its internal growth in the near term. 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.

INTERNATIONAL MANUFACTURING SOURCES

The  Company   currently   obtains   certain  of  its  products   under  various
manufacturing  arrangements  with  third-party  manufacturers in Asia. As of the
date of this  Report,  the Company  does not believe  that the current  economic
situation in Asia will have any adverse impact on the Company's operations.

YEAR 2000 COMPLIANCE

Many currently  installed  computer  systems and software  products are coded to
accept  only  two-digit  entries  to  represent  years in the date  code  field.
Computer  systems and products that do not accept  four-digit  year entries will
need to be  upgraded or replaced  to accept  four-digit  entries to  distinguish
years  beginning  with 2000 from prior years.  The Company has initiated but has
not yet  completed  an  internal  system  assessment  to  determine  whether its
existing computer hardware and software systems are "Year 2000" compliant.

The Company  currently is evaluating its entire internal computer system and has
engaged a third-party  consultant  in connection  with the upgrade of certain of
its existing  financial and accounting  systems,  including  software related to
order entry, inventory management,  materials planning, and accounts payable and
receivable.  These  upgrades are intended to improve the content,  quality,  and
flow of  information  within the  Company,  as well as to address  any Year 2000
issues that may exist. As of the filing date of this Report,  these projects are
approximately  75 to 85%  complete.  The  Company  currently  plans  to test the
upgrades to this  system in May 1999.  The  Company  estimates  that the cost of
these upgrades will be approximately $25,000.

The Company has been advised that certain of the computer  processing  platforms
and  networks  and  certain   software  systems  used  in  connection  with  its
operations, other than the financial and accounting systems described above, may
not be Year 2000  compliant.  The Company  currently is assessing  the extent of
such non-compliance and intends to develop a program to bring those systems into
Year 2000 compliance  during calendar 1999. A failure of its computer systems as
a result  of Year  2000  issues  could  have a  material  adverse  effect on the
Company's operations.

A significant portion of the Company's business  communications systems products
is  manufactured by third parties in Asia. The Company has initiated but has not
yet completed an assessment of the Year 2000 risks associated with the inability
of  those   manufacturers  to  bring  their   production   processes  and  other
computer-based  systems  into Year 2000  compliance.  Because the  manufacturing
processes  utilized  do not rely  upon  date-related  information,  the  Company
currently  believes that a failure on the part of its overseas  manufacturers to
bring their processes and equipment into Year 2000 compliance does not represent
a material  risk to the  Company's  ability to obtain its  products  on a timely
basis. As part of this  assessment,  all of the  manufacturers  have advised the
Company that their processes and systems are Year 2000 compliant.

Certain of the  Company's  products  contain  software and hardware that perform
functions based upon date-related information.  The Company has identified those
of its existing  products  that are not Year 2000  compliant  and has  completed
development of upgrades or modifications to those products that will enable them
to process Year 2000 dates without malfunctioning.  The Company believes that it
will be able to pass along to its customers costs related 

                                       8
<PAGE>
to upgrading  installed  products  that are no longer  covered by the  Company's
product  warranties.  The  Company  also  believes  that the  costs  related  to
upgrading  installed products that remain under the Company's product warranties
would  be  relatively   insignificant.   To  date,   the  Company  has  incurred
approximately  $15,000 in costs  associated  with the  development  of Year 2000
compliance  upgrades.  The  inability of the Company to develop and provide on a
timely  basis  product  modifications  that may be  required  could  result in a
material  adverse effect on the Company,  including  increased  warranty  costs,
customer satisfaction issues, and potential litigation.

The  Company  is unable to fully  assess the impact of the Year 2000 issue as of
the filing date of this Report.  The Company  currently is  evaluating  the Year
2000  issue as it  relates  to  computer  systems  operated  by all of the third
parties,   including   manufacturers,   suppliers,   customers,   and  financial
institutions,  with which the Company's  systems  interface.  The failure of the
Company's computer system or the systems of third parties to timely achieve Year
2000 compliance could have a material adverse effect on the Company's  business,
financial  condition,  and  operating  results.  As of the  filing  date of this
Report,  the Company has not  formulated a contingency  plan with respect to the
Year 2000 compliance issues described above.











----------
This report contains forward-looking statements,  including statements regarding
the  Company's  business and the industry in which the Company  operates.  These
forward-looking statements are based primarily on the Company's expectations and
are subject to a number of risks and uncertainties, some of which are beyond the
Company's   control.   Actual   results   could  differ   materially   from  the
forward-looking  statements as a result of numerous factors, including those set
forth in the Company's  Form 10-K for the year ended December 31, 1998, as filed
with the Securities and Exchange Commission.

                                       9
<PAGE>
                           PART II - OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS
          Not applicable.


Item 2.   CHANGES IN SECURITIES

          On  February 4, 1999,  the  Company  entered  into an  agreement  with
          Continental  Capital & Equity  Corporation  ("CCEC")  under which CCEC
          will provide investor  relations  services to the Company.  Under that
          agreement,  the Company agreed to issue to CCEC five-year  warrants to
          purchase an aggregate of 122,500 shares of the Company's  common stock
          at the following exercise prices:

          *  22,500 shares at an exercise price of $4.00 per share;

          *  20,000 shares at an exercise price of $4.50 per share;

          *  20,000 shares at an exercise price of $5.00 per share;

          *  20,000 shares at an exercise price of $5.50 per share;

          *  20,000 shares at an exercise price of $6.00 per share; and

          *  20,000 shares at an exercise price of $6.50 per share.

          The  Company  issued  the  warrants  without  registration  under  the
          Securities  Act of 1933 in reliance on Section 4(2) of the  Securities
          Act.

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
            Exhibit 27.1 Financial Data Schedule

        b)  Reports on Form 8-K
            Not applicable

                                       10
<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: May 10, 1999                     /s/ Gregory K. Roeper
                                        ---------------------------------------
                                        Gregory K. Roeper
                                        President, Chief Operating Officer
                                        Executive Vice President Finance,
                                        Administration and Operations;
                                        Chief Financial Officer; Secretary; and
                                        Treasurer (Principal Financial and
                                        Accounting Officer)