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 June 30, 2000

                           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 August 10, 2000 was 4,305,088.
<PAGE>
                    VODAVI TECHNOLOGY, INC. AND SUBSIDIARIES
                          QUARTERLY REPORT ON FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 30, 2000

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets - June 30, 2000
         and December 31, 1999.                                               3

         Condensed Consolidated  Statements of Operations - Three and
         Six Months Ended June 30, 2000 and 1999.                             4

         Condensed Consolidated Statements of Cash Flows - Six Months
         Ended June 30, 2000 and 1999.                                        5

         Notes to Condensed Consolidated Financial Statements.                6

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

Item 3.  Quantitative and Qualitative Disclosures about Market Risk          10

PART II. OTHER INFORMATION                                                   12

         SIGNATURES                                                          13

                                       2
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                    VODAVI TECHNOLOGY, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                  IN THOUSANDS


                                                       June 30,     December 31,
                                                         2000           1999
                                                       --------       --------
                                                      (Unaudited)
CURRENT ASSETS:
  Cash                                                 $  1,328       $  1,528
  Accounts receivable, net                                9,876         10,530
  Inventory                                               7,160          6,550
  Prepaids and other current assets                         760          1,037
                                                       --------       --------
     Total current assets                                19,124         19,645

PROPERTY AND EQUIPMENT, net                               2,216          2,356

GOODWILL, net                                             1,839          1,906

OTHER LONG-TERM ASSETS, net                               1,156          1,307
                                                       --------       --------
                                                       $ 24,335       $ 25,214
                                                       ========       ========
CURRENT LIABILITIES:
  Accounts payable                                     $  3,797       $  2,990
  Accrued liabilities                                     1,649          1,546
  Revolving credit facility                               6,562          8,672
                                                       --------       --------
     Total current liabilities                           12,008         13,208
                                                       --------       --------

OTHER LONG-TERM OBLIGATIONS                                 167            186
                                                       --------       --------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Common Stock                                                5              4
  Additional Paid-In Capital                             13,170         12,334
  Accumulated Deficit                                      (427)          (473)
  Treasury Stock                                           (588)           (45)
                                                       --------       --------
                                                         12,160         11,820
                                                       --------       --------
                                                       $ 24,335       $ 25,214
                                                       ========       ========

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

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


                                        Three Months Ended     Six Months Ended
                                             June 30,              June 30,
                                         -----------------     -----------------
                                          2000      1999        2000      1999
                                         -------   -------     -------   -------

REVENUE, net                             $12,980   $12,641     $22,444   $23,948

COST OF GOODS SOLD                         8,209     8,192      14,080    15,662
                                         -------   -------     -------   -------
GROSS MARGIN                               4,771     4,449       8,364     8,286

OPERATING EXPENSES
  Engineering and product development        427       415         818       730
  Selling, general and administrative      3,475     3,519       7,091     6,515
                                         -------   -------     -------   -------
OPERATING INCOME                             869       515         455     1,041

INTEREST EXPENSE                             177       150         365       289
                                         -------   -------     -------   -------
INCOME BEFORE INCOME TAXES                   692       365          90       752

PROVISION FOR INCOME TAXES                   266       133          44       281
                                         -------   -------     -------   -------

NET INCOME                               $   426   $   232     $    46   $   471
                                         =======   =======     =======   =======

BASIC EARNINGS PER SHARE                 $  0.10   $  0.05     $  0.01   $  0.11
                                         =======   =======     =======   =======
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC                        4,324     4,342       4,273     4,342
                                         =======   =======     =======   =======

DILUTED EARNINGS PER SHARE               $  0.10   $  0.05     $  0.01   $  0.11
                                         =======   =======     =======   =======
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED                      4,324     4,342       4,344     4,342
                                         =======   =======     =======   =======

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

                                        4
<PAGE>
                    VODAVI TECHNOLOGY, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  IN THOUSANDS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                         Six months ended
                                                                             June 30,
                                                                       --------------------
                                                                        2000         1999
                                                                       -------      -------
<S>                                                                   <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                                           $    46       $   471
 Adjustments to reconcile net income to net cash
  provided by (used in) operating activities
  Depreciation and amortization                                           382           299
  Loss on sale of repair center division                                   --            95
  Rent levelization                                                       (19)           (9)
 Changes in working capital:
  Accounts receivable, net                                                654        (1,154)
  Inventory                                                              (610)         (671)
  Prepaids and other current assets                                       277        (1,488)
  Other long-term assets, net                                             143             8
  Accounts payable                                                        807         2,428
  Accrued liabilities                                                     103          (403)
                                                                      -------       -------
       Net cash flows provided by (used in) operating activities        1,783          (424)
                                                                      -------       -------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of property and equipment                                      (167)         (151)
 Proceeds from sale of repair center division                              --           100
                                                                      -------       -------
       Net cash flows used in investing activities                       (167)          (51)
                                                                      -------       -------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Net payments on revolving credit facility                             (2,110)          155
 Purchase of common stock                                                (543)           --
 Stock options exercised                                                  837            --
 Payments on capital leases                                                --          (124)
                                                                      -------       -------
       Net cash flows (used in) provided by financing activities       (1,816)           31
                                                                      -------       -------
DECREASE IN CASH                                                         (200)         (444)

CASH, beginning of period                                               1,528           796
                                                                      -------       -------

CASH, end of period                                                   $ 1,328       $   352
                                                                      =======       =======
</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                        5
<PAGE>
                    VODAVI TECHNOLOGY, INC. AND SUBSIDIARIES
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED
                                  JUNE 30, 2000


(a)  Vodavi  Technology,  Inc.,  and  subsidiaries  (the  Company),  a  Delaware
     corporation,  designs,  develops,  markets,  and  supports a broad range of
     business telecommunication  solutions,  including telephony products, voice
     processing products, and computer-telephony products, for a wide variety of
     business  applications.  The Company markets its products  primarily in the
     United States as well as in foreign countries through a distribution  model
     consisting of wholesale  distributors,  direct dealers,  and its own direct
     sales personnel.

(b)  The accompanying unaudited condensed 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 June 30, 2000 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,
     1999 financial statements and accompanying notes thereto.

(c)  Diluted  earnings  per share for the  periods  ended June 30, 2000 and 1999
     were  determined by dividing net income by the weighted  average  number of
     common shares and dilutive securities outstanding, as outlined in Statement
     of Financial Accounting Standard (SFAS) No. 128, EARNINGS PER SHARE.

(d)  The Company has  determined  that it operates one reportable  segment,  the
     distribution of telecommunications equipment. The Company has three product
     categories - telephony, voice processing, and computer-telephony;  however,
     each of  these  does  not  meet the  segment  criteria  for  SFAS No.  131,
     DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED  INFORMATION.  As a
     result of the foregoing,  the Company has determined that it is appropriate
     to present one reportable  segment consistent with the guidance in SFAS No.
     131.  Accordingly,   the  Company  has  not  presented  separate  financial
     information  for  each  product  category,  as the  Company's  consolidated
     financial statements present its one reportable segment.

(e)  The  Company  is a  defendant  in  various  lawsuits.  See  Item 3,  "Legal
     Proceedings"  included  in the  Company's  Form  10-K  for the  year  ended
     December 31, 1999.  There have been no  significant  developments  in these
     lawsuits  since the filing of the Company's  Form 10-K. The Company has not
     made any  provisions in its financial  statements for these  lawsuits.  The
     imposition of damages in any of these matters could have a material adverse
     effect on the Company's results of operations and financial position.  From
     time to  time,  the  Company  also  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  the  Company's   financial   position  or  results  of
     operations.  The Company cannot provide  assurance,  however,  that damages
     that  result  in a  material  adverse  effect  on the  Company's  financial
     position or results of operations will not be imposed in these matters.

(f)  On December 3, 1999,  the  Securities  and Exchange  Commission  staff (the
     Staff) issued Staff  Accounting  Bulletin (SAB) 101,  REVENUE  RECOGNITION.
     Subsequent  to its  issuance,  the  Staff  elected  to defer  the  required
     implementation  date.  The Company will be required to adopt SAB 101 during
     the fourth  quarter of 2000.  Management  believes that the adoption of SAB
     101 will not have a material impact on the Company's  financial position or
     results of operations.

(g)  In June 1998, the Financial  Accounting  Standards Board (FASB) issued SFAS
     No. 133 (as amended by SFAS No. 137), ACCOUNTING FOR DERIVATIVE INSTRUMENTS
     AND  HEDGING  ACTIVITIES,  which  requires  that an  entity  recognize  all
     derivatives  as either assets or  liabilities in the statement of financial
     position and measure those  instruments at fair value. The issuance of SFAS
     No. 137,  ACCOUNTING FOR DERIVATIVE  INSTRUMENTS  AND HEDGING  ACTIVITIES -
     DEFERRAL OF THE  EFFECTIVE  DATE OF FASB  STATEMENT  NO.  133,  delayed the
     required effective date of SFAS No. 133 to all fiscal years beginning after
     June 15,  2000.  The  Company  will be  required  to adopt SFAS No. 133, as
     amended, on January 1, 2001.  Management does not believe that the adoption
     of SFAS No. 133, as amended,  will have a material impact on its results of
     operations or financial position.

                                        6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2000 AND 1999:

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

                                                            Three Months Ended
                                                                 June 30,
                                                            -------------------
                                                            2000          1999
                                                            -----         -----
Revenue                                                     100.0%        100.0%
Cost of goods sold                                           63.2%         64.8%
                                                            -----         -----
Gross margin                                                 36.8%         35.2%
Operating expenses:
  Engineering and product development                         3.3%          3.3%
  Selling, general and administrative                        26.8%         27.8%
                                                            -----         -----
Operating income                                              6.7%          4.1%
Interest expense                                              1.4%          1.2%
                                                            -----         -----
Income before income taxes                                    5.3%          2.9%
Provision for income taxes                                    2.0%          1.1%
                                                            -----         -----
Net income                                                    3.3%          1.8%
                                                            =====         =====

REVENUE

Revenue  was $13.0  million  in the  second  quarter  of 2000,  an  increase  of
$339,000,  or 2.7%,  from the second quarter of 1999. This increase is primarily
attributable to an increase of $2.1 million,  or 99%, in INFINITE  dealer-direct
revenue. The increase in INFINITE revenue is primarily due to the addition of 40
large-volume,  well-qualified  new dealers during the fourth quarter of 1999 and
the first quarter of 2000.

The increase in revenue for the  INFINITE  dealer-direct  channel was  partially
offset by a decrease  of $1.1  million,  or 12%, in the  wholesale  distribution
channel.  This  distribution  channel decrease was the net effect of the planned
migration  from our older digital key  telephone  systems and  commercial  grade
telephones  into  newer  product  lines,  offset by growth in sales of the Triad
program.  The  Triad  program,  which is a  dealer-direct  program  through  our
wholesale distribution channel, increased $1.0 million, or 47%.

Additionally, Vodavi-CT revenue was approximately $480,000 in the second quarter
of 2000, a decrease of $477,000,  or 50%, from the second quarter of 1999.  This
decrease is  attributable  to various  factors  including: (a)  decreases in the
Company's sales of high margin software license royalties, and (b) the Company's
efforts to develop new vertical markets that it believes are comprised of larger
accounts with a longer sales cycle.  As a result of the longer sales cycle,  the
Company had not yet generated revenue from these new markets.

Repair revenue  decreased  $210,000  compared to second quarter 1999, due to the
sale of the repair center division during the second quarter of 1999.

Total voice processing  revenues for all channels increased by $84,000, or 3.5%,
to $2.5 million.

                                        7
<PAGE>
GROSS MARGIN

Gross  margin  increased  to 36.8% of revenue  in the second  quarter of 2000 as
compared  with 35.2% in the second  quarter of 1999.  The  improvement  in gross
margin  in the  second  quarter  of  2000  was  mainly  attributable  to  margin
improvements for voice mail products.  Sales of  higher-margin  voice processing
products  increased  from 19.1% of total revenue in second quarter 1999 to 19.3%
of total revenue in second quarter 2000. Additional  improvement in gross margin
was attributable to a decrease in import duties.

ENGINEERING AND PRODUCT DEVELOPMENT

For the quarter ended June 30, 2000,  expenditures  related to  engineering  and
product development  remained consistent with expenditures in the second quarter
of 1999.

SELLING, GENERAL AND ADMINISTRATIVE

Selling,  general  and  administrative  expenses  decreased  by  $44,000 to $3.5
million in the second  quarter of 2000 as  compared  to the same period in 1999.
This decrease is the net effect of a number of factors including:  (a) decreased
rent  expense  due to the  sublease of the repair  center  facility in the third
quarter of 1999; (b) an increase in personnel-related  costs; (c) an increase in
professional  fees;  and (d)  increases  in the  reserve for  doubtful  accounts
receivable.

INTEREST EXPENSE

Interest  expense  increased  to  $177,000  in the second  quarter  of 2000,  as
compared with $150,000 in the second  quarter of 1999.  The $27,000  increase is
primarily  due to an increase in the interest rate on our line of credit for the
second  quarter  of 2000 as  compared  to the same  period in 1999.  The line of
credit bears interest at 2.5% over the 30-day commercial paper rate.

INCOME TAXES

We recorded a tax provision of $266,000, or 38.4% effective rate, for the second
quarter of 2000 as compared with a tax provision  utilizing an effective rate of
36.4%,  or $133,000,  for the second  quarter of 1999.  The provision for second
quarter  2000  is  slightly  higher  due  to the  utilization  of  research  and
development credits in prior year.

SIX MONTHS ENDED JUNE 30, 2000 AND 1999:

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

                                                             Six Months Ended
                                                                 June 30,
                                                            -------------------
                                                            2000          1999
                                                            -----         -----
Revenue                                                     100.0%        100.0%
Cost of goods sold                                           62.7%         65.4%
                                                            -----         -----
  Gross margin                                               37.3%         34.6%
Operating Expenses:
  Engineering and product development                         3.6%          3.1%
  Selling, general and administrative                        31.7%         27.2%
                                                            -----         -----
Operating income                                              2.0%          4.3%
Interest expense                                              1.6%          1.2%
                                                            -----         -----
Income before income taxes                                     .4%          3.1%
Provision for income taxes                                     .2%          1.1%
                                                            -----         -----
Net income                                                     .2%          2.0%
                                                            =====         =====

                                        8
<PAGE>
REVENUE

Revenue was  approximately  $22.4  million  for the first six months of 2000,  a
decrease of  approximately  $1.5 million,  or 6.3%, over the first six months of
1999.  Wholesale  distribution  revenue decreased by approximately $4.3 million.
This decrease is primarily due to a decision,  during the first quarter of 2000,
by one of our major  wholesale  distribution  customers to reduce its  inventory
levels. Sales through this distribution channel was also impacted by our planned
migration  from our older digital key  telephone  systems and  commercial  grade
telephones into newer product lines.

We sold our repair center  division  during the second  quarter of 1999.  Repair
revenue decreased by $444,000 during the first six months of 2000. The decreases
in revenue were partially  offset by an increase in revenue through the INFINITE
dealer-direct channel. INFINITE revenue increased approximately $3.1 million, or
75%. Total voice processing  revenue for all channels increased by 15.6% to $4.7
million.

GROSS MARGIN

Gross  margin  increased  to  approximately  37.3% of revenue  for the first six
months of 2000 as  compared  with  34.6% for the first six  months of 1999.  The
improvement  in gross margin is primarily due to changes in product mix as sales
of higher-margin voice processing products increased from 17.1% of total revenue
in 1999 to 21.1% of total revenue in 2000. Other factors include the elimination
of  expenses  related to our repair  center  division,  which we sold during the
second quarter of 1999, and decreased import duties.

ENGINEERING AND PRODUCT DEVELOPMENT

Expenditures related to engineering and product development increased by $88,000
to approximately  $818,000,  or 3.6% of revenue, in the first six months of 2000
as compared with  $730,000 or 3.1% of revenue,  in the first six months of 1999.
The  increase  was  primarily  due  to  salaries  and  related  personnel  costs
associated with additional headcount.

SELLING, GENERAL AND ADMINISTRATIVE

Selling,  general and  administrative  expenses increased by $576,000 during the
first six months of 2000 to $7.1  million as  compared  to $6.5  million for the
same  period in 1999.  This  increase  is the net effect of a number of factors,
including: (a) an  increase  in  personnel-related  costs;  (b) an  increase  in
professional  fees; (c) increased  efforts in our marketing and sales  programs;
(d) increases in the reserve for doubtful accounts receivable; and (e) decreased
rent expense due to sublease of the repair center  facility in the third quarter
of 1999.

INTEREST EXPENSE

Interest expense was  approximately  $365,000 in the first six months of 2000, a
$76,000,  or 26.3%,  increase over the first six months of 1999. The increase is
attributable  to an increase in the interest  rate,  which is calculated at 2.5%
over the 30-day  commercial  paper  rate,  and also higher  average  outstanding
borrowings on our line of credit during the first six months of 2000 as compared
to the same period in 1999.  Although  accounts  receivable  collections for the
first  six  months  of 2000  were  higher  than the  same  period  in  1999,  we
experienced  higher  cash  outlays  as a direct  result  of  funding  additional
operating  costs  discussed above and an increase in inventory of $610,000 since
December 31, 1999.

INCOME TAXES

We recorded a tax benefit of  $222,000,  or 37.0%  effective  rate for the first
quarter of 2000,  and a tax provision of $266,000,  or 38.4%  effective rate for
the second quarter of 2000, as compared with a tax provision of $281,000, 37.4%,
in the first six months of 1999.

                                        9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

We had $1.3  million  of cash at June 30,  2000.  Our cash  accounts  are  swept
regularly and applied  against our line of credit,  as described  below.  We had
borrowings of approximately $6.6 million against our available operating line of
credit at June 30,  2000,  which  represents  a decrease  of $2.1  million  from
borrowings of $8.7 million at December 31, 1999.  This decrease is primarily due
to the  timing  of  payments  received  on  accounts  receivable  balances  from
customers,  payments on  accounts  payable  balances  to vendors,  and cash flow
generated  in  first  six  months.  At June  30,  2000,  amounts  available  for
additional  borrowing  totaled  $3.5  million.   Working  capital  increased  to
approximately  $7.1 million at June 30, 2000 from  approximately $6.4 million at
December 31, 1999.

We maintain a $15.0  million  credit  facility  with  General  Electric  Capital
Corporation  that expires in April 2003.  The line of credit  bears  interest at
2.5% over the 30-day commercial paper rate, or 9.07% at June 30, 2000.  Advances
under the line of  credit  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 revolving line of credit
contains  covenants  that are customary for similar  credit  facilities and also
prohibit our operating subsidiaries from paying dividends to our company without
the consent of GE Capital.  At June 30, 2000, we were in compliance  with all of
the covenants.

In October  1999,  our Board of  Directors  approved a buy-back of up to 400,000
shares of our outstanding  common stock over a six-month  period. In April 2000,
the program was extended  through  October  2000.  Financing for the buy-back is
provided  through our line of credit and proceeds from option  exercises.  As of
June 30, 2000,  we had  repurchased  240,600  shares with a  cumulative  cost of
$588,000 under this program.

During the first  quarter of 2000,  net  receipts  from the  exercise of 211,250
common stock  options  amounted to $837,000.  There were no common stock options
exercised during the second quarter of 2000.

We are a defendant in various  lawsuits.  We have not made any provisions in our
financial  statements  for these  lawsuits.  The imposition of damages in any of
these matters could have a material  adverse effect on our results of operations
and financial position.

From time to time we also 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
finance our  internal  growth in the near term.  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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At June 30, 2000, we did not participate in any derivative financial instruments
or other  financial and commodity  instruments  for which fair value  disclosure
would be required under Statement of Financial  Accounting Standards No. 107. 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  instruments.  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 9.07% at June 30,  2000.  The  principal  of loans under this line of
credit is due in April 2003. At June 30, 2000 we had  outstanding  borrowings on
the line of credit of approximately $6.6 million.

                                       10
<PAGE>
This report contains forward-looking statements,  including statements regarding
our  business,   strategies,  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, 1999, as filed with the Securities and
Exchange Commission.

                                       11
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Not applicable

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

     The  Company's  2000 Annual  Meeting of  Stockholders  was held on June 19,
     2000.  The  following  nominees  were  elected  to the  Company's  Board of
     Directors  to  serve  until  their  successors  are  elected  or have  been
     qualified, or until their earlier resignation or removal:

     Nominee                          Votes in Favor               Withheld
     -------                          --------------               --------
     William J. Hinz                    3,741,214                   21,274
     Gregory K. Roeper                  3,741,914                   20,574
     Jae H. Bae                         3,739,914                   22,574
     Gilbert H. Engels                  3,741,714                   20,774
     Stephen A  McConnell               3,741,914                   20,574
     Emmett E. Mitchell                 3,741,264                   21,224

     The following item was voted upon by the Company's stockholders:

     a)   Proposal to amend the Second  Amended and  Restated  1994 Stock Option
          Plan.

     Votes in Favor            Opposed         Abstained         Broker Non-Vote
     --------------            -------         ---------         ---------------
       1,640,030               156,408           27,280             1,938,770

ITEM 5. OTHER INFORMATION

     Not applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     a)   Exhibits

          Exhibit 27 Financial Data Schedule

     b)   Reports on Form 8-K

          Not applicable

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<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: August 10, 2000                  /s/ Gregory K. Roeper
                                        ----------------------------------------
                                        Gregory K. Roeper
                                        President and Chief Executive Officer
                                        (Principal Executive Officer)



Dated: August 10, 2000                  /s/ Tammy M. Powers
                                        ----------------------------------------
                                        Tammy M. Powers
                                        Chief Financial Officer, Vice President
                                        - Finance, Treasurer, and Secretary
                                        (Principal Financial and Accounting
                                        Officer)

                                       13