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 June 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 par value
per share, as of July 31, 1997 was 4,342,238.
<PAGE>
                            VODAVI TECHNOLOGY, INC.
                         QUARTERLY REPORT ON FORM 10-Q
                      FOR THE QUARTER ENDED JUNE 30, 1997



                                TABLE OF CONTENTS


                                                                          Page #
PART I.           FINANCIAL INFORMATION

Item 1.           Financial Statements

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

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

                  Consolidated Statements of Cash Flows - Six Month Periods
                  Ended June 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
                                        2
<PAGE>
         PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements



                             VODAVI TECHNOLOGY, INC.
                           CONSOLIDATED BALANCE SHEETS
                                  In thousands





                                                       June 30,     December 31,
                                                         1997            1996
                                                       --------        --------
                                                      (Unaudited)
CURRENT ASSETS:
    Cash                                               $  1,800        $  1,152
    Accounts Receivable, net                              7,927           7,790
    Inventory, net                                        7,188           7,229
    Prepaids                                                569             420
                                                       --------        --------
                                                         17,484          16,591

PROPERTY AND EQUIPMENT, net                               2,653           2,465

GOODWILL, net                                             2,471           2,547

OTHER LONG-TERM ASSETS, net                               1,068             815
                                                       --------        --------
                                                       $ 23,676        $ 22,418
                                                       ========        ========

CURRENT LIABILITIES:
   Current Portion of Long-Term Debt                   $    386        $    258
   Accounts Payable                                       3,558           4,464
   Accrued Liabilities                                    2,490           2,518
                                                       --------        --------
                                                          6,434           7,240
                                                       --------        --------

LONG-TERM DEBT                                            7,230           5,777
                                                       --------        --------

STOCKHOLDERS' EQUITY:
   Common Stock                                               4               4
   Additional Paid-In Capital                            12,308          12,308
   Accumulated Deficit                                   (2,300)         (2,911)
                                                       --------        --------
                                                         10,012           9,401
                                                       --------        --------
                                                       $ 23,676        $ 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         Six Months Ended
                                               June 30,                   June 30,
                                               -------                    ------- 
                                          1997         1996         1997         1996
                                       ----------   ----------   ----------   ----------
<S>                                    <C>          <C>          <C>          <C>       
REVENUE, net                           $   11,917   $   11,900   $   23,445   $   22,256

COST OF GOODS SOLD                          7,944        7,913       15,572       14,836
                                       ----------   ----------   ----------   ----------

   GROSS MARGIN                             3,973        3,987        7,873        7,420

OPERATING EXPENSES
 Engineering and product development          499          535          982        1,035
 Selling, general and administrative        2,739        2,891        5,542        5,667
                                       ----------   ----------   ----------   ----------


OPERATING INCOME                              735          561        1,349          718

INTEREST EXPENSE                              161          207          338          442
                                       ----------   ----------   ----------   ----------

INCOME BEFORE INCOME TAXES                    574          354        1,011          276

PROVISION FOR INCOME TAXES                    227          185          400          206
                                       ----------   ----------   ----------   ----------


NET INCOME                             $      347   $      169   $      611   $       70
                                       ==========   ==========   ==========   ----------

NET INCOME PER SHARE                   $     0.08   $     0.04   $     0.14   $     0.02
                                       ==========   ==========   ==========   ==========

WEIGHTED AVERAGE SHARES
   OUTSTANDING                          4,342,238    4,532,523    4,342,238    4,532,523
                                       ==========   ==========   ==========   ==========
</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)





                                                           Six months ended
                                                               June 30,
                                                               --------
                                                         1997            1996
                                                       --------        --------
OPERATING ACTIVITIES:
  Net Income                                           $    611        $     70
  Adjustments:
    Depreciation and amortization                           326             504
    Rent levelization                                        25              35
    Changes in working capital:
          Accounts receivable                              (189)         (3,115)
          Inventory                                          41           3,015
          Prepaid expenses                                 (148)            101
          Other long term assets                           (258)            (55)
          Accounts payable                                 (905)           (475)
          Accrued liabilities                               (29)            (50)
                                                       --------        --------
NET CASH FLOWS - OPERATING ACTIVITIES                      (526)             30
                                                       --------        --------

INVESTING ACTIVITIES:
  Purchase of Fixed Assets                                 (107)           (331)
                                                       --------        --------
NET CASH FLOWS - INVESTING ACTIVITIES                      (107)           (331)
                                                       --------        --------

FINANCING ACTIVITIES:
  Payments on capital leases                                (66)            (15)
  Debt financing costs paid                                 (23)            --
  Borrowings from GE Capital                             23,517          18,223
  Payments to GE Capital                                (22,147)        (19,264)
                                                       --------        --------
NET CASH FLOWS - FINANCING ACTIVITIES                     1,281          (1,056)
                                                       --------        --------

INCREASE (DECREASE) IN CASH                                 648          (1,357)

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

CASH, end of period                                    $  1,800        $    587
                                                       ========        ========

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
                                  JUNE 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 June 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 which 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  June 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  Standards  Board issued
Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings Per Share."
The new standard  requires dual  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 June 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
                                                                  June 30,
                                                                  --------
                                                            1997          1996
                                                           ------        ------

Revenue                                                    100.0%        100.0%
Cost of goods sold                                          66.7%         66.5%
                                                           ------        ------
  Gross margin                                              33.3%         33.5%
Operating expenses:
   Engineering and product development                       4.1%          4.5%
   Selling, general and administrative                      23.0%         24.3%
                                                           ------        ------
Operating income                                             6.2%          4.7%
Interest expense                                             1.4%          1.7%
                                                           ------        ------
Pre-tax income                                               4.8%          3.0%
Income taxes                                                 1.9%          1.6%
                                                           ------        ------
Net income                                                   2.9%          1.4%
                                                           ======        ======



         Revenue

Revenue remained  relatively constant at approximately $11.9 million in both the
second quarters of 1997 and 1996.

         Gross Margin

Gross margin remained  relatively  constant at approximately 33.3% of revenue in
the second quarter of 1997 as compared with 33.5% in the second quarter of 1996.

         Engineering and Product Development

Expenditures  related to engineering and product development declined $36,000 in
the second quarter of 1997 as compared with the second quarter of 1996.

         Selling, General and Administrative

Selling,  general and  administrative  expenses  declined $152,000 in the second
quarter of 1997 as compared with the second  quarter of 1996. As a percentage of
revenue,  selling,  general  and  administrative  expenses  declined to 23.0% of
revenue  in the  second  quarter  of 1997 as  compared  with 24.3% in the second
quarter 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  $161,000 in the second  quarter of 1996, a
decrease of $46,000,  or 22.2%, over the second 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 (see  Liquidity and Capital
Resources).
                                        7
<PAGE>
         Income Taxes

The Company has provided  for income  taxes using an effective  rate of 39.6% in
the  second  quarter of 1997.  The  provision  for  income  taxes for the second
quarter  of  1996  reflects  the  impact  of  the  non-tax  deductible  goodwill
amortization related to Enhanced.


         Six Months Ended June 30, 1997 and 1996:

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

                                                            Six Months Ended
                                                                 June 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%          4.6%
  Selling, general and administrative                       23.6%         25.5%
                                                           ------        ------
Operating income                                             5.8%          3.2%
Interest expense                                             1.5%          2.0%
                                                           ------        ------
Pre-tax income                                               4.3%          1.2%
Income taxes                                                 1.7%          0.9%
                                                           ------        ------
Net income                                                   2.6%          0.3%
                                                           ======        ======



         Revenue

Revenue was  approximately  $23.4  million for the first six months of 1997,  an
increase of $1.2 million, or 5.3%, over the first six months of 1996.

         Gross Margin

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

         Engineering and Product Development

Expenditures  related to engineering and product development declined $53,000 in
the first six months of 1997 as compared with the first six months of 1996.

         Selling, General and Administrative

Selling,  general and administrative expenses declined $125,000 in the first six
months of 1997 as compared with the first six months of 1996. As a percentage of
revenue,  selling,  general  and  administrative  expenses  declined to 23.6% of
revenue in the first six months of 1997 as compared  with 25.5% in the first six
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 Expenses

Interest expense was  approximately  $338,000 in the first six months of 1997, a
decrease of $104,000 or 23.5% over the first six 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 (See  Liquidity and Capital
Resources).
                                        8
<PAGE>
         Income Taxes

The Company has provided  for income  taxes using an effective  rate of 39.6% in
the first six months of 1997.  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 were  approximately  1.8 million at June
30, 1997 as compared with $1.2 million at December 31, 1996.  The Company's cash
accounts are swept  regularly and applied  against the Company's line of credit.
The  Company's  borrowings  against its available  operating  line of credit (as
described  below)  at June 30,  1997  were  approximately  $6.7  million,  which
represents  a $1.3  million  increase  from its  borrowings  of $5.4  million at
December 31, 1996. The increased  borrowings are attributed to the timing of the
regular  cash  account  sweeps  by the  Company's  lender  as  evidenced  in the
increased  cash and cash  equivalents  at June 30, 1997 as well as  increases in
overall working capital.  At June 30, 1997, the Company had  approximately  $2.9
million available to it under its operating line of credit.

The Company  maintains a $12.0  million  line of credit  with  General  Electric
Capital Corporation (GE Capital). During the second quarter of 1997, the Company
signed an agreement to extend the facility  through April 2000. The terms of the
extension  lowered the interest  rate to 2.5% over the 30-day  commercial  paper
rate, or a total of 8.1% at June 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 June 30, 1997.

As of June 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 provided for interest rates ranging from 9% to 13% with 24-
month repayment periods.

As of June 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.
                                        9
<PAGE>
                           PART II - OTHER INFORMATION

Item 1.           LEGAL PROCEEDINGS

On September  20, 1996,  the Company and Enhanced  filed a lawsuit in the United
States  District  Court for the  District of Arizona  (No.  CIV 96-2184 PHX SMM)
against Michael Mittel and Fereydoun  Taslimi,  former officers and directors of
Enhanced.  The lawsuit  alleges,  among other  things,  that Messrs.  Mittel and
Taslimi violated  federal and Arizona  securities laws and engaged in fraudulent
activities in connection  with the  Company's  acquisition  of Enhanced in 1995;
breached certain terms of their respective  employment  contracts with Enhanced;
and converted  certain  corporate  assets of Enhanced,  breached their fiduciary
duties to Enhanced,  and  misappropriated  certain  corporate  opportunities for
their own  benefit.  The  Company and  Enhanced  are  seeking  compensatory  and
punitive  damages  against  Messrs.  Mittel and Taslimi.  On September 24, 1996,
Messrs.  Mittel and Taslimi filed a lawsuit in the United States  District Court
for the  Northern  District  of Georgia,  Atlanta  Division  (No.  196-CV-2463),
against the Company and Enhanced.  The lawsuit  alleges that  Enhanced  breached
Messrs.  Mittel's and Taslimi's respective  employment agreements by terminating
their employment.

A hearing to determine  appropriate venue for these cases was held in the United
States  District  Court for the District of Arizona in April 1997. The Court has
not  yet  reached  a  decision  on  this  matter.   In  May  1997,  the  parties
unsuccessfully  attempted to settle these matters through mediation. The Company
intends to proceed with its lawsuit  against  Messrs.  Mittel and Taslimi and to
vigorously defend the lawsuit filed by them against the Company and Enhanced.


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 1997 Annual Meeting of Stockholders  was held on
                  May 19,  1997.  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
                  -------                      --------------           --------

                  Steven A. Sherman              3,513,200              658,709
                  Glenn R. Fitchet               4,165,517                6,352
                  K.S. Cho                       4,165,257                6,652
                  Gilbert H. Engels              4,165,517                6,352
                  Stephen A McConnell            4,165,517                6,352
                  William J. Hinz                4,165,257                6,652

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

                  a) Proposal to ratify the  appointment of Arthur  Andersen LLP
                  as the independent auditors of the Company for the fiscal year
                  ending December 31, 1997.

                  Votes in Favor     Opposed      Abstained      Broker Non-Vote
                  --------------     -------      ---------      ---------------

                  3,842,416          1,400        328,093              0
                                       10
<PAGE>
Item 5.           OTHER INFORMATION
                  Not applicable.

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

                  10.13A Vodavi Single Line Telephone  Agreement Extension dated
                  April 4, 1997 between Vodavi Communications  Systems, Inc. and
                  L.G. Srithai Electronics Co., Ltd.

                  10.23 Amended and Restated Credit  Agreement dated as of April
                  11, 1994  between  Vodavi  Communications  Systems,  Inc.  and
                  General Electric Capital Corporation,  as Amended and Restated
                  as of June 11, 1997.

                  10.24 First  Amendment to Stock Pledge and Security  Agreement
                  dated as of June 11, 1997, between Vodavi Technology, Inc. and
                  General Electric Capital Corporation.

                  10.25  Security  Agreement  dated as of June 11, 1997  between
                  Enhanced   Systems,   Inc.   and  General   Electric   Capital
                  Corporation.

                  10.26  Security  Agreement  dated as of June 11, 1997  between
                  Arizona Repair  Services,  Inc. and General  Electric  Capital
                  Corporation.

                  10.27  Guaranty  Agreement  dated as of June 11, 1997,  by and
                  among Arizona Repair Services,  Inc., Enhanced Systems,  Inc.,
                  and General Electric Capital Corporation.

                  10.28 Trademark Security Agreement, dated as of June 11, 1997,
                  by and between Vodavi Communications Systems, Inc. and General
                  Electric Capital Corporation.

                  10.29 Trademark  Security Agreement dated as of June 11, 1997,
                  by and between  Enhanced  Systems,  Inc. and General  Electric
                  Capital Corporation.

                  10.30 Strategic  Alliance Agreement dated May 22, 1997 between
                  Vodavi    Communications    Systems,    Inc.    and   Paradygm
                  Communications, 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:            August 8, 1997        /s/Glenn R. Fitchet
                                        -------------------
                                        Glenn R. Fitchet
                                        President and Chief Executive Officer
                                        (Principal Executive Officer)



Dated:            August 8, 1997        /s/Gregory K. Roeper
                                        --------------------
                                        Gregory K. Roeper
                                        Vice President Finance and
                                        Chief Financial Officer
                                        (Principal Financial and Accounting
                                        Officer)
                                       12