Vodavi Announces Second Quarter 2006 Financial Results; 3.9% Revenue Hike Driven by VoIP Terminal Sales

Vodavi Technology Inc. (Nasdaq: VTEK), a provider of
business telecommunications solutions, today announced results for its
second quarter ended June 30, 2006.
   For the second quarter of 2006, the company reported an increase
in revenue of 3.9 percent to $11.0 million compared with revenue of
$10.6 million in the second quarter of 2005. Net income totaled
$401,000, or $0.10 per diluted share, in the most recent quarter
compared with net income of $369,000, or $0.09 per diluted share, in
the comparable period of 2005.
   For the first half of 2006, the company reported an increase in
revenue of 2.7 percent to $21.0 million compared with $20.5 million
during the first half of 2005. Net income totaled $605,000, or $0.15
per diluted share, during the most recent six months compared with net
income of $563,000, or $0.14 per diluted share, during the same period
of 2005.
   Gregory K. Roeper, chief executive officer, stated, "We are
starting to see positive results from the business alliances we
announced earlier in the year related to the hosted IP services
market. Sales of our IP terminals have accelerated and we continue to
expect increases in this product line in the future. We are pleased
that even with our increased investments into these programs, that we
were still able to leverage the increased revenues into increased
earnings very quickly."
   For a more detailed discussion of the company's financial results,
please refer to the company's Form 10-Q for the quarterly period ended
June 30, 2006, filed with the Securities and Exchange Commission.

   Teleconference Information

   The company has scheduled a teleconference to discuss its results
on Wednesday August 2, 2006, at 5 p.m. Eastern time. To participate
in the teleconference, please dial 800-834-7251 at least 10 minutes
prior to the start of the call. International participants should dial
706-645-9291. Please refer to Conference ID: 3898824.
   A replay of the teleconference will be available beginning August
2, 2006, at approximately 7 p.m. Eastern time through August 30,
2006. To listen to the replay by phone, dial 800-642-1687. If calling
internationally, please call 706-645-9291. Please refer to Conference
ID: 3898824.

   About Vodavi

   Vodavi Technology Inc. is an advanced telephony solutions provider
delivering innovative business communications solutions that help
small to large enterprises increase productivity and reduce costs.
Vodavi's full range of telephony solutions include traditional
telephone systems, Voice-over-IP (VoIP) technology and converged
telephony solutions that allow enterprises to deploy traditional
digital or VoIP communications simultaneously, providing a flexible
and cost-effective migration path to new technology. The company is
headquartered in Phoenix. For more information on Vodavi, visit
www.vodavi.com.

   This press release contains forward-looking statements, including
statements regarding the company's business strategies, the company's
business, and the industry in which the company operates as well as
expectations regarding revenue and income levels, and the market
acceptance of new product introductions. These forward-looking
statements are based primarily on the company's current expectations
and are subject to a number of risks and uncertainties, some of which
are out of 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 filed with the Securities and Exchange
Commission.

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                        VODAVI TECHNOLOGY INC.
       UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 In thousands except per share amounts

                                 Three Months Ended  Six Months Ended
                                      June 30,            June 30,
                                 ------------------  -----------------
                                    2006     2005      2006     2005
                                 --------- --------  -------- --------

REVENUE, net                      $11,008  $10,598   $21,013  $20,464

COST OF GOODS SOLD                  6,995    6,737    13,548   13,129
                                 --------- --------  -------- --------

GROSS MARGIN                        4,013    3,861     7,465    7,335
                                 --------- --------  -------- --------

OPERATING EXPENSES:
Engineering and product
 development                          543      500     1,021    1,018
Selling, general and
 administrative                     2,886    2,787     5,585    5,442
                                 --------- --------  -------- --------
                                    3,429    3,287     6,606    6,460
                                 --------- --------  -------- --------

OPERATING INCOME                      584      574       859      875

INTEREST INCOME                        63       21       117       33
                                 --------- --------  -------- --------

INCOME BEFORE INCOME TAXES            647      595       976      908

INCOME TAX PROVISION                  246      226       371      345
                                 --------- --------  -------- --------

NET INCOME                           $401     $369      $605     $563
                                 ========= ========  ======== ========


EARNINGS PER COMMON SHARE:
   Diluted                          $0.10    $0.09     $0.15    $0.14
                                 ========= ========  ======== ========

WEIGHTED AVERAGE SHARES
 OUTSTANDING:
   Diluted                          4,104    4,092     4,110    4,118
                                 ========= ========  ======== ========
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                        VODAVI TECHNOLOGY INC.
            UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                   In thousands except share amounts

                                                   June 30,   Dec. 31,
                                                     2006       2005
                                                  ---------  ---------
CURRENT ASSETS:
  Cash                                              $6,788     $6,538
  Accounts receivable, net                           6,486      7,126
  Inventory                                          3,437      3,543
  Deferred income taxes                                446        446
  Prepaids and other current assets                  1,103        508
                                                  ---------  ---------
     Total current assets                           18,260     18,161

PROPERTY AND EQUIPMENT, net                          1,146      1,228

DEFERRED INCOME TAXES                                  168        168

OTHER LONG-TERM ASSETS                                  58         45
                                                  ---------  ---------
                                                   $19,632    $19,602
                                                  =========  =========

CURRENT LIABILITIES:
  Trade accounts payable                              $702       $451
  Accrued liabilities                                  953        944
  Accrued rebates                                      471        453
  Trade accounts payable to stockholder              3,326      4,097
                                                  ---------  ---------
     Total current liabilities                       5,452      5,945


STOCKHOLDERS' EQUITY
  Preferred Stock                                        -          -
  Common Stock, $.001 par value; 3,860,849 and
   3,850,974 shares issued, respectively                 4          4
  Additional paid-in capital                        11,851     11,814
  Retained Earnings                                  2,832      2,227
  Treasury stock, 97,499 and 76,741 shares at
   cost, respectively                                 (507)      (388)
                                                  ---------  ---------
                                                    14,180     13,657
                                                  ---------  ---------
                                                   $19,632    $19,602
                                                  =========  =========
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