SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              --------------------

                                    FORM 10-Q
                              --------------------

                                 CURRENT REPORT

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

                     For the Quarter Ended December 31, 1996

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the Transition Period from_____ to _____

                         Commission File Number 0-22710


ATEC  GROUP,  INC.
(Exact name of registrant as specified in its charter)

Delaware                                            13-3673965
(State or other jurisdiction of                     (I.R.S. Employer
corporation or organization)                        Identification Number)

90 Adams Avenue, Hauppauge, New York                11788
(Address of principal executive offices)            (Zip Code)

Issuer's telephone number, including area code (516) 231-2832

1952 Jericho Turnpike, East Northport, New York 11731
Former  name,  former  address and former  fiscal  year,  if changed  since last
report.

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__

As of the close of business on December 31, 1996,  there were 18,733,462  shares
of the Registrant's Common Stock outstanding.


<PAGE>

                                ATEC GROUP, INC.

TABLE OF CONTENTS
-----------------

                                                                            Page
                                                                            ----
PART I   Financial Information


           Item 1 - Consolidated Financial Statements........................1-5

           Item 2 - Notes to Consolidated Condensed Financial Statements.....6-8

           Item 3 - Management Discussion & Analysis
                        of Financial Condition and Results
                        of Operations........................................8-9


PART II  Other Information Required in Report


           Item 6 - Other Information.........................................10

           Signature Page.....................................................11

<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                            UNAUDITED               AUDITED
                                        December 31, 1996        June 30, 1996
                                        -----------------        -------------

ASSETS

Current Assets
     Cash                                   $   911,316           $ 1,667,031
     Accounts receivable, net                 6,460,949             5,152,005
     Inventories                              2,545,434             2,813,937
     Current portion of note
        receivable - officer                     14,124                 6,124
     Deferred taxes                              37,249                42,773
     Other current assets                       328,478               413,712
                                            -----------           -----------
          Total currrent assets              10,297,550            10,095,582
                                            -----------           -----------

Property and equipment, net                     470,138               514,910

Goodwill, net                                 2,485,026             2,614,445

Other assets                                     65,946                97,196
                                            -----------           -----------

                                            $13,318,660           $13,322,133
                                            ===========           ===========


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
     Revolving inventory line of credit      $1,980,554           $ 2,085,054
     Accounts payable                         2,139,944             1,274,896
     Notes payable - related parties            610,774               650,000
     Accrued expenses                           864,887             1,008,154
     Deferred sales tax obligation              553,052               553,052
     Other current liabilities                  311,593               709,188
                                            -----------           -----------

          Total current liabilities           6,460,804             6,280,344

Notes payable - officer                            --                 228,322
                                            -----------           -----------

          Total liabilities                   6,460,804             6,508,666

Stockholders' equity
     Preferred stocks                         9,353,068            11,353,068
     Common stock                               235,432               218,765
     Additional paid-in capital               5,282,473             5,026,332
     Discount on preferred stock             (7,659,083)           (9,361,100)
     Retained earnings (deficit)                340,829              (423,598)
     Less:  Treasury Stock at
        Cost (761,800 shares)                  (694,863)                 --
                                            -----------           -----------

          Total stockholders' equity          6,857,856             6,813,467
                                            -----------           -----------

                                            $13,318,660           $13,322,133
                                            ===========           ===========


                                       1
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                         THREE MONTHS ENDED DECEMBER 31,

                                                   1996                1995
                                                                    (RESTATED)
                                                -----------         -----------

Net sales                                       $25,783,789         $22,655,291

Cost of sales                                    23,501,921          20,795,078
                                                -----------         -----------

Gross profit                                      2,281,868           1,860,213
                                                -----------         -----------

Operating expenses
     Selling and administrative                   1,604,318           1,331,754
     Amortization of goodwill                        73,068              36,017
                                                -----------         -----------

          Total operating expenses                1,677,386           1,367,771
                                                -----------         -----------

Income from operations                              604,482             492,442
                                                -----------         -----------

Other income (expense)
     Miscellaneous income                             6,786              12,362
     Interest income                                 24,452               9,100
     Interest expense                               (48,878)             (9,568)
                                                -----------         -----------

          Total other (expense) income              (17,640)             11,894
                                                -----------         -----------

Income before provision for income taxes            586,842             504,336

Provision for income taxes                          223,018             199,211
                                                -----------         -----------

Net income                                      $   363,824         $   305,125
                                                ===========         ===========


Net earnings per share                          $      0.01         $      0.01
                                                ===========         ===========


 Weighted average number of
    shares - fully diluted                       25,160,473          20,511,500
                                                ===========         ===========


                                       2
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                          SIX MONTHS ENDED DECEMBER 31,

                                                   1996                 1995
                                                                     (RESTATED)
                                                -----------         -----------

Net sales                                       $51,422,875         $36,934,975

Cost of sales                                    46,760,545          33,921,285
                                                -----------         -----------

Gross profit                                      4,662,330           3,013,690
                                                -----------         -----------

Operating expenses
     Selling and administrative                   3,279,487           2,173,366
     Amortization of goodwill                       129,417              72,034
                                                -----------         -----------

          Total operating expenses                3,408,904           2,245,400
                                                -----------         -----------

Income from operations                            1,253,426             768,290
                                                -----------         -----------

Other income (expense)
     Miscellaneous income                            64,760              12,362
     Interest income                                 43,845              11,121
     Interest expense                               (87,986)            (19,246)
                                                -----------         -----------

          Total other (expense) income               20,619               4,237
                                                -----------         -----------

Income before provision for income taxes          1,274,045             772,527

Provision for income taxes                          509,618             306,511
                                                -----------         -----------

Net income                                      $   764,427         $   466,016
                                                ===========         ===========


Net earnings per share                          $      0.03         $      0.03
                                                ===========         ===========


 Weighted average number of
    shares - fully diluted                       25,160,473          17,216,200
                                                ===========         ===========


                                       3
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
                          SIX MONTHS ENDED DECEMBER 31,

                                                        1996            1995
                                                                     (RESTATED)
                                                     ----------      ----------

Net cash provided by (used in)
   operating activities                              $   75,797       ($574,268)

Cash flows from investing activities:

          Purchase of Treasury Stock                   (694,863)           --

          Purchase of property and equipment            (12,282)        (26,599)
                                                     ----------       ---------

Net cash (used in) provided by
   investing activities                                (707,145)        (26,599)
                                                     ----------       ---------


Cash flows from financing activities:

          Due from related parties                         --            54,364

          Notes receivable - officer                     (8,000)         94,691

          Long term borrowings                          (11,867)           --

          Short term borrowings                        (104,500)           --
                                                     ----------       ---------

Net cash (used in) provided by
   financing activities                                (124,367)        149,055
                                                     ----------       ---------

Net increase (decrease) in cash                        (755,715)       (451,812)

Cash and cash equivalents - Beginning of period       1,667,031         919,095
                                                     ----------       ---------

Cash and cash equivalents - End of period            $  911,316       $ 467,283
                                                     ==========       =========


                                       4
<PAGE>

                                 ATEC GROUP, INC
            UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                       SIX MONTHS ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>

                                                     Common           Value           Series           Value          Additional
                                                     Shares          Common         Preferred        Preferred         Paid-In
                                                     Issued           Stock           Issued           Stock           Capital
                                                   ----------        --------       ----------      -----------      ------------
<S>                                                <C>               <C>            <C>             <C>              <C>
Balance at June 30, 1996                           17,066,797        $218,765       2,570,689       $11,353,068      $5,026,332

Conversion of Series I Preferred Stock              1,666,665          16,667        (390,000)       (2,000,000)        281,316

Registration Expenses                                    --              --              --                --           (25,175)

Purchase of Common Stock                                 --              --              --                --              --

Net Income for the Six Months Ended
  December 31, 1996                                      --              --              --                --              --

Balance at December 31, 1996                       18,733,462        $235,432       2,180,689       $ 9,353,068      $5,282,473
                                                   ==========        ========       =========       ===========      ==========

<CAPTION>
                                                  Discount on                        Retained         Total
                                                   Preferred         Treasury        Earnings     Stockholders'
                                                     Stock            Stock         (Deficit)         Equity
                                                  -----------        --------        --------     -------------

<S>                                               <C>                <C>            <C>              <C>
Balance at June 30, 1996                          ($9,361,100)           --         ($423,598)       $6,813,467

Conversion of Series I Preferred Stock              1,702,017            --              --                --

Registration Expenses                                    --              --              --             (25,175)

Purchase of Common Stock                                 --          (694,863)           --            (694,863)

Net Income for the Six Months Ended
  December 31, 1996                                      --              --           764,427           764,427

Balance at December 31, 1996                      ($7,659,083)      ($694,863)       $340,829        $6,857,856
                                                  ============      ==========       ========        ==========
</TABLE>

                                       5
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                                    FORM 10Q
                       SIX MONTHS ENDED DECEMBER 31, 1996
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.  Condensed Consolidated Financial Statements

Basis of Presentation
The accompanying interim unaudited consolidated financial statements include the
accounts of Atec Group, Inc. and its wholly owned subsidiaries American Computer
Systems Corp.,  Inc.  (ACS),  Cony Computer  Systems,  Inc.  (CONY),  Innovative
Business Micros,  Inc.  (Innovative),  Micro Computer Store,  Inc. (MCS) and Sun
Computer  and  Software,  Inc.  (SCSI) which are  hereafter  referred to as (the
"Company").  All intercompany  accounts and transactions have been eliminated in
consolidation.

On June  14,  1996,  ATEC  acquired  all the  stock  of  Innovative  located  in
Hauppauge,  NY. The  acquisition  of Innovative has been accounted for under the
pooling  of  interest  method  and,  accordingly,   the  consolidated  financial
statements  have been  restated  to  include  the  accounts  and  operations  of
Innovative. Innovative changed its fiscal year end from September 30 to June 30.
The results of  Innovative  for the quarter  ended  September  30, 1995 were not
included.  If Innovative's results for the quarter ended September 30, 1995 were
included in the six month results,  revenues would have been $41,497,107 and net
income would have been $512,357 or $.03 per share.

These  financial  statements  have been  prepared in accordance  with  generally
accepted  accounting  principles for interim financial  information and with the
instructions  to  Form  10-Q.  Accordingly,  they  do  not  include  all  of the
information and footnotes required by generally accepted  accounting  principles
for complete financial  statements.  In the opinion of management,  such interim
statements  reflect all adjustments  (consisting of normal  recurring  accruals)
necessary to present fairly the financial position and the results of operations
and cash flows for the interim periods presented.  The results of operations for
these  interim  periods  are not  necessarily  indicative  of the  results to be
expected  for the  full  year.  These  financial  statements  should  be read in
conjunction  with the audited  consolidated  financial  statements and footnotes
included in the Company's  report on Form 10-K dated September 30, 1996, for the
year ended June 30, 1996.


                                       6
<PAGE>

2.  Equity Securities

     Capital Stock

          The Company's capital stock consists of the following:


                                                      Shares
                                                      Issued
                                      Shares          and
                                      Authorized      Outstanding       Amount
                                      ----------      -----------       ------
September 30, 1996
------------------

Preferred Stocks:
   Series A cumulative convertible       29,233           29,231          $2,923
   Series B convertible                  12,704            1,458             145
   Series C convertible                 350,000          350,000         350,000
   Series D convertible                 400,000          400,000       2,000,000
   Series E convertible                 200,000          200,000       1,000,000
   Series J convertible                 800,000          800,000       4,000,000
   Series K convertible                 400,000          400,000       2,000,000
                                                      ----------      ----------

       Total preferred                                 2,180,689      $9,353,068
                                                      ==========      ==========

Common Stock                         70,000,000       18,733,462        $235,432


3.  Computation of Earnings Per Share

Earnings per share are based on the weighted average number of common and common
equivalent shares  outstanding.  The common equivalent shares of 25,541,373 were
calculated on the assumption that all preferred  shares were converted as of the
beginning of the period.


4.  Goodwill

Goodwill is being amortized over a period of fifteen years.


5.  Treasury Stock

On November 15, 1996,  the Board of Directors  authorized  the repurchase of the
company's capital stock. At December 31, 1996, the Company had purchased 761,800
shares for a total cost of $694,863.


                                       7
<PAGE>

6.  Litigation

During 1990, a competitor of the Company  commenced an action against it and one
of its advertising agents. The complaint seeks $1,000,000 in damages for alleged
disclosure of certain trade secrets,  and  $10,000,000  in punitive  damages and
$10,000,000 based upon allegations that the Company interfered with and impaired
the competitor's business relations.  Management believes that there is no merit
to this action. The action has been virtually inactive since commencement.

A lawsuit was commenced  against the Company by Mid Hudson Clarklift as a result
of a claim filed against them by a former  employee of the Company who sustained
an injury  while  operating a forklift.  The lawsuit  consists of four causes of
action each for $5,000,000 and one cause of action by the former employee's wife
for  $2,000,000.  The lawsuit is in the  discovery  stages.  Management  and its
counsel have no opinion as to its ultimate disposition.

The  Company  is a  defendant  in  various  other  lawsuits  for  which  certain
provisions  have been made in the  financial  statements.  Management  is of the
opinion  that  the  ultimate  resolution  of  these  actions  will  not  have  a
significant effect on the Company's financial statements.


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                        ATEC Group, Inc. and Subsidiaries

Background

     ATEC Group,  Inc. ("the  Company"),  through its wholly owned  subsidiaries
ACS, CONY, INNOVATIVE,  MCS and SCSI is engaged in the sale of computer hardware
and software  products to  businesses,  professionals,  government  agencies and
educational  institutions.  The Company provides its customers with a wide range
of services,  including designing,  integration and installing computer systems,
local area networks,  high volume data  communications,  video  conferencing and
Internet ready solutions.

RESULTS OF OPERATIONS

Six Months 1996 compared to Six Months 1995

The Company's  revenues for the six months ended  December 31, 1996 increased to
$51.4   million  from  $36.9   million  for  the  prior  year,  an  increase  of
approximately  39%. This increase is primarily  attributable to internal growth.
Revenues are generated by the Company's sales of computer hardware and software,
and related  support  services.  Gross  margin for the period  increased to $4.7
million for December 31, 1996 from $3.0 million for the comparable  1995 period,
a 56% increase due to the increased  revenues.  Gross margins as a percentage of
revenues  for the six months  were 9.1% as  compared to 8.2% for the prior year.
These  margins are expected to increase as the Company  attempts to increase its
market share in more  profitable  sectors of the business  such as  integration,
hardware service/maintenance, networking, and training.


                                       8
<PAGE>

December 31, 1996 operating  expenses  exclusive of  amortization  of intangible
assets increased to $3.3 million as compared to $2.2 million for the prior year.
The  50%  increase  in  operating  expenses  are  related  to the  exclusion  of
Innovative  for the first  quarter  of the prior  year due to the  change in its
fiscal year. Innovative expenses in the first quarter of 1995 were approximately
$500,000.

Amortization  of  intangible  assets  increased to $129,417 for the quarter from
$72,034 in the comparable 1995 period.

The  provision  for income taxes was $509,618 for the 1996 period as compared to
$306,511 for 1995 period.

As a result of the above, the Company's net income increased to $764,427 for the
three months ended  December 31, 1996 compared to $306,511 for 1995.  Net income
per share was $.03 compared to $.03 in the prior year. Primary and fully diluted
average shares outstanding were 25,160,473 for 1996.

LIQUIDITY AND CAPITAL RESOURCES

The  Company's  cash  position  was $911,316 at December 31, 1996, a decrease of
$755,715  compared to June 30, 1996.  The decrease  resulted  primarily from the
purchase  of the  Company's  common  stock.  The  Company's  working  capital at
December 31, 1996 was $3,836,746 as compared to a working  capital of $3,815,238
at June 30, 1996. Net cash provided by operating activities was $75,797.

Cash used for investing  activities totaled $12,282 for the purchase of property
and equipment.

To accommodate the Company's financial needs for inventory  financing,  Deutsche
Financial  Service has  granted a credit  line in the amount of $5  million.  At
December  31,  1996,  indebtedness  of the  Company to  Deutsche  Financial  was
$1,980,554, a decrease of $104,500 compared to June 30, 1996. Substantially, all
of subsidiary  company tangible and intangible  assets are pledged as collateral
for this facility.

The Company entered into an agreement to purchase  $1,250,000 of the outstanding
preferred  stock at a 15% discount from par value.  The Company plans to satisfy
its obligations under this agreement in two cash installments of an aggregate of
$625,000 each.  These  installments are to be paid on January 31, 1997 and March
31, 1997.


                                       9
<PAGE>

                        Atec Group, Inc. and Subsidiaries
                                Other Information
                                December 31, 1996


PART II


Item 6.  Exhibits and Reports on form 8-k

a) Exhibits - none

b) Reports on Form 8-K:

     The  following  reports  on Form 8K were  filed by the  Company  during the
quarter ended December 31, 1996:

             NONE


                                       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.



                                 ATEC GROUP, INC.
                                 (REGISTRANT)



Dated: February 14, 1997

                                 By:/s/ Ashok Rametra
                                    ------------------------------------------
                                    Ashok Rametra, in the capacity of both
                                    Vice President and Chief Financial Officer

                                       11