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 March 31, 1998

              [ ] 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

________________________________________________________________________________
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 March 31, 1998,  there were  5,821,052  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...................................6-9

           Item 3 - Management Discussion & Analysis
                        of Financial Condition and Results
                        of Operations......................................10-11

PART II  Other Information Required in Report

           Item 5 - Other Information.........................................12

           Item 6 - Reports on Form 8K........................................12

           Signature Page.....................................................13

<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                    UNAUDITED        AUDITED
                                                  March 31, 1998  June 30, 1997
                                                  --------------  -------------
ASSETS                                           
                                                 
Current Assets                                   
     Cash                                          $  6,433,977    $  2,013,549
     Accounts receivable, net                        13,350,831       9,246,247
     Inventories                                      2,500,772       1,382,236
     Deferred taxes                                      37,249          37,249
     Other current assets                               611,782         441,469
                                                   ------------    ------------
          Total currrent assets                      22,934,611      13,120,750
                                                 
Property and equipment, net                             459,039         439,000
                                                 
Goodwill, net                                         3,361,704       3,556,704
                                                 
Other assets                                             82,724          31,253
                                                   ------------    ------------
                                                 
                                                   $ 26,838,078    $ 17,147,707
                                                   ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY             
                                                 
Current liabilities                              
     Bank overdraft                                          --    $    533,871
     Revolving inventory line of credit              13,074,037       1,830,359
     Accounts payable                                 2,462,092       4,447,595
     Notes payable - related parties                    127,967         127,967
     Accrued expenses                                 1,128,163         777,385
     Income taxes payable                               491,581       1,029,016
     Other current liabilities                          139,110         621,412
                                                   ------------    ------------
                                                 
          Total liabilities                          17,422,950       9,367,605
                                                   ------------    ------------
                                                 
Stockholders' equity                             
     Preferred stocks                                   353,057         353,057
     Common stock                                       346,380         346,380
     Additional paid-in capital                       6,806,216       6,806,216
     Discount on preferred stock                       (315,000)       (315,000)
     Retained earnings                                2,879,326       1,244,300
     Less:  Treasury stock at cost                     (654,851)       (654,851)
                                                   ------------    ------------
                                                 
          Total stockholders' equity                  9,415,128       7,780,102
                                                   ------------    ------------
                                                 
                                                   $ 26,838,078    $ 17,147,707
                                                   ============    ============


                                       1
<PAGE>

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

                                                     1998             1997
                                                 ------------      -------------
Net sales                                        $ 45,278,978      $ 20,939,200
Cost of sales                                      42,210,327        18,446,752
                                                 ------------      ------------
Gross profit                                        3,068,651         2,492,448
                                                 ------------      ------------
Operating expenses
     Selling and administrative                     1,703,328         1,922,087
     Amortization of goodwill                          60,000            47,261
                                                 ------------      ------------
          Total operating expenses                  1,763,328         1,969,348
                                                 ------------      ------------
Income from operations                              1,305,323           523,100
                                                 ------------      ------------
Other income (expense)
     Miscellaneous income                                  --           (12,074)
     Interest income                                  (43,700)           15,212
     Interest expense                                   7,200           (30,148)
                                                 ------------      ------------
          Total other (expense) income                (36,500)          (27,010)
                                                 ------------      ------------
Income (loss) before provision
   for income taxes                                 1,341,823           496,090
Provision for income taxes                            644,075           198,436
                                                 ------------      ------------
Net income (loss)                                $    697,748      $    297,654
                                                 ============      ============
Basic and diluted earnings per share             $       0.12      $       0.06
                                                 ============      ============
 Weighted average number of shares                  5,874,757         4,883,640
                                                 ============      ============


                                       2
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                           NINE MONTHS ENDED MARCH 31,

                                                     1998            1997
                                                -------------    -------------


Net sales                                       $ 114,490,400    $  72,362,075
Cost of sales                                     105,864,629       65,207,295
                                                -------------    -------------
Gross profit                                        8,625,771        7,154,780
                                                -------------    -------------
Operating expenses
     Selling and administrative                     5,481,547        5,236,471
     Amortization of goodwill                         170,000          141,783
                                                -------------    -------------
          Total operating expenses                  5,651,547        5,378,254
                                                -------------    -------------
Income from operations                              2,974,224        1,776,526
                                                -------------    -------------
Other income (expense)
     Miscellaneous income                              70,000           52,685
     Interest income                                  120,922           59,057
     Interest expense                                 (20,865)        (118,133)
                                                -------------    -------------
          Total other (expense) income                170,057           (6,391)
                                                -------------    -------------
Income (loss) before provision 
   for income taxes                                 3,144,281        1,770,135
Provision for income taxes                          1,509,255          708,054
                                                -------------    -------------
Net income (loss)                               $   1,635,026    $   1,062,081
                                                =============    =============
Basic and diluted earnings per share            $        0.28    $        0.22
                                                =============    =============
Weighted average number of shares                   5,906,330        4,883,640
                                                =============    =============


                                       3
<PAGE>

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

                                                      1998             1997
                                                   -------------   -------------
Net cash provided by (used in)
   operating activities                            ($ 6,655,094)   $  2,126,675
Cash flows from investing activities:
   Purchase of Treasury Stock                                --        (654,851)
   Purchase and Retirement of
      Preferred Stock                                        --      (1,250,000)
   Purchase of property and equipment                  (168,156)        (63,446)
                                                   ------------    ------------
Net cash (used in) provided by
   investing activities                                (168,156)     (1,968,297)
                                                   ------------    ------------
Cash flows from financing activities:
   Notes receivable - officer                                --          (6,124)
   Notes payable related parties                             --        (228,322)
   Short term borrowings                             11,243,678         184,574
                                                   ------------    ------------
Net cash (used in) provided by financing
   activities                                        11,243,678         (49,872)
                                                   ------------    ------------
Net increase (decrease) in cash                       4,420,428         108,506
Cash and cash equivalents - Beginning of period       2,013,549       1,667,031
                                                   ------------    ------------
Cash and cash equivalents - End of period          $  6,433,977    $  1,775,537
                                                   ============    ============


                                       4
<PAGE>

                                 ATEC GROUP, INC
            UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        NINE MONTHS ENDED MARCH 31, 1998


<TABLE>
<CAPTION>
                                           Common           Value        Series        Value         Additional      Discount on
                                           Shares          Common       Preferred    Preferred        Paid-In         Preferred
                                           Issued           Stock         Issued       Stock          Capital           Stock
                                           -------         --------      --------     --------        --------       -----------

<S>                                      <C>               <C>            <C>         <C>           <C>               <C>       
Balance at June 30, 1997                 5,965,652         $346,380       380,579     $353,057      $6,806,216        ($315,000)

Net Income for the Nine Months Ended
  March 31, 1998                                --               --            --           --              --              --

Balance at March 31, 1998                5,965,652         $346,380       380,579     $353,057      $6,806,216        ($315,000)
                                         =========         ========      ========    =========      ==========       ==========

<CAPTION>

                                            Retained                Treasury Stock                Total
                                            Earnings            ------------------------      Stockholders'
                                            (Deficit)           Shares            Amount         Equity
                                            ---------           ------            ------         ------

<S>                                         <C>                <C>              <C>             <C>       
 Balance at June 30, 1997                   $1,244,300         (144,600)        ($654,851)      $7,780,102
                                      
 Net Income for the Nine Months Ended 
   March 31, 1998                            1,635,026                                           1,635,026
                                      
 Balance at March 31, 1998                  $2,879,326         (144,600)        ($654,851)      $9,415,128
                                            ===========        =========        ==========      ==========
</TABLE>


                                       5
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                                    FORM 10Q
                        NINE MONTHS ENDED MARCH 31, 1998
                   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  which are
hereafter  referred  to  as  (the  "Company").  All  intercompany  accounts  and
transactions have been eliminated in consolidation.

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 for the year ended June 30, 1997.


                                       6
<PAGE>

2. Equity Securities

   Capital Stock

      The Company's capital stock consists of the following:

                                                         Shares             
                                                         Issued        
                                             Shares       and          
December 31, 1997                         Authorized  Outstanding      Amount
-----------------                         ----------  -----------      ------
Preferred Stocks:(1)                                                         
     Series A cumulative convertible         29,233      29,231       $  2,912
     Series B convertible                    12,704       1,458            145
     Series C convertible                   350,000     350,000        350,000
                                                        -------       --------
         Total preferred                                380,579       $353,057
                                                        =======       ========
Common Stock                            70,000,000     5,821,052      $346,380

(1)   As discussed  below in "Split of Common Stock",  the conversion  ratios of
      the preferred stock has been adjusted as follows: Series A - One (1) share
      equals  one-fifth  (1/5) share of common;  Series B - One (1) share equals
      one-fifth  (1/5)  share  of  common;  Series  C - Ten  (10)  shares  equal
      one-fifth (1/5) share of common.

Stock Option Plan and Common Stock Purchase Warrants

In August 1997, the Company  awarded  140,000  common stock purchase  options to
employees  under the 1997 Stock  Option Plan at an exercise  price of $3.125 per
share (the  market  price on the date of grant).  In March 1998,  the  Company's
compensation  committee  awarded 560,000 common stock purchase options at $5.00.
In December 1996, the Company issued 140,000 common stock purchase options at an
exercise  price of $3.75 per share.  Total  outstanding  common  stock  purchase
options at March 31, 1998 were 840,000.

During August 1997, the Company entered into  non-exclusive  Investment  Banking
agreements with Auerback,  Pollack & Richardson,  Inc. and M.H.  Meyerson & Co.,
Inc. In connection  with these  agreements,  the Company agreed to issue 240,000
common stock purchase  warrants at exercise  prices of $3.75 to $7.50 per share.
In March 1998, the Company  issued  250,000  common stock  purchase  warrants at
exercise prices of $4.00 to $5.00 for investor relations  services.  In February
1998, the Company entered into a non-exclusive investment banking agreement with
First Colonial  Securities  Group, Inc. and agreed to issue 125,000 common stock
purchase warrants at exercise prices of $4.25 to $5.25 per share.


                                       7
<PAGE>

Split of Common Stock

The  Company's  stockholders  approved a reverse  stock  split of the  Company's
outstanding  shares of Common Stock  ("Reverse  Stock Split")  pursuant to which
each five (5) outstanding shares of Common Stock will be automatically converted
into one (1) share of Common at the  Company's  annual  meeting on November  18,
1997. All share and per share data have been adjusted to reflect the split.

3. Computation of Earnings Per Share

Earnings per share are based on the weighted average number of common and common
equivalent shares outstanding. Shares outstanding and earnings per share for the
three and nine  months  ended March 31,  1997 have been  adjusted  for the stock
split.

4. Goodwill

Goodwill is being amortized over a period of fifteen years.

5. 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.


                                       8
<PAGE>

6. Event Subsequent to Balance Sheet Date

On April 9, 1998, the Company  acquired ninety percent of the outstanding  stock
of Logix Solutions, Inc. ("Logix") in exchange for 252,000 shares of ATEC Group,
Inc.  common  stock and  options to purchase  756,000  shares at $4.74 per share
expiring  September  8,  1999,  2,520,000  shares at $7.50  per  share  expiring
September  8,  1999  and  2,520,000  shares  at  $10.00  per  share  exercisable
commencing on March 31, 1999 through  December 31, 2000. In addition,  the Logix
shareholders  were granted options to purchase 471,698 shares of common stock at
$4.24 per share expiring on April 23, 1998. On April 23, 1998, 327,520 shares of
common stock were issued in consideration of cash payment of $1,388,685.


                                       9
<PAGE>

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

                        ATEC Group, Inc. and Subsidiaries

Background

      ATEC  Group,  Inc.  ("the  Company")  is engaged  in the sale of  computer
hardware and software products to businesses, professionals, government agencies
and educational institutions. In April 1998, the Company acquired a 90% interest
in Logix, a year 2000 solution provider. The Company provides its customers with
a wide  range of  services,  including  designing,  integration  and  installing
computer   systems,   local  area   networks,   high   volume   data   satellite
communications, video conferencing, year 2000 and Internet ready solutions.

Results of Operations

March 31, 1998 compared to March 31, 1997

The Company's  revenues for the third quarter ended March 31, 1998  increased to
$45.3   million  from  $20.9   million  for  the  prior  year,  an  increase  of
approximately 116%. 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 $3.1
million for March 31, 1998 from $2.5 million for the comparable 1997 quarter,  a
23% increase due to the  increased  revenues.  Gross  margins as a percentage of
revenues  for the nine months were 6.8% as compared to 11.9% for the prior year.
The decline is the result of higher wholesale revenues. The Company's goal is to
increase  these margins as the Company  attempts to increase its market share in
more  profitable   sectors  of  the  business  such  as  integration,   hardware
service/maintenance, networking, training and year 2000 code remediations.

March 31, 1998 operating expenses exclusive of amortization of intangible assets
decreased to $1.7  million as compared to $1.9  million for the prior year.  The
decrease resulted from general cost controls.

The  provision for income taxes was $644,075 for the 1998 quarter as compared to
$198,436 for 1997 period.

As a result of the above, the Company's net income increased to $697,748 for the
three months ended March 31, 1998 compared to $297,654 for the 1997 quarter. For
the March 31,  1998  quarter,  basic and  diluted  net income per share was $.12
compared to $.06 in the prior year.  Average shares  outstanding  were 5,874,757
for 1998 and 4,883,640 for 1997.


                                       10
<PAGE>

Revenues for nine months ended March 31, 1998  increased to $114.5  million from
$72.4  million  for the prior  year,  an increase  of  approximately  58%.  This
increase is primarily  attributed to internal growth. Gross margins increased to
$8.6 million as compared to $7.2 million for the comparable  period of the prior
year. Gross margins as a percentage of revenues for the nine months were 7.5% as
compared to 9.9% for the prior year.  The decline in gross margins is the result
of higher wholesale  revenues.  Operating  expenses  increased  slightly to $5.4
million as compared to $5.2 million for the prior year. The provision for income
taxes was $1,509,255 for 1998 as compared to $708,054 for the prior year.

As a result of the above,  the Company's net income  increased to $1,635,026 for
the nine months  ended March 31,  1998 as compared to  $1,062,081  for the prior
year.  Basic and diluted  net income per share was $.28  compared to $.22 in the
prior year. Average shares outstanding were 5,906,330 for 1998 and 4,883,640 for
1997.

Liquidity and Capital Resources

The  Company's  cash  position was  $6,433,977 at March 31, 1998, an increase of
$4,420,428 compared to June 30, 1997. The Company's working capital at March 31,
1998 was  $5,511,611 as compared to a working  capital of $3,753,145 at June 30,
1997. The increase in working capital primarily resulted from increased profits.
Net cash used by operating  activities was  $6,655,094.  Cash used for investing
activities totaled $168,156 for the purchase of property and equipment.

To accommodate the Company's financial needs for inventory  financing,  Deutsche
Financial  Service (DFS) has granted a credit line in the amount of $22 million.
At March 31, 1998,  indebtedness of the Company to Deutsche  Financial was $13.1
million, an increase of $11.2 million compared to June 30, 1997.  Substantially,
all of  subsidiary  company  tangible  and  intangible  assets  are  pledged  as
collateral for this facility.


                                       11
<PAGE>

                        ATEC Group, Inc. and Subsidiaries
                                Other Information
                                 March 31, 1998

PART II

Item 5.  Other Information

In February  1998,  Balwinder  Singh  Bathla's  term as President of the Company
expired.  On such  expiration,  Surinder  Rametra,  Chairman and Chief Executive
Officer assumed the additional role as President.

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 March 31, 1998:

           NONE


                                       12
<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: May 7, 1998                      By: s/Ashok Rametra
                                           -------------------------------------
                                             Ashok Rametra, in the capacity 
                                             of Chief Financial Officer


                                       13