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 September 30, 1997

              [ ] 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 September 30, 1997, there were 29,095,260  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........................1-4

          Item 2 - Notes to Consolidated Condensed Financial Statements.....5-7

          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
                                        September 30, 1997     June 30, 1997
                                        ------------------   ------------------
ASSETS

Current Assets
   Cash                                 $        1,261,640   $        2,013,549
   Accounts receivable, net                      6,423,128            9,246,247
   Inventories                                   1,435,453            1,382,236
   Deferred taxes                                   37,286               37,249
   Other current assets                            522,277              441,469
                                        ------------------   ------------------
        Total currrent assets                    9,679,784           13,120,750
                                        ------------------   ------------------
Property and equipment, net                        454,317              439,000

Goodwill, net                                    3,496,704            3,556,704

Other assets                                        39,746               31,253
                                        ------------------   ------------------
                                        $       13,670,551   $       17,147,707
                                        ==================   ==================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
   Bank overdraft                       $          802,523   $          533,871
   Revolving inventory line of credit            2,549,459            1,830,359
   Accounts payable                                688,867            4,447,595
   Notes payable - related parties                 117,967              127,967
   Accrued expenses                              1,077,743              777,385
   Income taxes payable                            182,787            1,029,016
   Other current liabilities                          --                621,412
                                        ------------------   ------------------
        Total liabilities                        5,419,346            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                             1,715,403            1,244,300
   Less:  Treasury stock at cost                  (654,851)            (654,851)
                                        ------------------   ------------------
        Total stockholders' equity               8,251,205            7,780,102
                                        ------------------   ------------------

                                        $       13,670,551   $       17,147,707
                                        ==================   ==================


                                       1
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                        THREE MONTHS ENDED SEPTEMBER 30,

                                                         1997          1996
                                                     ------------  ------------

Net sales                                            $ 33,072,555  $ 25,639,086

Cost of sales                                          30,371,529    23,258,624
                                                     ------------  ------------
Gross profit                                            2,701,026     2,380,462
                                                     ------------  ------------
Operating expenses
   Selling and administrative                           1,927,253     1,675,169
   Amortization of goodwill                                60,000        56,349
                                                     ------------  ------------
          Total operating expenses                      1,987,253     1,731,518
                                                     ------------  ------------
Income from operations                                    713,773       648,944
                                                     ------------  ------------
Other income (expense)
   Miscellaneous income                                    70,000        57,974
   Interest income                                         34,406        19,393
   Interest expense                                        (6,576)      (39,108)
                                                     ------------  ------------
          Total other (expense) income                     97,830        38,259
                                                     ------------  ------------
Income (loss) before provision for income taxes           811,603       687,203

Provision for income taxes                                340,500       286,600
                                                     ------------  ------------
Net income (loss)                                    $    471,103  $    400,603
                                                     ============  ============

Net earnings (loss) per share                        $       0.02  $       0.01
                                                     ============  ============

Weighted average number of shares - fully diluted      29,358,593    29,105,260
                                                     ============  ============


                                       2
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
                        THREE MONTHS ENDED SEPTEMBER 30,

                                                          1997          1996
                                                      -----------   -----------

Net cash provided by (used in) operating activities   $  (981,400)  $   149,464

Cash flows from investing activities:

    Purchase of property and equipment                    (29,161)      (25,647)
                                                      -----------   -----------
Net cash (used in) provided by investing activities       (29,161)      (25,647)
                                                      -----------   -----------
Cash flows from financing activities:

    Due from related parties                                 --            --   

    Notes receivable - officer                            (10,000)      (21,000)

    Long term borrowings                                     --        (186,455)

    Short term borrowings                                 268,652       659,956
                                                      -----------   -----------
Net cash (used in) provided by financing activities       258,652       452,501
                                                      -----------   -----------
Net increase (decrease) in cash                          (751,909)      576,318

Cash and cash equivalents - Beginning of period         2,013,549     1,667,031
                                                      -----------   -----------
Cash and cash equivalents - End of period               1,261,640     2,243,349
                                                      ===========   ===========


                                       3
<PAGE>

                                 ATEC GROUP, INC
            UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                      THREE MONTHS ENDED SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
                                     Common       Value    Series     Value     Additional  Discount on    Retained  
                                     Shares      Common   Preferred Preferred     Paid-In    Preferred     Earnings  
                                     Issued       Stock    Issued     Stock       Capital      Stock       (Deficit) 
                                   ----------   --------   -------   --------   ----------   ---------    ---------- 
<S>                                <C>          <C>        <C>       <C>        <C>          <C>          <C>        
Balance at June 30, 1997           29,828,260   $346,380   380,579   $353,057   $6,806,216   $(315,000)   $1,244,300 

Net Income for the Quarter Ended
  September 30, 1997                     --         --        --         --           --          --         471,103 

Balance at September 30, 1997      29,828,260   $346,380   380,579   $353,057   $6,806,216   $(315,000)   $1,715,403 
                                   ==========   ========   =======   ========   ==========   =========    ========== 
</TABLE>

                                       Treasury Stock         Total
                                   ---------------------   Stockholders'
                                    Shares       Amount       Equity
                                   --------    ---------    ----------
Balance at June 30, 1997           (723,000)   $(654,851)   $7,780,102

Net Income for the Quarter Ended
  September 30, 1997                471,103

Balance at September 30, 1997      (723,000)   $(654,851)   $8,251,205
                                   ========    =========    ==========


                                       4
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                                    FORM 10Q
                        QUARTER ENDED SEPTEMBER 30, 1997
                   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.


                                        5

<PAGE>

2.   Equity Securities

     Capital Stock

          The Company's capital stock consists of the following:

                                                        Shares
                                                        Issued
                                          Shares          and
                                        Authorized    Outstanding      Amount
                                        ----------    -----------      ------
  September 30, 1997

Preferred Stocks:
   Series A cumulative convertible         29,233          29,121   $     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      29,105,260   $   346,380
                                                  
Stock Option Plan and Common Stock Purchase Warrants

In August 1997, the Company  awarded  700,000  common stock purchase  options to
employees  under the 1997 Stock  Option Plan at an  exercise  price of $.625 per
share (the market  price on the date of grant).  In December  1996,  the Company
issued 700,000  common stock  purchase  options at an exercise price of $.75 per
share.  Total  outstanding  common stock purchase  options at September 30, 1997
were 1,400,000.

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 1,200,000
common stock purchase warrants at exercise prices of $.75 to $1.50 per share.

Split of Common Stock Proposed

The Company's Board of Directors unanimously authorized 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  Stock  subject  to
stockholders approval at the Company's annual meeting on November 18, 1997.


                                        6

<PAGE>

The  primary  reason for the Reverse  Stock  Split is to increase  the per share
stock price of the Common  Stock in order for the Company to be in a position to
obtain a  listing  on the  National  Association  of  Securities  Dealers,  Inc.
("Nasdaq")  National  Market  System  ("NMS"),  thus  providing the Company with
greater market exposure. NMS requires a minimum bid price of $5.00 per share for
an initial  listing.  In  addition,  an  increased  share price will help assure
future  compliance  with recently  instituted  Nasdaq  SmallCap  Market  minimum
maintenance requirements.

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 months ended September 30, 1996 have been restated to reflect the increase
in shares  issued upon the  conversion  of  preferred  stock due to market price
changes.

4.   Goodwill

Goodwill  relating to the  acquisition of ACS and CONY 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.


                                        7

<PAGE>

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

                        ATEC Group, Inc. and Subsidiaries

Background

     ATEC Group, Inc. is a leading system integrator and provider of a full line
of  information  technology  products and  services to business,  professionals,
government agencies and educational institutions. ATEC offers computer hardware,
software,  connectivity  devices,  multimedia  products,  data communication via
satellite,  video  conferencing,  Internet,  Intranet and Y2K solutions to their
clients.

RESULTS OF OPERATIONS

September 30, 1997 compared to September 30, 1996

The Company's  revenues for the first quarter ended September 30, 1997 increased
to $33.1  million  from  $25.6  million  for the  prior  year,  an  increase  of
approximately  29%. 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 $2.7
million  for  September  30,  1997 from $2.4  million  for the  comparable  1996
quarter,  a 13%  increase  due to the  increased  revenues.  Gross  margins as a
percentage  of revenues  for the  quarter  were 8.2% as compared to 9.3% for the
prior year.  The slight  decline in gross  margins are the result of higher than
normal wholesale revenues. 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.

September 30, 1997 operating  expenses  exclusive of  amortization of intangible
assets increased to $1.9 million as compared to $1.6 million for the prior year.
The increase is for additional selling expenses.

Amortization  of  intangible  assets  increased  to $60,000 for the quarter from
$56,349 in the  comparable  1996  period.  The  provision  for income  taxes was
$340,500 for the 1997 quarter as compared to $286,600 for 1996 quarter.

As a result of the above, the Company's net income increased to $471,103 for the
three months ended September 30, 1997 compared to $400,603 for the 1996 quarter.
For the September  30, 1997  quarter,  net income per share was $.02 compared to
$.01 in the prior year.  Primary and fully diluted  average  shares  outstanding
were 29,358,593 for 1997 and 1996.


                                        8

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's  cash position was $1,261,640 at September 30, 1997, a decrease of
$751,909  as  compared  to June 30,  1997.  The  Company's  working  capital  at
September 30, 1997 was $4,260,438 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 $981,400 due to
decreases  in  liabilities,  primarily  income  taxes.  Cash used for  investing
activities totaled $29,161 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 $7  million.  At
September  30,  1997,  indebtedness  of the  Company to Deutsche  Financial  was
$2,549,459, a decrease of $719,100 compared to June 30, 1997. Substantially, all
of subsidiary  company tangible and intangible  assets are pledged as collateral
for this facility.


                                        9

<PAGE>

                        Atec Group, Inc. and Subsidiaries
                                Other Information
                               September 30, 1997

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 September 30, 1997:

          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:  November 13, 1997        
                                 
                                   By: /s/ Ashok Rametra
                                      ----------------------------------
                                      Ashok Rametra, in the capacity of both
                                      Vice President and Chief Financial Officer
                                 

                                       11