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, 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)

1952 Jericho Turnpike, East Northport, New York      11731
(Address of principal executive offices)             (Zip Code)

Issuer's telephone number, including area code (516) 462-2832

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, 1996, there were 17,066,797  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

<TABLE>
<CAPTION>
                                                      UNAUDITED          AUDITED
                                                September 30, 1996    June 30, 1996
                                                ------------------   --------------
<S>                                                <C>               <C>           
ASSETS

Current Assets
  Cash                                             $    2,243,349    $    1,667,031
  Accounts receivable, net                              6,398,689         5,152,005
  Inventories                                           2,585,817         2,813,937
  Current portion of note receivable - officer             27,124             6,124
  Deferred taxes                                           42,773            42,773
  Other current assets                                    292,326           413,712
                                                   --------------    --------------
       Total currrent assets                           11,590,078        10,095,582
                                                   --------------    --------------

Property and equipment, net                               471,146           514,910

Goodwill, net                                           2,532,287         2,614,445

Other assets                                              137,443            97,196
                                                   --------------    --------------

                                                   $   14,730,954    $   13,322,133
                                                   ==============    ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Revolving inventory line of credit               $    2,745,010    $    2,085,054
  Accounts payable                                      2,299,834         1,274,896
  Notes payable - related parties                         650,000           650,000
  Accrued expenses                                        934,143         1,008,154
  Deferred sales tax obligation                           553,052           553,052
  Other current liabilities                               292,978           709,188
                                                   --------------    --------------

       Total current liabilities                        7,475,017         6,280,344

Notes payable - officer                                    41,867           228,322
                                                   --------------    --------------

       Total liabilities                                7,516,884         6,508,666

Stockholders' equity
  Preferred stocks                                     11,353,068        11,353,068
  Common stock                                            218,765           218,765
  Additional paid-in capital                            5,026,332         5,026,332
  Discount on preferred stock                          (9,361,100)       (9,361,100)
  Retained earnings (deficit)                             (22,995)         (423,598)
                                                   --------------    --------------

       Total stockholders' equity                       7,214,070         6,813,467
                                                   ==============    ==============
                                                   $   14,730,954    $   13,322,133
                                                   ==============    ==============

</TABLE>


<PAGE>

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

                                                        1996           1995    
                                                    -----------    -----------
                                                   
                                                   
Net sales                                           $25,639,086    $14,279,684
                                                   
Cost of sales                                        23,258,624     13,126,207
                                                    -----------    -----------
                                                   
Gross profit                                          2,380,462      1,153,477
                                                    -----------    -----------
                                                   
Operating expenses                                 
                                                   
     Selling and administrative                       1,675,169        841,612
     Amortization of goodwill                            56,349         36,017
                                                    -----------    -----------
                                                   
          Total operating expenses                    1,731,518        877,629
                                                    -----------    -----------
                                                   
Income from operations                                  648,944        275,848
                                                    -----------    -----------
                                                   
Other income (expense)                             
                                                   
     Miscellaneous income                                57,974           --  
     Interest income                                     19,393          2,021
     Interest expense                                   (39,108)        (9,678)
                                                    -----------    -----------
                                                   
          Total other (expense) income                   38,259         (7,657)
                                                    -----------    -----------
                                                   
Income (loss) before provision for income taxes         687,203        268,191
                                                   
Provision for income taxes                              286,600        107,300
                                                    -----------    -----------
                                                   
Net income (loss)                                   $   400,603    $   160,891
                                                    ===========    ===========
                                                   
                                                   
Net earnings (loss) per share                       $       0.02   $       0.01
                                                    ============   ============
                                                   
                                                   
 Weighted average number of shares - fully diluted    25,541,373     15,611,500
                                                    ============   ============ 

<PAGE>

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

                                                          1996          1995
                                                       ----------    ----------
                                                      
Net cash provided by (used in) operating activities    $  149,464    ($  90,759)
                                                      
Cash flows from investing activities:                 
                                                      
     Purchase of property and equipment                   (25,647)      (26,599)
                                                       ----------    ----------
                                                      
Net cash (used in) provided by investing activities       (25,647)      (26,599)
                                                       ----------    ----------
                                                      
                                                      
Cash flows from financing activities:                 
                                                      
     Due from related parties                                --          29,364
                                                      
     Notes receivable - officer                           (21,000)       94,691
                                                      
     Long term borrowings                                (186,455)         --  
                                                      
     Short term borrowings                                659,956          --  
                                                      
                                                       ----------    ----------
                                                      
Net cash (used in) provided by financing activities       452,501       124,055
                                                       ----------    ----------
                                                      
Net increase in cash                                      576,318         6,697
                                                      
Cash and cash equivalents - Beginning of period         1,667,031       441,462
                                                       ----------    ----------
                                                      
Cash and cash equivalents - End of period               2,243,349    $  448,159
                                                       ==========    ========== 
                                                     

<PAGE>

                                 ATEC GROUP, INC
            UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                      THREE MONTHS ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
                                  Common      Value    Series       Value     Additional  Discount on   Retained       Total
                                  Shares     Common   Preferred   Preferred    Paid-In     Preferred    Earnings    Stockholders'
                                  Issued      Stock    Issued       Stock      Capital       Stock      (Deficit)      Equity
                                ----------  --------  ---------  -----------  ----------  -----------   ---------    ----------
<S>                             <C>         <C>       <C>        <C>          <C>         <C>           <C>          <C>       
Balance at June 30, 1996        17,066,797  $218,765  2,570,689  $11,353,068  $5,026,332  ($9,361,100)  ($423,598)   $6,813,467

Net Income for the Quarter  
  Ended September 30, 1996            --        --         --           --          --           --       400,603       400,603

Balance at September 30, 1996   17,066,797  $218,765  2,570,689  $11,353,068  $5,026,332  ($9,361,100)  ($ 22,995)   $7,214,070
                                ==========  ========  =========  ===========  ==========  ===========   =========    ==========
</TABLE>

<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                                    FORM 10Q
                        QUARTER ENDED SEPTEMBER 30, 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,  revenues would have been $18,841,816,  net income of $207,262 or $.01
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.

                                        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, 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 I convertible                    390,000        390,000      2,000,000
   Series J convertible                    800,000        800,000      4,000,000
   Series K convertible                    400,000        400,000      2,000,000
                                                       ----------    -----------
                                                                    
      Total preferred                                   2,570,689    $11,353,068
                                                       ==========    ===========
                                                                    
Common Stock                            70,000,000     17,066,797    $   218,765
                                                                   

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
end of each period presented.

4. Goodwill

Goodwill  relating to the  acquisition of ACS and CONY is being amortized over a
period of fifteen years.

                                        6

<PAGE>

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. ("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

September 30, 1996 compared to September 30, 1995

The Company's  revenues for the first quarter ended September 30, 1996 increased
to $25.6  million  from  $14.3  million  for the  prior  year,  an  increase  of
approximately 80%. This increase is primarily attributable to the acquisition of
Innovative and 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 $2.4 million for  September  30, 1996 from $1.2 million
for the comparable 1995 quarter, a 106% increase due to the increased  revenues.
Gross  margins as a percentage of revenues for the quarter were 9.3% as compared
to 8.1% 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.

September 30, 1996 operating  expenses  exclusive of  amortization of intangible
assets increased to $1.6 million as compared to $0.8 million for the prior year.
The 100%  increase  in  operating  expenses  are  related  to the  exclusion  of
Innovative  in the prior year due to the change in its fiscal  year.  Innovative
expenses in 1995 were approximately $500,000.

Amortization  of  intangible  assets  increased  to $56,349 for the quarter from
$36,017 in the comparable 1995 period.

The  provision for income taxes was $286,600 for the 1996 quarter as compared to
$107,300 for 1995 quarter.

As a result of the above, the Company's net income increased to $400,603 for the
three months ended September 30, 1996 compared to $160,891 for the 1995 quarter.
For the September  30, 1996  quarter,  net income per share was $.02 compared to
$.01 in the prior year.  Primary and fully diluted  average  shares  outstanding
were 25,541,373 for 1996.

                                        8

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash position was $2,243,349 at September 30, 1996, an increase of
$576,318  as  compared  to June 30,  1996.  The  Company's  working  capital  at
September 30, 1996 was $4,115,061 as compared to a working capital of $3,815,238
at June 30, 1996. The increase in cash and working  capital  primarily  resulted
from short term  borrowing  under the  revolving  credit  facility and increased
profits. Net cash provided by operating activities was $149,464.

Cash used for investing  activities totaled $25,647 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
September  30,  1996,  indebtedness  of the  Company to Deutsche  Financial  was
$2,745,010, a increase of $659,956 compared to June 30, 1996. 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, 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 September 30, 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: November   , 1996

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



                                       11