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, 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

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 March 31, 1997,  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
                                                  March 31, 1997   June 30, 1996
                                                  --------------   -------------
ASSETS

Current Assets
   Cash                                            $  1,775,537    $  1,667,031
   Accounts receivable, net                           5,517,343       5,152,005
   Inventories                                        1,706,858       2,813,937
   Current portion of note receivable - officer              --           6,124
   Deferred taxes                                        46,373          42,773
   Other current assets                                 415,565         413,712
                                                   ------------    ------------
        Total currrent assets                         9,461,676      10,095,582
                                                   ------------    ------------

Property and equipment, net                             445,743         514,910

Goodwill, net                                         2,437,765       2,614,445

Other assets                                            103,483          97,196
                                                   ------------    ------------

                                                   $ 12,448,667    $ 13,322,133
                                                   ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
   Revolving inventory line of credit              $  2,269,628    $  2,085,054
   Accounts payable                                   1,490,747       1,274,896
   Notes payable - related parties                      682,903         650,000
   Accrued expenses                                     989,493       1,008,154
   Deferred sales tax obligation                        553,052         553,052
   Other current liabilities                            517,322         709,188
                                                   ------------    ------------

        Total current liabilities                     6,503,145       6,280,344

Notes payable - related parties                              --         228,322
                                                   ------------    ------------

        Total liabilities                             6,503,145       6,508,666

Stockholders' equity
   Preferred stocks                                   7,882,468      11,353,068
   Common stock                                         235,432         218,765
   Additional paid-in capital                         4,032,610       5,026,332
   Discount on preferred stock                       (6,188,620)     (9,361,100)
   Retained earnings (deficit)                          638,483        (423,598)
   Less:  Treasury Stock at Cost  (723,000 shares)     (654,851)             --
                                                   ------------    ------------

        Total stockholders' equity                    5,945,522       6,813,467
                                                   ------------    ------------

                                                   $ 12,448,667    $ 13,322,133
                                                   ============    ============
 

                                        1
<PAGE>

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

                                                         1997          1996
                                                                    (RESTATED)
                                                      -----------   -----------

Net sales                                             $20,939,200   $21,145,532

Cost of sales                                          18,446,752    19,630,389
                                                      -----------   -----------

Gross profit                                            2,492,448     1,515,143
                                                      -----------   -----------
Operating expenses
   Selling and administrative                           1,922,087     1,431,830
   Amortization of goodwill                                47,261        36,017
                                                      -----------   -----------

        Total operating expenses                        1,969,348     1,467,847
                                                      -----------   -----------

Income from operations                                    523,100        47,296
                                                      -----------   -----------
Other income (expense)
   Miscellaneous income                                   (12,074)       (8,247)
   Interest income                                         15,212         9,100)
   Interest expense                                       (30,148)       (9,568)
                                                      -----------   -----------

        Total other (expense) income                      (27,010)       (8,715)
                                                      -----------   -----------

Income before provision for income taxes                  496,090        38,581

Provision for income taxes                                198,436        11,989
                                                      -----------   -----------

Net income                                            $   297,654   $    26,592
                                                      ===========   ===========

Net earnings per share                                $      0.01   $      0.00
                                                      ===========   ===========

Weighted average number of shares - fully diluted      24,418,198    17,413,922
                                                      ===========   ===========
 

                                      2
<PAGE>

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

                                                       1997            1996
                                                                    (RESTATED)
                                                   ------------    ------------

Net sales                                          $ 72,362,075    $ 62,642,609

Cost of sales                                        65,207,295      57,583,034
                                                   ------------    ------------

Gross profit                                          7,154,780       5,059,575
                                                   ------------    ------------

Operating expenses
   Selling and administrative                         5,236,471       4,078,144
   Amortization of goodwill                             141,783         108,051
                                                   ------------    ------------

        Total operating expenses                      5,378,254       4,186,195
                                                   ------------    ------------

Income from operations                                1,776,526         873,380
                                                   ------------    ------------

Other income (expense)
   Miscellaneous income                                  52,685          13,128
   Interest income                                       59,057          11,121
   Interest expense                                    (118,133)        (19,246)
                                                   ------------    ------------

        Total other (expense) income                     (6,391)          5,003
                                                   ------------    ------------

Income before provision for income taxes              1,770,135         878,383

Provision for income taxes                              708,054         339,434
                                                   ------------    ------------

Net income                                         $  1,062,081    $    538,949
                                                   ============    ============

Net earnings per share                             $       0.04    $       0.03
                                                   ============    ============

Weighted average number of shares - fully diluted    24,418,198      17,413,922
                                                   ============    ============
 

                                      3
<PAGE>

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

                                                           1997         1996
                                                                     (RESTATED)
                                                        ----------   ----------

Net cash provided by (used in) operating activities     $2,018,169   $  453,636

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                      (63,446)     (26,599)
                                                        ----------   ----------

Net cash (used in) provided by investing activities     (1,968,297)     (26,599)
                                                        ----------   ----------
Cash flows from financing activities:

   Notes payable related parties                          (228,322)      54,364

   Notes receivable - officer                               (6,124)      94,691

   Short term borrowings                                   184,574           --
                                                        ----------   ----------

Net cash (used in) provided by financing activities        (49,872)     149,055
                                                        ----------   ----------

Net increase in cash                                       108,506      576,092

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

Cash and cash equivalents - End of period               $1,775,537   $1,495,187
                                                        ==========   ==========


                                       4
<PAGE>

                                 ATEC GROUP, INC
            UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        NINE MONTHS ENDED MARCH 31, 1997

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

Conversion of Series I
  Preferred Stock                 1,666,665        16,667      (390,000)    (2,000,000)       (12,667)     1,996,000             -- 

Purchase and Retirement of
  Series D                               --            --      (117,648)      (588,240)      (205,880)       294,120                
  Series J                               --            --      (166,472)      (832,360)      (707,500)       832,360                
  Series K                               --            --       (10,000)       (50,000)       (42,500)        50,000                

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

Purchase of Common Stock                 --            --            --             --             --             --       (654,851)

Net Income for the Nine
  Months Ended March 31, 1997            --            --            --             --             --             --             -- 
                               ------------  ------------  ------------   ------------   ------------   ------------   ------------ 
Balance at March 31, 1997        18,733,462  $    235,432     1,886,569   $  7,882,468   $  4,032,610   ($ 6,188,620)  ($   654,851)
                               ============  ============  ============   ============   ============   ============   ============ 

<CAPTION>
                                 Retained        Total
                                 Earnings     Stockholders'
                                 (Deficit)       Equity
                               ------------   ------------
<S>                            <C>            <C>         
Balance at June 30, 1996       ($   423,598)  $  6,813,467

Conversion of Series I
  Preferred Stock                        --             --

Purchase and Retirement of
  Series D                                        (500,000)
  Series J                                        (707,500)
  Series K                                         (42,500)

Registration Expenses                    --        (25,175)

Purchase of Common Stock                 --        -654851

Net Income for the Nine
  Months Ended March 31, 1997     1,062,081      1,062,081
                               ------------   ------------ 
Balance at March 31, 1997      $    638,483   $  5,945,522
                               ============   ============
</TABLE>
 

                                      5
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                                    FORM 10Q
                        NINE MONTHS ENDED MARCH 31, 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 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 nine month  results,  revenues would have been $67.1 million and
net income would have been $585,320 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
                                          ----------   -----------   -----------

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       282,352     1,411,760
   Series E convertible                      200,000       200,000     1,000,000
   Series J convertible                      800,000       633,528     3,167,640
   Series K convertible                      400,000       390,000     1,950,000
                                                       -----------   -----------

       Total preferred                                   1,886,569   $ 7,882,468
                                                       ===========   ===========

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 24,418,198 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 March 31, 1997, the Company had purchased  723,000
shares of common  stock  for a total  cost of  $654,851  and  294,120  shares of
preferred stock with a par value of $1,470,600 for a total cost of $1,250,000.


                                        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 third party 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

The  Company's  revenues for the nine months  ended March 31, 1997  increased to
$72.4   million  from  $62.6   million  for  the  prior  year,  an  increase  of
approximately  16%. 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 $7.2
million for March 31, 1997 from $5.1 million for the comparable  1996 period,  a
44% increase due to the  increased  revenues.  Gross  margins as a percentage of
revenues  for the six months  were 9.8% 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.


                                        8

<PAGE>

Revenues for the three months ended March 31, 1997 were  approximately  the same
as the  comparable  period of the prior year.  Gross  margins  increased to $2.5
million  (11.9%) from $1.5 million  (7.1%) in 1996. The level sales and increase
in gross  margins  resulted  from the  discontinuance  of sales to selected  low
margin wholesale customers in 1997.

March 31, 1997 operating expenses exclusive of amortization of intangible assets
increased  to $5.2  million for the nine months ended March 31, 1997 as compared
to $4.1  million for the prior year.  The  increase in  operating  expenses  are
related to additional  selling  expenses and 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. The increase
in  operating  expenses  for the three  months ended March 31, 1997 is primarily
increased selling expenses.

The  provision  for income taxes was $708,054 for the 1997 period as compared to
$339,434 for 1996 period.

As a result of the above,  the Company's net income  increased to $1,062,081 for
the nine months ended March 31, 1997  compared to $538,949 for 1996.  Net income
per  share was $.04  compared  to $.03 for the same  period  in the prior  year.
Primary and fully diluted average shares outstanding were 24,418,198 for 1997.

Net income for the three  months  ended March 31, 1997  increased to $297,654 as
compared to $26,592 for the 1996 quarter.  The increase is primarily  attributed
to weather related  problems in the 1996 quarter and better gross margins in the
1997 quarter.

LIQUIDITY AND CAPITAL RESOURCES

The  Company's  cash  position was  $1,775,537  at March 31, 1997, a increase of
$108,506  compared to June 30, 1996. The Company's  working capital at March 31,
1997 was  $2,958,531 as compared to a working  capital of $3,815,238 at June 30,
1996. Net cash provided by operating activities was $2,018,169.

Cash used for investing  activities  totaled  $1,968,297.  The Company purchased
$1,470,600 of the outstanding  preferred stock for $1,250,000 and 723,000 shares
of its common stock for $654,851.

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
March  31,  1997,   indebtedness  of  the  Company  to  Deutsche  Financial  was
$2,269,628,  an increase of $188,574  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
                                 March 31, 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 March 31, 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: May 13, 1997

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


                                       11