SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              --------------------

                                    FORM 10-Q

                              --------------------

                                 CURRENT REPORT

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

                     For the Quarter Ended December 31, 1999

              [ ] 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 (631) 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 December 31, 1999, there were 7,326,963 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............................................9-10


PART II  Other Information Required in Report


     Item 6 - Other Information...........................................11

     Signature Page.......................................................12

<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                  UNAUDITED           AUDITED
                                             December 31, 1999     June 30, 1999
                                             -----------------     -------------

ASSETS

CURRENT ASSETS
     Cash                                        $  2,323,368      $  2,246,951
     Accounts receivable, net                       9,414,396         8,666,500
     Inventories                                    1,891,212         1,110,273
     Deferred taxes                                   251,290           251,290
     Other current assets                           1,585,126         1,405,333
                                                 ------------      ------------
          Total currrent assets                    15,465,392        13,680,347
                                                 ------------      ------------

PROPERTY AND EQUIPMENT, NET                           694,752           750,279

GOODWILL, NET                                       1,474,775         1,519,775

OTHER ASSETS                                          239,637            54,594
                                                 ------------      ------------

                                                 $ 17,874,556      $ 16,004,995
                                                 ============      ============


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Revolving inventory line of credit          $  1,867,676      $  1,934,534
     Accounts payable                               3,464,322         1,709,763
     Accrued expenses                                 452,013           669,738
     Income taxes payable                             285,800                --
     Other current liabilities                        242,078           232,768
                                                 ------------      ------------

          Total liabilities                         6,311,889         4,546,803

STOCKHOLDERS' EQUITY
     Preferred stocks                                 321,090           321,090
     Common stock                                      73,270            73,270
     Additional paid-in capital                    11,758,235        11,758,235
     Discount on preferred stock                     (288,090)         (288,090)
     Retained earnings                                 91,518          (314,862)
     Less:  Treasury stock at cost                   (393,356)          (91,451)
                                                 ------------      ------------

          Total stockholders' equity               11,562,667        11,458,192
                                                 ------------      ------------

                                                 $ 17,874,556      $ 16,004,995
                                                 ============      ============


                                        1
<PAGE>

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

                                                      1999           1998
                                                  ------------   ------------

NET SALES                                         $ 17,531,550   $ 32,797,105

COST OF SALES                                       14,443,169     30,299,606
                                                  ------------   ------------

GROSS PROFIT                                         3,088,381      2,497,499
                                                  ------------   ------------

OPERATING EXPENSES
     Selling and administrative                      2,861,726      2,363,445
     Amortization of goodwill                           22,500        105,000
                                                  ------------   ------------

          Total operating expenses                   2,884,226      2,468,445
                                                  ------------   ------------

INCOME FROM OPERATIONS                                 204,155         29,054
                                                  ------------   ------------

OTHER INCOME (EXPENSE)
     Interest income                                    23,296         43,982
     Interest expense                                       --        (13,062)
                                                  ------------   ------------

          Total other (expense) income                  23,296         30,920
                                                  ------------   ------------

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES        227,451         59,974

PROVISION FOR INCOME TAXES                              91,200         36,500
                                                  ------------   ------------

NET INCOME (LOSS)                                 $    136,251   $     23,474
                                                  ============   ============


NET EARNINGS (LOSS) PER SHARE-BASIC AND DILUTED   $       0.02   $       0.00
                                                  ============   ============


 WEIGHTED AVERAGE NUMBER OF SHARES-BASIC             7,301,374      7,192,285
                                                  ============   ============

 WEIGHTED AVERAGE NUMBER OF SHARES-DILUTED           7,301,374      7,192,285
                                                  ============   ============


                                        2
<PAGE>

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

                                                      1999           1998
                                                  ------------   ------------

NET SALES                                         $ 37,720,193   $ 67,617,938

COST OF SALES                                       30,814,105     61,864,395
                                                  ------------   ------------

GROSS PROFIT                                         6,906,088      5,753,543
                                                  ------------   ------------

OPERATING EXPENSES
     Selling and administrative                      6,213,422      5,243,547
     Amortization of goodwill                           45,000        180,000
                                                  ------------   ------------

          Total operating expenses                   6,258,422      5,423,547
                                                  ------------   ------------

INCOME FROM OPERATIONS                                 647,666        329,996
                                                  ------------   ------------

OTHER INCOME (EXPENSE)
     Interest income                                    44,514         79,209
     Interest expense                                       --        (35,418)
                                                  ------------   ------------

          Total other (expense) income                  44,514         43,791
                                                  ------------   ------------

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES        692,180        373,787

PROVISION FOR INCOME TAXES                             285,800        149,500
                                                  ------------   ------------

NET INCOME (LOSS)                                 $    406,380   $    224,287
                                                  ============   ============


NET EARNINGS (LOSS) PER SHARE-BASIC AND DILUTED   $       0.06   $       0.03
                                                  ============   ============


 WEIGHTED AVERAGE NUMBER OF SHARES-BASIC             7,301,374      7,192,285
                                                  ============   ============

 WEIGHTED AVERAGE NUMBER OF SHARES-DILUTED           7,301,374      7,192,285
                                                  ============   ============

                                       3
<PAGE>
<TABLE>
<CAPTION>

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

                                                          1999           1998
                                                      -----------    -----------
<S>                                                   <C>            <C>
Net cash provided by (used in) operating activities   $   537,543    $ 8,353,635

Cash flows from investing activities:
          Purchase of Treasury Stock                     (301,905)       (40,800)
          Increase in Loans Receivable                                  (597,016)
          Purchase of property and equipment              (92,363)       (11,302)
                                                      -----------    -----------

Net cash (used in) provided by investing activities      (394,268)      (649,118)
                                                      -----------    -----------


Cash flows from financing activities:

          Decrease in bank overdraft                                    (339,944)
          Notes Payable - related Parties                                 (2,967)
          Short term borrowings                           (66,858)    (5,453,072)
                                                      -----------    -----------

Net cash (used in) provided by financing activities       (66,858)    (5,795,983)
                                                      -----------    -----------

Net increase (decrease) in cash                            76,417      1,908,534

Cash and cash equivalents - Beginning of period         2,246,951      1,784,850
                                                      -----------    -----------

Cash and cash equivalents - End of period             $ 2,323,368    $ 3,693,384
                                                      ===========    ===========
</TABLE>

                                       4

<PAGE>
<TABLE>
<CAPTION>
                                                     ATEC GROUP, INC
                                 UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                          THREE MONTHS ENDING DECEMBER 31, 1999


                                         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, 1999                7,326,963    $73,270   330,009   $321,090  $11,758,235    ($288,090)   ($314,862)

Purchase of Treasury Stock

Net Income for the Six months Ended
  December 31, 1999                                                                                              406,380
                                       ----------   --------  --------   --------  -----------   ----------  -----------
BALANCE AT DECEMBER 31, 1999            7,326,963   $ 73,270   330,009   $321,090  $11,758,235    ($288,090)    $ 91,518
                                       ==========   ========  ========   ========  ===========   ==========  ===========


                                                        Treasury                   Total
                                             ----------------------------       Stockholders'
                                                 Shares          Amount            Equity
                                             -----------      -----------       -------------
<S>                                             <C>             <C>             <C>
Balance at June 30, 1999                        (18,000)        ($91,451)       $ 11,458,192

Purchase of Treasury Stock                     (123,900)       ($301,905)          ($301,905)

Net Income for the Six months Ended
  December 31, 1999                                                                  406,380

                                             -----------      -----------       -------------
BALANCE AT DECEMBER 31, 1999                   ($141,900)       ($393,356)      $  11,562,667
                                             ===========      ===========       =============
</TABLE>

                                       5
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                                    FORM 10-Q
                         QUARTER ENDED DECEMBER 31, 1999
                   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 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, 1999.


                                        6
<PAGE>

2.  EQUITY SECURITIES

     CAPITAL STOCK

          The Company's capital stock consists of the following:

                                                          Shares
                                                          Issued
                                           Shares          And
   December 31, 1999                     Authorized     Outstanding     Amount
                                         ----------     -----------    -------
   Preferred Stocks:
       Series A cumulative convertible       29,233          8,451    $    845
       Series B convertible                  12,704          1,458         145
       Series C convertible                 350,000        320,100     320,100
                                                         ---------    --------

           Total preferred                                 330,009    $321,090
                                                         =========    ========
   Common Stock                          70,000,000      7,326,963    $ 73,270

All of the Preferred  Stocks convert into 16,311 shares of the Company's  Common
Stock.

STOCK OPTION PLAN AND COMMON STOCK PURCHASE WARRANTS

In October 1999, the Company  awarded  234,500 common stock purchase  options to
employees  under the 1997 Stock  Option Plan at an exercise  price of $1.875 per
share (the  market  price on the date of grant).  In  November  1999 the Company
issued 150,000 common stock purchase  options to the Chairman and 200,000 common
stock  purchase  options to the President at an exercise  price of $1.99.  Total
outstanding common stock purchase options and warrants at December 31, 1999 were
3,324,825 at prices of $1.875 to $15.00 per share.


3.  COMPUTATION OF EARNINGS PER SHARE

Earnings per share are based on the weighted average number of common and common
equivalent shares outstanding.


4.  GOODWILL

Goodwill is being amortized over its estimated period of benefit,  not exceeding
fifteen years.


                                        7
<PAGE>


5.  LITIGATION

On or about  August 23, 1999 and October 14,  1999,  respectively,  two putative
shareholder class actions were filed in the United States District Court for the
Eastern  District of New York on behalf of all persons whom purchased our common
stock from October 12,  1998,  through May 19, 1999,  inclusive.  The  complaint
charges us and certain of our officers and  directors of  violations of sections
10(b) and 20(a) of the Exchange Act, 15 U.S.C.  ss.ss.  78j(b) & 781(a), and SEC
Rule 10b-5, 17 C.F.R. ss. 240.10b-5,  promulgated  thereunder.  The actions have
been  consolidated.  Plaintiffs  seek to represent all persons who purchased our
common stock between October 12, 1998 and May 19, 1999.  Plaintiffs  allege that
we and the  individual  defendants  issued  a  series  of  allegedly  false  and
misleading  statements  regarding our growth plans and that we were  purportedly
positioning  ourself for a sale to a larger company.  Plaintiffs seek to recover
damages on behalf of all plaintiffs.

In October 1999, we commenced an action against  defendants,  Rita Dozal,  Frank
Dozal and  Michelle  O'Mahoney  for breach of contract  alleging  damages in the
aggregate  of  $2,131,365  against  defendants.  It is alleged  that  defendants
breached the terms of the contract by selling shares underlying  certain options
before they were entitled to do so under the terms of the contract.  In December
1999,  the  defendants  counter  claimed  for  $9,800,000  in damages  for:  (a)
fraudulent  and  economic  coercion;  (b) breach of  contract;  and (c) wrongful
termination  of  employment  against  Rita  Dozal.  The  action was filed in the
Supreme Court, New York County. The action is still in the preliminary stage and
discovery has not commenced.


                                       8
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                        ATEC GROUP, INC. AND SUBSIDIARIES
BACKGROUND

         ATEC  Group,  Inc.  is a PC  manufacturer  of Nexar XPA  technology,  a
leading system integrator and provider of a full line of information  technology
products  and  services.  As a  one-stop  company  for  the  computer  needs  of
businesses,  professionals,  government  agencies and educational  institutions,
ATEC enters the new millennium  with a  technological  arsenal that includes Y2K
remediation  solutions,  computer  hardware,  software,   connectivity  devices,
multimedia  products,  data  communication  via satellite,  video  conferencing,
system  integration  networking,  high speed data  transmission,  graphic  arts,
Internet and Intranet.


RESULTS OF OPERATIONS

THREE MONTHS ENDING DECEMBER 31, 1999 COMPARED TO DECEMBER 31, 1998

         The Company's  revenues for the second  quarter ended December 31, 1999
decreased to $17.5  million from $32.7 million for the prior year, a decrease of
approximately  46%. This decrease is attributable to a significant drop in sales
in our  distribution  division and a major shift in the marketing  philosophy of
large systems  manufacturers  that are gradually  decreasing their  distribution
network  and   increasingly   selling  directly  to  end-users  and  introducing
build-to-order  systems.  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 December 31, 1999 from $2.5 million for
the  comparable  1998 quarter,  a 24% increase due to higher margin sales in the
software  division.  Gross  margins as a percentage  of revenues for the quarter
were 17.6% as compared to 7.6% for the prior year.

         December  31, 1999  operating  expenses  exclusive of  amortization  of
intangible  assets increased to $2.8 million as compared to $2.4 million for the
prior year. The increase is primarily for additional employees and compensation.
Amortization  of  intangible  assets  decreased  to $22,500 for the quarter from
$105,000 in the  comparable  1998  period.  The  provision  for income taxes was
$91,200 for the 1999 quarter as compared to $36,500 for the 1998 quarter.

         As a result of the above, the Company's net income was $136,251 for the
three months ended  December 31, 1999  compared to $23,474 for the 1998 quarter.
For the  December 31, 1999  quarter,  basic and diluted net income per share was
$.02 compared to $.00 in the prior year. Average diluted shares outstanding were
7,301,374 for 1999 and 7,192,285 for 1998.


                                        9
<PAGE>

SIX MONTHS ENDING DECEMBER 31, 1999 COMPARED TO DECEMBER 31, 1998

         Revenues for the six months ended  December 31, 1999 decreased to $37.7
million from $67.6 million for the prior year, a decrease of approximately  44%.
This decrease is attributable to a significant drop in sales in our distribution
division  and a  major  shift  in the  marketing  philosophy  of  large  systems
manufacturers  that are  gradually  decreasing  their  distribution  network and
increasingly  selling  directly  to  end-users  and  introducing  build-to-order
systems.  Revenues are generated by the Company's sales of computer hardware and
software, and related support services. Gross margin for the period increased to
$6.9  million for  December  31, 1999 from 5.7 million for the  comparable  1998
quarter,  a 21%  increase due to higher  margin sales in the software  division.
Gross  margins as a percentage  of revenues for the quarter were 18% as compared
to 9% for the prior year.

         December 31, 1999 operating  expenses for the six months,  exclusive of
amortization of intangible assets, increased to $6.2 million as compared to $5.2
million for the prior year. The increase is primarily for  additional  employees
and  compensation.  Amortization of intangible  assets decreased to $45,000 from
$180,000 in the  comparable  1998  period.  The  provision  for income taxes was
$285,800 for the 1999 period as compared to $149,500 for the prior year.

         As a result  of the  above,  the  Company's  net  income  increased  to
$406,380 for the six months ended  December 31, 1999 as compared to $224,287 for
the prior year.  Primary  and diluted net income per share was $.06  compared to
$.03 for the prior year.  Average diluted shares  outstanding were 7,301,374 for
1999 and 7,192,285 for 1998.

LIQUIDITY AND CAPITAL RESOURCES

         The  Company's  cash  position was  $2,323,368 at December 31, 1999, an
increase of $76,417 as compared to June 30, 1999. The Company's  working capital
at December 31, 1999 was $9,153,503 as compared to working capital of $9,133,544
at June 30, 1999. Net cash provided by operating  activities was $235,638.  Cash
used for investing  activities  totaled $92,363 for the purchase of property and
equipment.  During the period the Company  purchased  123,900  common shares for
$301,905.

         To accommodate the Company's  financial needs for inventory  financing,
Deutsche Financial Service has granted a credit line of $7 million.  At December
31, 1999,  indebtedness  of the Company to Deutsche  Financial was  $1,867,676 a
decrease  of  $66,858  compared  to June 30,  1999.  Substantially  all  company
tangible and intangible assets are pledged as collateral for this facility.


                                       10
<PAGE>

                        ATEC GROUP, INC. AND SUBSIDIARIES
                                Other Information
                                December 31, 1999


PART II


Item 6.  Exhibits and Reports on form 8-K

         a) Exhibits - none

         b) Reports on Form 8-K: - NONE



                                       11
<PAGE>

                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                  ATEC GROUP, INC.
                                  (REGISTRANT)



Dated:  February 14, 2000         By: /s/ JAMES J. CHARLES
                                      ---------------------------
                                          James J. Charles,
                                          Chief Financial Officer


                                       12