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, 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 December 31, 1997, there were 5,821,462 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..............................................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, 1997    June 30, 1997
                                             -----------------    -------------
ASSETS

Current Assets
   Cash                                      $       3,552,916    $   2,013,549
   Accounts receivable, net                          8,583,813        9,246,247
   Inventories                                       3,343,480        1,382,236
   Deferred taxes                                       37,249           37,249
   Other current assets                                327,643          441,469
                                             -----------------    -------------
        Total currrent assets                       15,845,101       13,120,750

Property and equipment, net                            475,379          439,000

Goodwill, net                                        3,446,704        3,556,704

Other assets                                            82,264           31,253
                                             -----------------    -------------
                                             $      19,849,448    $  17,147,707
                                             =================    =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
   Bank overdraft                            $            --      $     533,871
   Revolving inventory line of credit                6,300,844        1,830,359
   Accounts payable                                  3,944,392        4,447,595
   Notes payable - related parties                     127,967          127,967
   Accrued expenses                                    504,136          777,385
   Income taxes payable                                  2,397        1,029,016
   Other current liabilities                           139,110          621,412
                                             -----------------    -------------
        Total liabilities                           11,018,846        9,367,605
                                             -----------------    -------------
Stockholders' equity
   Preferred stocks                                    353,057          353,057
   Common stock                                        346,380          346,380
   Additional paid-in capital                        6,806,216        6,806,216
   Discount on preferred stock                        (315,000)        (315,000)
   Retained earnings                                 2,294,800        1,244,300
   Less:  Treasury stock at cost                      (654,851)        (654,851)
                                             -----------------    -------------
        Total stockholders' equity                   8,830,602        7,780,102
                                             -----------------    -------------
                                             $      19,849,448    $  17,147,707
                                             =================    =============


                                       1
<PAGE>

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

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


Net sales                                          $ 36,138,869    $ 25,783,789

Cost of sales                                        33,282,776      23,501,921
                                                   ------------    ------------
Gross profit                                          2,856,093       2,281,868
                                                   ------------    ------------
Operating expenses
   Selling and administrative                         1,840,963       1,604,318
   Amortization of goodwill                              60,000          73,068
                                                   ------------    ------------
        Total operating expenses                      1,900,963       1,677,386
                                                   ------------    ------------
Income from operations                                  955,130         604,482
                                                   ------------    ------------
Other income (expense)
   Miscellaneous income                                    --             6,786
   Interest income                                       42,816          24,452
   Interest expense                                      (7,089)        (48,878)
                                                   ------------    ------------
        Total other (expense) income                     35,727         (17,640)
                                                   ------------    ------------
Income (loss) before provision for income taxes         990,857         586,842

Provision for income taxes                              411,460         223,018
                                                   ------------    ------------
Net income (loss)                                  $    579,397    $    363,824
                                                   ============    ============
Basic and diluted earnings per share               $       0.10    $       0.06
                                                   ============    ============
Weighted average number of shares                     5,963,168       5,632,148
                                                   ============    ============


                                       2
<PAGE>

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

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

Net sales                                          $ 69,211,424    $ 51,422,875

Cost of sales                                        63,654,305      46,760,545
                                                   ------------    ------------
Gross profit                                          5,557,119       4,662,330
                                                   ------------    ------------
Operating expenses
   Selling and administrative                         3,768,216       3,279,487
   Amortization of goodwill                             120,000         129,417
                                                   ------------    ------------
          Total operating expenses                    3,888,216       3,408,904
                                                   ------------    ------------
Income from operations                                1,668,903       1,253,426
                                                   ------------    ------------
Other income (expense)
   Miscellaneous income                                  70,000          64,760
   Interest income                                       77,222          43,845
   Interest expense                                     (13,665)        (87,986)
                                                   ------------    ------------
          Total other (expense) income                  133,557          20,619
                                                   ------------    ------------

Income (loss) before provision for income taxes       1,802,460       1,274,045

Provision for income taxes                              751,960         509,618
                                                   ------------    ------------
Net income  (loss)                                 $  1,050,500    $    764,427
                                                   ============    ============
Basic and diluted earnings per share               $       0.18    $       0.14
                                                   ============    ============
Weighted average number of shares                     5,898,668       5,632,148
                                                   ============    ============


                                       3
<PAGE>

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

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


Net cash provided by (used in) operating activities   ($2,823,669)  $    75,797

Cash flows from investing activities:

    Purchase of Treasury Stock                               --        (694,863)

    Purchase of property and equipment                   (107,449)      (12,282)
                                                      -----------   -----------
Net cash (used in) provided by investing activities      (107,449)     (707,145)
                                                      -----------   -----------
Cash flows from financing activities:

    Notes receivable - officer                               --          (8,000)

    Long term borrowings                                     --         (11,867)

    Short term borrowings                               4,470,485      (104,500)
                                                      -----------   -----------
Net cash (used in) provided by financing activities     4,470,485      (124,367)
                                                      -----------   -----------
Net increase (decrease) in cash                         1,539,367      (755,715)

Cash and cash equivalents - Beginning of period         2,013,549     1,667,031
                                                      -----------   -----------

Cash and cash equivalents - End of period             $ 3,552,916   $   911,316
                                                      ===========   ===========


                                       4
<PAGE>

                                 ATEC GROUP, INC
            UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                       SIX MONTHS ENDED DECEMBER 31, 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              5,965,652   $346,380   380,579   $353,057   $6,806,216   ($315,000)   $1,244,300  

Net Income for the Six Months Ended
  December 31, 1997                        --         --        --         --           --          --       1,050,500  
                                      ---------   --------   -------   --------   ----------   ---------    ----------  
Balance at December 31, 1997          5,965,652   $346,380   380,579   $353,057   $6,806,216   ($315,000)   $2,294,800  
                                      =========   ========   =======   ========   ==========   =========    ==========  
<CAPTION>
                                           Treasury Stock            Total
                                      -------------------------   Stockholders'
                                        Shares        Amount         Equity
                                      ----------    -----------    ----------
<S>                                     <C>         <C>            <C>       
Balance at June 30, 1997                (144,600)   ($  654,851)   $7,780,102

Net Income for the Six Months Ended
  December 31, 1997                                                 1,050,500
                                      ----------    -----------    ----------
Balance at December 31, 1997            (144,600)   ($  654,851)   $8,830,602
                                      ==========    ===========    ==========
</TABLE>


                                       5
<PAGE>

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

These  financial  statements  have been  prepared in accordance  with  generally
accepted  accounting  principles for interim financial  information and with the
instructions  to  Form  10-Q.  Accordingly,  they  do  not  include  all  of the
information and footnotes required by generally accepted  accounting  principles
for complete financial  statements.  In the opinion of management,  such interim
statements  reflect all adjustments  (consisting of normal  recurring  accruals)
necessary to present fairly the financial position and the results of operations
and cash flows for the interim periods presented.  The results of operations for
these  interim  periods  are not  necessarily  indicative  of the  results to be
expected  for the  full  year.  These  financial  statements  should  be read in
conjunction  with the audited  consolidated  financial  statements and footnotes
included in the Company's report on Form 10-K for the year ended June 30, 1997.


                                        6

<PAGE>

2. Equity Securities

   Capital Stock

      The Company's capital stock consists of the following:

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

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

Stock Option Plan and Common Stock Purchase Warrants

In August 1997, the Company  awarded  140,000  common stock purchase  options to
employees  under the 1997 Stock  Option Plan at an exercise  price of $3.125 per
share (the market  price on the date of grant).  In December  1997,  the Company
issued 140,000  common stock purchase  options at an exercise price of $3.75 per
share. Total outstanding common stock purchase options at December 31, 1997 were
280,000.

During August 1997, the Company entered into  non-exclusive  Investment  Banking
agreements with Auerback,  Pollack & Richardson,  Inc. and M.H.  Meyerson & Co.,
Inc. In connection  with these  agreements,  the Company agreed to issue 240,000
common stock purchase warrants at exercise prices of $3.75 to $7.50 per share.


                                       7
<PAGE>

Split of Common Stock

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

3. Computation of Earnings Per Share

Earnings per share are based on the weighted average number of common and common
equivalent shares outstanding. Shares outstanding and earnings per share for the
three and six months ended  December 31, 1996 have been  restated to reflect the
increase in shares issued upon the  conversion of preferred  stock due to market
price changes and have been adjusted for the stock split.

4. Goodwill

Goodwill is being amortized over a period of fifteen years.

5. Litigation

During 1990, a competitor of the Company  commenced an action against it and one
of its advertising agents. The complaint seeks $1,000,000 in damages for alleged
disclosure of certain trade secrets,  and  $10,000,000  in punitive  damages and
$10,000,000 based upon allegations that the Company interfered with and impaired
the competitor's business relations.  Management believes that there is no merit
to this action. The action has been virtually inactive since commencement.

A lawsuit was commenced  against the Company by Mid Hudson Clarklift as a result
of a claim filed against them by a former  employee of the Company who sustained
an injury  while  operating a forklift.  The lawsuit  consists of four causes of
action each for $5,000,000 and one cause of action by the former employee's wife
for  $2,000,000.  The lawsuit is in the  discovery  stages.  Management  and its
counsel have no opinion as to its ultimate disposition.

The  Company  is a  defendant  in  various  other  lawsuits  for  which  certain
provisions  have been made in the  financial  statements.  Management  is of the
opinion  that  the  ultimate  resolution  of  these  actions  will  not  have  a
significant effect on the Company's financial statements.


                                        8

<PAGE>

                     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

December 31, 1997 compared to December 31, 1996

The Company's  revenues for the second quarter ended December 31, 1997 increased
to $36.1  million  from  $25.7  million  for the  prior  year,  an  increase  of
approximately  40%. 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 $2.8
million for December 31, 1997 from $2.3 million for the comparable 1996 quarter,
a 22% increase due to the increased  revenues.  Gross margins as a percentage of
revenues  for the six months  were 7.9% as  compared to 8.8% for the prior year.
The decline is the result of higher wholesale revenues. The Company's goal is to
increase  these margins as the Company  attempts to increase its market share in
more  profitable   sectors  of  the  business  such  as  integration,   hardware
service/maintenance, networking, and training.

December 31, 1997 operating  expenses  exclusive of  amortization  of intangible
assets increased to $1.8 million as compared to $1.6 million for the prior year.
The increase  resulted from  increased  operating  expenses to support the sales
growth.

The  provision for income taxes was $411,460 for the 1997 quarter as compared to
$223,018 for 1996 period.

As a result of the above, the Company's net income increased to $579,397 for the
three months ended  December 31, 1997 compared to $363,824 for the 1996 quarter.
For the  December 31, 1997  quarter,  basic and diluted net income per share was
$.10  compared  to $.06 in the  prior  year.  Average  shares  outstanding  were
5,963,168 for 1997 and 5,632,148 for 1996.


                                        9

<PAGE>

Revenues for six months ended  December 31, 1997 increased to $69.2 million from
$51.4  million  for the prior  year,  an increase  of  approximately  35%.  This
increase is primarily  attributed to internal growth. Gross margins increased to
$5.6 million as compared to $4.7 million for the comparable  period of the prior
year.  Gross  margins as a percentage  of revenues for the six months were 8% as
compared to 9.1% for the prior year. The slight decline in gross margins are the
result  of higher  wholesale  revenues.  Operating  expenses  increased  to $3.7
million as compared to $3.3  million  for the prior  year.  The 12%  increase is
attributed to increased  operating expenses related to the Company's growth. The
provision for income taxes was $751,960 for 1997 as compared to $509,618 for the
prior year.

As a result of the above,  the Company's net income  increased to $1,050,500 for
the six months  ended  December  31, 1997 as compared to $764,427  for the prior
year.  Primary and diluted net income per share was $.18 compared to $.14 in the
prior year. Average shares outstanding were 5,898,668 for 1997 and 5,632,148 for
1996.

Liquidity and Capital Resources

The Company's  cash position was $3,552,916 at December 31, 1997, an increase of
$1,539,367  compared to June 30, 1997. The Company's working capital at December
31, 1997 was  $4,826,255 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  $4,470,485.  Cash used for
investing   activities  totaled  $107,449  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
December 31, 1997,  indebtedness  of the Company to Deutsche  Financial was $6.3
million,  an increase of $4.5 million compared to June 30, 1997.  Substantially,
all of  subsidiary  company  tangible  and  intangible  assets  are  pledged  as
collateral for this facility.


                                       10

<PAGE>

                        ATEC Group, Inc. and Subsidiaries
                                Other Information
                                December 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 December 31, 1997:

            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 13, 1998           By: s/Surinder Rametra
                                       -----------------------------
                                       Surinder Rametra, in the capacity of both
                                       Chairman and Chief Executive Officer


                                       12