United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549


                                    Form 10-Q



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

     For the quarterly period ended December 31, 2001

     Commission file number 0-20468


                     ALTERNATIVE TECHNOLOGY RESOURCES, INC.
             (Exact name of registrant as specified in its charter)


           Delaware                                       68-0195770
 (State or other jurisdiction of              (IRS Employer Identification No.)
 incorporation or organization)


                     33 Jewel Court, Portsmouth, N.H. 03801
                    (Address of principal executive offices)

                                 (603) 501-3200
              (Registrant's telephone number, including area code)


                  (Former address if changed since last report)


Check 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

Number of shares of common stock outstanding as of February 11, 2002: 59,984,322

<PAGE>2

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements


                     ALTERNATIVE TECHNOLOGY RESOURCES, INC.
                            Condensed Balance Sheets
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                        Fiscal Quarter       Fiscal Year End
                                                                         December 31,           June 30,
                               Assets                                        2001                 2001
                                                                        --------------       ---------------
<S>                                                                  <C>                   <C>
Current assets:
  Cash and cash equivalents                                             $     367,495        $   3,159,017
  Short-term investments                                                            -            1,354,137
  Trade accounts receivable                                                       636               24,252
  Interest receivable                                                             382               52,134
  Prepaid expenses and other current assets                                   211,197              267,635
                                                                        -------------        -------------
Total current assets                                                          579,710            4,857,175
                                                                        -------------        -------------
Property and equipment:
  Equipment and software                                                      721,757              501,626
  Accumulated depreciation and amortization                                  (188,221)            (107,848)
                                                                        -------------        -------------
  Property and equipment, net                                                 533,536              393,778
                                                                        -------------        -------------
Prepaid annual license and service fees                                       225,122              259,155
Other non-current assets                                                       39,388               67,550
                                                                        -------------        -------------
                                                                        $   1,377,756        $   5,577,658
                                                                        =============        =============

                 Liabilities and Stockholders' Equity (Deficit)

Current liabilities:
  Payable to Healthcare Exchange participants                           $     173,334        $      40,756
  Trade accounts payable                                                      165,015              151,371
  Accrued payroll and related expenses                                        224,013              181,028
  Accrued preferred stock dividends                                           283,195              283,195
  Accounts payable and accrued interest payable to stockholders               619,921              728,941
  Other current liabilities                                                   259,230              295,680
                                                                        -------------        -------------
Total current liabilities                                                   1,724,708            1,680,971
                                                                        -------------        -------------
  Notes payable to stockholder                                              1,630,529            1,511,635
  Convertible notes payable to stockholder                                  2,423,823            2,228,815
                                                                        -------------        -------------
Total notes payable to stockholders                                         4,054,352            3,740,450

Commitments and contingencies

Stockholders' equity (deficit):
  Common stock, $0.01 par value - 100,000,000 shares authorized;
    59,422,344 shares issued and outstanding at December 31, 2001
    (59,394,844 at June 30, 2001)                                             594,223              593,949
  Additional paid-in capital                                               49,133,637           49,109,283
  Accumulated other comprehensive (loss)                                            -                  (22)
  Accumulated deficit                                                     (54,129,164)         (49,546,973)
                                                                        -------------        -------------
Total stockholders' equity (deficit)                                       (4,401,304)             156,237
                                                                        -------------        -------------
                                                                        $   1,377,756        $   5,577,658
                                                                        =============        =============
</TABLE>


See accompanying notes to condensed financial statements.

<PAGE>3


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements


                     ALTERNATIVE TECHNOLOGY RESOURCES, INC.
                       Condensed Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                         Three Months Ended              Six Months Ended
                                                             December 31,                December 31, 2001
                                                        2001            2000           2001             2000
<S>                                                <C>           <C>              <C>             <C>
Healthcare exchange
   Healthcare exchange revenue                      $    253,876   $          -    $    362,094    $          -
   Healthcare exchange costs                            (350,213)             -        (575,001)              -
                                                    ------------   ------------    ------------    ------------
Healthcare exchange gross profit (loss)                  (96,337)             -        (212,907)              -

Contract programming
   Contract programming revenue                                -         47,812               -         225,831
   Programmer costs                                            -        (44,569)              -        (174,172)
   Start-up and other costs                                    -         (2,083)              -          (8,283)
                                                    ------------   ------------    ------------    ------------
Contract programming gross profit                              -          1,160               -          43,376

Selling, marketing and product development costs      (1,546,462)    (1,238,497)     (3,051,657)     (2,295,922)

General and administrative expenses                     (600,045)      (490,072)     (1,105,879)     (2,631,558)
                                                    ------------   ------------    ------------    ------------
Loss from operations                                  (2,242,844)    (1,727,409)     (4,370,443)     (4,884,104)

Other income (expense)
   Interest income                                         7,646        184,900          40,779         265,635
   Interest expense to stockholders and directors       (113,010)      (104,920)       (252,527)       (236,591)
                                                    ------------   ------------    ------------    ------------
Total other income (expense)                            (105,364)        79,980        (211,748)         29,044
                                                    ------------   ------------    ------------    ------------
Net loss                                              (2,348,208)    (1,647,429)     (4,582,191)     (4,855,060)

Preferred stock dividends in arrears                           -              -               -        (886,142)
                                                    ------------   ------------    ------------    ------------
Net loss applicable to common stockholders          $ (2,348,208)  $ (1,647,429)   $ (4,582,191)   $ (5,741,202)
                                                    ============   ============    ============    ============

Basic and diluted net loss applicable to common
stockholders per share                              $      (0.04)  $       (.03)   $      (0.08)   $      (0.10)
                                                    ============   ============    ============    ============
Shares used in per share calculations                 59,421,866     59,329,251      59,411,863      58,012,419
                                                    ============   ============    ============    ============

</TABLE>

See accompanying notes to condensed financial statements.

<PAGE>4


                     ALTERNATIVE TECHNOLOGY RESOURCES, INC.
                       Condensed Statements of Cash Flows
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                 Six Months Ended
                                                                    December 31,
                                                              2001              2000
                                                          ------------     ------------

<S>                                                       <C>              <C>
Net cash used in operating activities                     $ (4,264,080)    $ (3,037,819)
                                                          ------------     ------------
Cash flows used in investing activities:
   Purchases of property and equipment                        (220,131)        (108,057)
   Purchase of short-term investments                                -       (4,952,852)
   Maturities of short-term investments                      1,354,159                -
                                                          ------------     ------------
Net cash provided (used) by investing activities             1,134,028       (5,060,909)
                                                          ------------     ------------

Cash flows from financing activities:
   Proceeds from sale of common stock                                -        9,560,345
   Proceeds from exercise of options and warrants               24,628           37,917
   Proceeds from notes payable to stockholders                 313,902          233,026
   Payments on notes payable to stockholders                         -          (60,000)
   Payments on notes payable to directors                            -          (23,324)
                                                          ------------     ------------
Net cash provided by financing activities                      338,530        9,747,964
                                                          ------------     ------------
Net increase (decrease) in cash and cash equivalents        (2,791,522)       1,649,236
Cash and cash equivalents at beginning of period             3,159,017        1,909,421
                                                          ------------     ------------
Cash and cash equivalents at end of period                $    367,495     $  3,558,657
                                                          ============     ============

</TABLE>


See accompanying notes to condensed financial statements.

<PAGE>5


PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations


                     ALTERNATIVE TECHNOLOGY RESOURCES, INC.
                     Notes to Condensed Financial Statements
                                December 31, 2001
                                   (Unaudited)

Note 1 - Basis of Presentation

The accompanying  unaudited condensed financial statements have been prepared in
accordance with accounting  principles  generally  accepted in the United States
for interim  financial  information and pursuant to the rules and regulations of
the Securities and Exchange Commission.  Accordingly, they do not include all of
the  information  and  footnotes  required by  accounting  principles  generally
accepted in the United  States for complete  financial  statements.  For further
information, refer to the financial statements and footnotes thereto included in
the  Company's  annual  report on Form 10-K for the  fiscal  year ended June 30,
2001.

In the opinion of  management,  the  unaudited  condensed  financial  statements
contain all adjustments,  consisting of normal recurring adjustments, considered
necessary to present  fairly the  Company's  financial  position at December 31,
2001 and June 30, 2001, results of operations for the three and six months ended
December 31, 2001 and 2000, and cash flows for the six months ended December 31,
2001 and 2000.  The results for the period  ended  December  31,  2001,  are not
necessarily  indicative of the results to be expected for the entire fiscal year
ending June 30, 2002.

The Company has incurred  operating losses since inception,  which have resulted
in an  accumulated  deficit of  $54,129,164  at December 31, 2001.  Based on the
steps the  Company  has taken to refocus its  operations  and obtain  additional
financing,  the Company  believes that it has developed a viable plan to address
the Company's  ability to continue as a going  concern,  and that this plan will
enable the Company to continue as a going  concern,  at least through the end of
fiscal year 2002. The Company is currently seeking to raise up to $12,000,000 by
selling up to 5,333,333 shares of its common stock at $2.25 per share.

There can be no assurance that this plan will be  successfully  implemented.  If
the offering is not fully subscribed,  the Company may be required to reduce the
development  efforts  of its  Healthcare  Exchange  or be  forced  into  seeking
protection under federal bankruptcy laws. As a result, the report of independent
auditors  on the  Company's  June 30,  2001,  financial  statements  includes an
explanatory  paragraph indicating there is substantial doubt about the Company's
ability to continue as a going concern.  The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification  of assets or the amounts and  classification of liabilities that
may result from the outcome of this uncertainty.

<PAGE>6

PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations


Note 2 - Financing Arrangements

See Part I, Item 2 "Management's  Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."

Note 3 - Comprehensive Loss

Total  comprehensive loss for the three months ended December 31, 2001 and 2000,
was $2,348,208, and $1,643,330, and $4,582,169 and $4,850,961 for the six months
ended December 31, 2001 and 2000 respectively. Other comprehensive income (loss)
represents  the net change in unrealized  gains  (losses) on  available-for-sale
securities.

Note 4 - Recent Accounting Pronouncements

In July 2001, the Financial  Accounting  Standards  Boards issued  Statements of
Financial Accounting Standards No. 141, "Business Combinations," or SFAS 141 and
No. 142, "Goodwill and Other Intangible  Assets," or SFAS 142. SFAS 141 requires
that the purchase  method of  accounting  be used for all business  combinations
initiated  after June 30,  2001.  Use of the  pooling-of-interests  method is no
longer permitted. SFAS 141 also includes guidance on the initial recognition and
measurement  of  goodwill  and other  intangible  assets  acquired in a business
combination  that is completed  after June 30, 2001.  SFAS 142 no longer permits
the amortization of goodwill and  indefinite-lived  intangible assets.  Instead,
these  assets  must be  reviewed  annually  (or more  frequently  under  certain
conditions) for impairment in accordance with this statement.  Intangible assets
that do not have  indefinite  lives will  continue  to be  amortized  over their
useful lives and reviewed for impairment in accordance  with existing  guidance.
We are required to adopt SFAS 142  effective  July 1, 2002.  Because the Company
has historically  not been party to any business  combinations and therefore has
not recorded  related goodwill and intangible  assets,  the adoption of SFAS 141
and 142 did not and will not,  respectively,  have an  effect  on the  Company's
results of operations, financial position or cash flows.

In  October  2001,  the FASB  issued  Statement  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets"  (SFAS 144).  SFAS 144  supersedes
SFAS 121,  however it  retains  the  fundamental  provisions  of that  statement
related to the  recognition  and  measurement  of the  impairment  of long-lived
assets to be "held  and  used."  Among  other  things,  SFAS 144  provides  more
guidance on estimating  cash flows when  performing a  recoverability  test. The
Company will adopt SFAS 144 effective July 1, 2002.  Management  does not expect
that the  adoption of SFAS 144 will have an effect on the  Company's  results of
operations, financial condition and cash flows.

Note 5 - Net Loss Per Share

All loss per share  amounts for all periods have been  presented  in  accordance
with Statement of Financial  Accounting  Standards Board No. 128,  "Earnings per

<PAGE>7

PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations


Share". As the Company has reported net losses in all periods  presented,  basic
and  diluted  loss per  share  have  been  calculated  on the  basis of net loss
applicable  to common  stockholders  divided by the weighted  average  number of
common stock shares  outstanding  without giving effect to outstanding  options,
warrants,  and convertible  securities whose effects are anti-dilutive.  For the
three and six months ended December 31, 2001 and 2000, there were stock options,
stock  warrants,  and  a  convertible  note  payable  outstanding,  which  could
potentially dilute earnings per share in the future but were not included in the
computation of diluted loss per share as their effect was  anti-dilutive  in the
periods presented.

Note 6 - Subsequent Events

Subsequent to December 31, 2001, and through  February 11, 2002, the Company has
received  $737,500  through  the sale of 327,778  shares  pursuant  to a Private
Placement.  The  Company's  Chief  Financial  Officer,  James W.  Cameron,  Jr.,
purchased 222,222 shares of the Company's common stock in the Private Placement.
Because the purchase  price of such stock was less than the public trading price
on the dates of purchase,  the Company expects to record compensation expense of
approximately $138,583 for the quarter ending March 31, 2002.

Subsequent to December 31, 2001,  the Company  issued  284,200  shares of common
stock through the exercise of warrants for the amount of $213,150.

Management's Discussion and Analysis

The following  discussion  provides  information to facilitate the understanding
and  assessment  of  significant  changes  in trends  related  to the  financial
condition  of the Company and its  results of  operations.  It should be read in
conjunction  with the Company's  financial  statements and the notes thereto and
other financial  information  included elsewhere in the Form 10-K for the fiscal
year ended June 30, 2001.

Overview

General

Alternative  Technology  Resources,  Inc. (hereinafter referred to as "ATR," the
"Company,"  "we" or  "us")  has  developed  and is  operating  an  Exchange  for
healthcare  services  ("Healthcare  Exchange").  The  purpose of the  Healthcare
Exchange  is to  utilize  the  Internet  and other  technologies  to  facilitate
Provider initiated discounts and administrative, billing and remittance services
for all commercial lines of business in the healthcare industry.  The Healthcare
Exchange offers a direct and efficient  conduit between Providers and Purchasers
of  healthcare   services  and/or  their  agents,  such  as  Preferred  Provider
Organizations.

<PAGE>8

PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations


The purpose of the  Healthcare  Exchange is to utilize  the  Internet  and other
technologies  to facilitate  Provider  initiated  discounts and  administrative,
billing and remittance  services for all commercial lines of business within the
healthcare  industry.  Our  Healthcare  Exchange  offers a direct and  efficient
conduit  between  Providers and Purchasers of health care services,  their PPOs'
and/or their  agents.  Providers  submit bills to the Company,  who reprices the
bills   to   the   rate   set   by   the   Providers,    including    adding   a
transaction-processing  fee,  and  then  routes  them  to  Purchasers  or  their
intermediaries.  The Company  receives  payments  from  Purchasers  on behalf of
Providers, and then remits payments to Providers.

ATR's  Healthcare  Exchange began  operations with a limited number of Providers
and  Purchasers in the quarter  ending June 30, 2001.  The Company  continues to
receive,  process and analyze  operating  data, and the results of the Company's
analysis will determine the amount and timing of remaining  development  related
efforts.

The Company is currently recruiting medical doctors,  medical groups,  hospitals
and other health care  practitioners  (collectively,  "Providers") in thirty-two
markets in  twenty-two  states to offer their  services  through the  Healthcare
Exchange to those who purchase or facilitate the purchase of healthcare services
("Purchasers").

The Company has outsourced to multiple  vendors  portions of the development and
operations of the information systems for its Healthcare  Exchange.  The Company
signed  agreements  effective  in  January  2001  with an  application  services
provider to license, support and run software to process medical bills submitted
to the Company's Healthcare Exchange.  ATR has also signed agreements to receive
claims from Providers  through  electronic  clearinghouses  and to convert paper
claims into electronic  formats.  ATR is evaluating  other potential  technology
vendors as well.

ATR will not provide healthcare services, but rather expects to act as a neutral
conduit for efficiency  between Providers,  Purchasers and their  intermediaries
including  preferred  provider  organizations,  that  should  benefit  all.  ATR
believes that  eliminating  the costs  associated with  traditional  "bricks and
mortar"  operations,   creating  economies  of  scale,  facilitating  access  to
Providers and Purchasers,  streamlining overhead costs, exploiting possibilities
for functional  integration,  reducing errors and speeding the payment of claims
should allow  Purchasers  to pay less and Providers to recover more of what they
bill.

History

Alternative  Technology  Resources,  Inc. was founded as 3Net  Systems,  Inc. in
1989. In August 1999, James W. Cameron,  Jr., the Company's largest stockholder,
was named Chairman and Chief Executive Officer.  Under his direction the Company
identified what it believes to be a significant  business  opportunity and began
developing a business model involving the establishment of a Healthcare Exchange
under the name "DoctorandPatient."

<PAGE>9

PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations


In February  2000,  Jeffrey S.  McCormick  assumed the position of the Company's
Chief Executive Officer. Mr. McCormick has significant  experience in financing,
managing and growing early stage development companies as a managing director of
Boston-based  Saturn  Asset  Management,  Inc.  Mr.  McCormick  has served as an
advisor or director of several Internet and electronic  commerce  companies over
the last six years.  As the Company's CEO, Mr.  McCormick is responsible for all
phases of development,  implementation and operation of the Company's Healthcare
Exchange.  Mr.  Cameron still acts as Chairman and Chief  Financial  Officer and
continues to play an active and  substantial  role in formulating  the Company's
business strategy and policy.

The Company is using its management's  experience in health care and information
technology to establish the Healthcare Exchange,  which has become the Company's
sole focus.  At present,  the  Healthcare  Exchange is operating  with a limited
number of Providers so the Company can refine its model and determine the amount
and  timing of  remaining  development  efforts.  ATR's  previous  business  was
recruiting,  hiring, and training foreign computer  programmers and placing them
with  U.S.  companies.  In line  with  the  Company's  strategy  to focus on the
establishment of a Healthcare  Exchange for health care services,  ATR suspended
recruitment of foreign computer  programmers in December 1999 and began pursuing
the  conversion of foreign  computer  programmers  to become  employees of ATR's
customers.  This  conversion  process was complete as of June 30, 2001,  and the
Company is no longer in that line of business.

Critical Accounting Policies

Revenue  Recognition.  The  Company  has  developed  a proof of  concept  of its
Healthcare    Exchange.    The    Company    recognized    revenue    for    the
transaction-processing  fee  when  it is  earned  and  if no  other  contractual
obligations or contingencies exist.

Product Development Costs. In October 1999, the Company began incurring costs to
develop its Healthcare Exchange.  In accordance with SOP 98-5,  "Reporting Costs
on Start-Up  Activities," start-up costs associated with the Healthcare Exchange
have been expensed as incurred.

Stock-Based  Compensation.  The Company  has elected to account for  stock-based
compensation   using  the  intrinsic  value  method   prescribed  by  Accounting
Principles  Board Opinion No. 25,  "Accounting  for Stock Issued to  Employees."
Under the intrinsic value method,  compensation  cost is the excess,  if any, of
the  quoted  market  price or fair value of the stock at the grant date or other
measurement date over the amount an employee must pay to acquire the stock.

Prepaid License and Service Fees. Prepaid license and services fees are recorded
at cost and  amortized on a  straight-line  basis over the service  period of 66
months.  Management  considers whether  indicators of impairment of these assets
are present at each balance  sheet date and an impairment  loss is recorded,  if
necessary.

<PAGE>10

PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations


Financial Condition

Cash and cash  equivalents  decreased  approximately  $2,791,522  and short-term
investments  decreased  $1,354,137  since June 30,  2001.  At December 31, 2001,
substantially all of ATR's cash was invested in money market accounts.

Because the Company is emphasizing the  development of the Healthcare  Exchange,
the results of operation for the six months ended  December 31, 2001, may not be
indicative of results of operations for the year ended June 30, 2002.

Results of Operation

Healthcare Exchange

Healthcare  Exchange  Revenue.  The Company  developed a proof of concept of its
Healthcare  Exchange,  which began operations with a limited number of Providers
in the three-month  period ending June 30, 2001.  Providers submit bills to ATR,
who reprices the bills to the Provider's  Healthcare  Exchange  rate,  including
adding a transaction-processing fee, and then routes them to Purchasers or their
intermediaries.  ATR receives  payments from  Purchasers on behalf of Providers,
and then remits payments to Providers.  The Company  recognizes  revenue for the
transaction-processing  fee when earned and no other contractual  obligations or
contingencies  exist. During the three and six month periods ending December 31,
2001,  $253,876  and  $362,094  of  revenue  was  recognized,  respectively.  No
Healthcare Exchange revenue was generated during the three and six month periods
ending December 31, 2000.

Healthcare  Exchange  Costs.  Healthcare  Exchange  costs are the  direct  costs
related to the  processing  of the bills  submitted  by  Providers  and payments
received  from  Purchasers.  These  costs  include the salary and other wage and
benefit costs of the Healthcare Exchange operations staff and the operating cost
of the application services provider.  The costs for three and six month periods
ending  December  31,  2001,  were  $350,213  and  $575,001,   respectively.  No
Healthcare  Exchange  costs were  incurred  for the three and six month  periods
ending December 31, 2000.

Contract Programming

Contract  Programming Revenue.  ATR's previous business was recruiting,  hiring,
training and placing foreign computer  programmers with U.S. companies.  In line
with the  Company's  strategy to focus on the  establishment  of the  Healthcare
Exchange for health care services, ATR suspended recruitment of foreign computer
programmers  in December  1999 and began  pursuing  the  conversion  of computer
programmers to employees of ATR's former customers.  This conversion process was

<PAGE>11

PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations


complete  as of June 30,  2001.  For the  three  and six  month  periods  ending
December 3, 2000,  $47,812 and $225,831 in revenue was generated  primarily from
sales of programmer services.

Programmer Costs. Programmer costs were salary, and other wage and benefit costs
of  ATR's  programmer  employees.  Due  to  the  final  phase  out  of  contract
programming business through conversion of the computer programmers to employees
of ATR's  customers  as of June  30,  2001,  as  discussed  above  in  "Contract
Programming  Revenue," no contract programming costs were incurred for the three
and six month periods ending December 31, 2001.  There were $44,569 and $174,172
in  programmer  costs for the three and six month  periods  ending  December 31,
2000.

Start-up  and Other  Costs.  Start-up  and other  costs  represent  the costs of
recruiting  fees,  training,  and travel for programmer  employees coming to the
United States from the former Soviet Union for the first time,  relocation costs
within the United  States,  and legal and other costs  related to obtaining  and
maintaining compliance with required visas, postings and notifications. Start-up
and other costs were  expensed  as  incurred.  There were no start-up  and other
costs for the three and six month periods ending  December 31, 2001, as compared
to $2,083 and $8,283 for the three and six month  periods  ending  December  31,
2000.

Selling, Marketing and Product Development Costs

In October 1999,  the Company began  incurring  costs to develop its  Healthcare
Exchange.  Costs incurred are primarily salary,  other wage and benefit costs of
ATR's  employees and other  operational  costs  associated  with  recruiting the
network of healthcare Providers.  The cost increase of $307,965 and $755,735 for
the three and six month periods ending  December 31, 2001,  compared to the same
period in the prior fiscal year is primarily the result of the increase of sales
and marketing  staff to 67 at quarter end December 31, 2001,  from 33 at quarter
end December 31, 2000.

General and Administrative Expenses

General and  administrative  expenses  increased  $109,973  for the  three-month
period ended  December  31, 2001,  over the same period of the prior fiscal year
due to additional  support staff and related  administrative  expenses.  The six
month period ending December 31, 2001, showed a decrease of $1,525,679  compared
to the same period of the prior fiscal year due  primarily to non-cash  employee
compensation  related to the  purchase of common stock in the  Company's  August
2000 private  placement by the  Company's  Chief  Executive  Officer and related
entities,  and non-cash  compensation  due to  conversion  of Series D Preferred
Stock into common stock by the Company's  Chairman of the Board recorded  during
the six-month  period ended December 31, 2000. No comparable costs were recorded
in the six-month period ending December 31, 2001. The period ending December 31,
2001, reflects an increase of employees and related costs to support development
efforts of the Healthcare Exchange.

<PAGE>12

PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Other Income (Expense)

Interest Income. Interest income is related to the short-term investment of cash
balances.  The decrease is the result of reduced cash  balances in the three and
six month period  ending  December 31, 2001, in comparison to the same period in
fiscal 2001.

Interest Expense. Interest expense increased $8,090 and $15,936 in the three and
six months  ended  December  31,  2001,  primarily  due to the increase in Notes
Payable to Stockholder and Convertible Notes Payable to Stockholder.

Income Taxes

As of June 30,  2001,  the  Company had net  operating  loss  carryforwards  for
federal  and state  income tax  purposes  of  approximately  $37 million and $21
million,  respectively.  The federal net operating loss carryforwards  expire in
2004 through 2020 and the state net operating loss carryforwards  expire in 2001
through 2010. The Company also has approximately $98,000 and $25,000 of research
and  development  tax credit  carryforwards  for  federal  and state  income tax
purposes,   respectively.  The  federal  research  and  development  tax  credit
carryforwards expire in 2005.

Under  certain  provisions  of the Internal  Revenue  Code of 1986,  as amended,
portions of the net operating loss carryforward and research and development tax
credit  carryforward are subject to annual limitations as a result of changes in
the ownership of the company.

Liquidity and Capital Resources

Beginning  in the  three-month  period ended June 30,  2001,  ATR began  limited
operations of its Healthcare  Exchange.  For the  six-months  ended December 31,
2001,  the Company earned  $362,094 in revenues but incurred a $4,582,191  loss.
Until the Company can generate sufficient revenue to finance its operations, the
Company will have to seek other financing. Traditionally, the Company has used a
combination  of  equity  and  debt  financing  and  internal  cash  flow to fund
operations and finance  accounts  receivable but has incurred  operating  losses
since its inception, which has resulted in an accumulated deficit of $54,129,164
at December 31, 2001.

The Company's  Healthcare Exchange  development efforts will require substantial
funds prior to generating sufficient revenues to fund operations and repay debt.
The Company is  currently  seeking to raise up to  $12,000,000  by selling up to
5,333,333 shares of its common stock at $2.25 per share in a private  placement.
The  common  stock to be  issued in the  private  placement  will be  restricted
securities.  Subsequent to December 31, 2001, and through February 11, 2002, the
Company has received  $737,500  through the sale of 327,778  shares  pursuant to
this  offering,  all  subsequent  to December  31,  2001.  The  Company's  Chief
Financial  Officer,  James W.  Cameron,  Jr.,  purchased  222,222  shares of the
Company's common stock in the Private  Placement.  Because the purchase price of

<PAGE>13

PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations


such stock was less than the public trading price on the dates of purchase,  the
Company expects to record compensation expense of approximately $138,583 for the
quarter ending March 31, 2002.

Subsequent to December 31, 2001,  the Company  issued  284,200  shares of common
stock through the exercise of warrants for the amount of $213,150.

On August 28,  2000,  the Company sold  3,333,334  shares of its common stock at
$3.00 per share. Proceeds, net of offering costs, were approximately $9,560,345.
Proceeds  are being used to  develop  the  Company's  Healthcare  Exchange.  The
Company's  Chief  Executive  Officer and related  entities  purchased  2,333,335
shares of the  Company's  common  stock in the  private  placement.  Because the
purchase  price of such stock was less than the public trading price on the date
of purchase,  the Company  recorded  compensation  expense of  $1,458,334 in the
first fiscal quarter ended September 30, 2000.

On  September,  11,  2000,  the  Company  agreed  with the  Series  D  Preferred
stockholders to exchange all their  outstanding  Series D shares and $475,915 in
accrued preferred stock dividends into 566,972 shares of common stock based on a
purchase price of $3.00 per common share.  The benefit  accruing to the Series D
Preferred  stockholders  was recorded in the quarter  ended  September 30, 2000,
approximately  $317,702 in compensation  expense and $862,033 in preferred stock
dividends.

The Company has received short-term,  unsecured financing to fund its operations
in the form of notes payable of $3,740,450 as of June 30, 2001, from Mr. Cameron
and another  stockholder.  These notes bear interest at 10.25%. On September 11,
2000,  the  Company  agreed  with Mr.  Cameron  to extend  the due date on notes
payable to him until  December 31, 2001, in exchange for an extension fee of 2%.
These extended notes total $1,511,635,  including accrued interest and extension
fees,  and bear interest at 10.25% per annum.  Also on September  11, 2000,  the
Company  agreed  with the other note  holder to extend the due date of his notes
until December 31, 2001, in  consideration  of such notes  becoming  convertible
promissory notes. The convertible  promissory notes total $2,288,815,  including
accrued  interest,  bear interest at 10.25% per annum and are  convertible  into
common stock at $3.00 per share (approximate  public trading price on that date)
at the note holder's option.  On September 1, 2001, the due dates of these notes
were  extended  from  December  31, 2001 to December  31,  2002.  Mr.  Cameron's
extended notes total  $1,630,529,  including accrued interest and extension fees
of 2%, and bear interest at 10.25% per annum.  The convertible  promissory notes
total $2,423,823, including accrued interest at 10.25% per annum.

The Company  signed  agreements  effective in January  2001 with an  application
services provider to license,  support and run software to process medical bills
submitted  to the  Company's  Healthcare  Exchange.  The  agreements  are for 66
months. They required payment of an initial base license fee of $250,000,  which
is being amortized over 66 months, and start-up costs, including data center set
up,  training and  implementation  fees of  approximately  $145,000,  which were

<PAGE>14

PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations


expensed.  The agreements  require monthly minimum  payments  currently of about
$35,000 and additional fees that are transaction  based if volumes exceed levels
included in the monthly minimums.

Based on the steps the Company has taken to refocus  its  operations  and obtain
additional  financing,  the Company believes that it has developed a viable plan
to address the Company's  ability to continue as a going concern,  and that this
plan will enable the Company to continue as a going concern through at least the
end of fiscal 2002. However,  the Company needs to raise additional funds during
fiscal  2002.  There can be no  assurance  that  this plan will be  successfully
implemented.  If  unsuccessful  the  Company  may  be  required  to  reduce  the
development  efforts  or its  Healthcare  Exchange  or be  forced  into  seeking
protection under federal bankruptcy laws. As a result, the report of independent
auditors  on the  Company's  June 30,  2001  financial  statements  includes  an
explanatory  paragraph indicating there is substantial doubt about the Company's
ability to continue as a going concern.  The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification  of assets or the amounts and  classification of liabilities that
may result from the outcome of this uncertainty.

Effects of Inflation

Management does not expect  inflation to have a material effect on the Company's
operating expense.

<PAGE>15


PART I. FINANCIAL INFORMATION
Item 3  Quantitative and Qualitative Disclosures About Market Risk

The Company has  long-term  debt in the  aggregate  amount of  $4,054,352  as of
December 31, 2001,  payable to two  stockholders of the Company.  The debt bears
interest at 10.25% per annum and is due December 31, 2002.  The Company does not
believe  that any change in  interest  rates will have a material  impact on the
Company during fiscal 2002.  Further,  the Company has no foreign operations and
therefore is not subject to foreign currency fluctuations.

PART II. OTHER INFORMATION

Item 1   None

Item 2   Changes in Securities and Use of Proceeds.

(c)  On January 9, 2002,  the Board of  Directors unanimously  approved to issue
and sell up to 5,333,333  shares of Common Stock at $2.25  pursuant to a Private
Placement.  Assuming  that the  offering is fully  subscribed,  the Company will
receive  approximately  $12,000,000  in gross  proceeds.  This  amount is before
expenses of the offering of approximately  $100,000 and potential  finders fees,
which will not exceed 10% of the gross proceeds in the  aggregate.  We intend to
use the net proceeds of the offering (after  expenses) to develop our Healthcare
Exchange and for other general working capital purposes.  Subscription  proceeds
received as of February 11, 2002, are approximately $737,500 through the sale of
327,778 shares of common stock. The Company's Chief Financial Officer,  James W.
Cameron,  Jr.,  purchased  222,222  shares of the Company's  common stock in the
Private  Placement.  Because the purchase  price of such stock was less than the
public  trading  price on the dates of purchase,  the Company  expects to record
compensation expense of approximately  $138,583 for the quarter ending March 31,
2002.  The Company is relying on  Regulation  D, Rule 506, as an exemption  from
registration.

Item 3  None

Item 4  Submission of Matters to a Vote of Security Holders

An annual meeting of  stockholders  was held November 20, 2001, at the Company's
offices in  Sacramento,  California.  The  stockholders  voted on the  following
matters and approved:

     1)   The election of James W. Cameron, Jr., Edward L. Lammerding, Jeffrey S
          McCormick  and Thomas W.  O'Neil,  Jr. as  directors  of the  Company:
          53,461,758 shares were received in favor of Mr. Cameron,  5,150 shares
          were  withheld;  53,456,758  shares  were  received  in  favor  of Mr.
          Lammerding,  10,150  shares  were  withheld;  53,461,758  shares  were
          received in favor of Mr.  McCormick,  5,150 shares were withheld;  and
          53,461,758  shares were received in favor of Mr. O'Neil,  5,150 shares
          were withheld.

Items 5, 6  None

<PAGE>16

                                   SIGNATURES


In accordance with 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.


                              ALTERNATIVE TECHNOLOGY RESOURCES, INC.
                              (Registrant)

Dated: February 13, 2002

                                 /S/ JAMES W. CAMERON, JR.
                              ----------------------------------------
                              James W. Cameron, Jr.
                              Chairman of the Board and Chief Financial Officer
                              (Principal Executive and Financial Officer