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, 2000

     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, Portsmith, N.H. 03801
                    (Address of principal executive offices)

                                 (916) 231-0400
              (Registrant's telephone number, including area code)

                       629 J Street, Sacramento, CA 95814
                  (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 January 31, 2001: 59,359,577

<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                                        2000                 2000
                               ------                                  -----------------    -----------------
<S>                                                                  <C>                  <C>
Current assets:
  Cash and cash equivalents                                            $    3,558,657       $    1,909,421
  Short-term investments                                                    4,956,951                    -
  Trade accounts receivable                                                    78,818               98,128
  Other current assets                                                        134,554               84,183
                                                                       --------------       --------------
Total current assets                                                        8,728,980            2,091,732
                                                                       --------------       --------------
Property and equipment:
  Equipment and software                                                      283,472              175,415
  Accumulated depreciation and amortization                                   (52,372)             (14,444)
                                                                       --------------       --------------
  Property and equipment, net                                                 231,100              160,971
                                                                       --------------       --------------
Prepaid annual service fee                                                    250,000              250,000
                                                                       --------------       --------------
                                                                       $    9,210,080       $    2,502,703
                                                                       ==============       ==============
                 Liabilities and Stockholders' Equity (Deficit)

Current liabilities:
  Accounts payable and accrued interest payable to stockholders        $      569,697       $      613,630
  Notes payable to directors                                                        -               23,324
  Trade accounts payable                                                      123,636               97,205
  Accrued payroll and related expenses                                        132,723              167,507
  Accrued preferred stock dividends                                           283,195              735,001
  Other current liabilities                                                   196,142              273,018
                                                                       --------------       --------------
Total current liabilities                                                   1,305,393            1,909,685
                                                                       --------------       --------------

  Convertible notes payable to stockholder                                  2,228,815                    -
  Notes payable to stockholder(s)                                           1,511,635            3,567,424
                                                                       --------------       --------------
Total notes payable to stockholders                                         3,740,450            3,567,424
                                                                       --------------       --------------
Commitments and contingencies

Stockholders' equity (deficit):
  Convertible preferred stock, $6.00 par value - 1,200,000
    shares authorized, 204,167 shares designated Series D
    issued and outstanding at June 30, 2000; liquidation
    preference value of $1,960,003 at June 30, 2000                                 -            1,225,002
  Common stock, $0.01 par value - 100,000,000 shares authorized;
    59,351,577 shares issued and outstanding at December 31, 2000
(55,329,605 at June 30, 2000)                                                 593,516              553,297
  Additional paid-in capital                                               49,053,900           35,879,513
  Accumulated other comprehensive income                                        4,099                    -
  Accumulated deficit                                                     (45,487,278)         (40,632,218)
                                                                       --------------       --------------
Total stockholders' equity (deficit)                                        4,164,237           (2,974,406)
                                                                       --------------       --------------
                                                                       $    9,210,080       $    2,502,703
                                                                       ==============       ==============
</TABLE>

See accompanying notes to condensed financial statements.

<PAGE>3

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


<TABLE>
<CAPTION>
                                                   Three Months Ended                  Six Months Ended
                                                      December 31,                       December 31,
                                                  2000            1999              2000              1999
                                             ------------     ------------      ------------     ------------
<S>                                        <C>            <C>                   <C>            <C>
Contract Programming
   Contract programming revenue              $     47,812     $    700,626      $    225,831     $  1,645,277
   Contract termination fees                            -              203                 -            5,453
   Programmer costs                               (44,569)        (454,404)         (174,172)      (1,106,468)
   Start-up and other costs                        (2,083)        (153,846)           (8,283)        (356,969)
                                             ------------     ------------      ------------     ------------
Contract programming gross profit                   1,160           92,579            43,376          187,293

Product development costs                      (1,238,497)        (234,232)       (2,295,922)        (235,820)

Selling, general and administrative              (490,072)        (279,124)       (2,631,558)        (554,480)
                                             --------------   --------------    -------------    --------------
Loss from operations                           (1,727,409)        (420,777)       (4,884,104)        (603,007)

Other income (expense)
   Interest income                                184,900            7,798           265,635           18,907
   Interest expense to stockholders
     and directors                               (104,920)         (95,146)         (236,591)      (2,618,657)
                                             --------------   --------------    -------------    --------------
Total other income (expense)                       79,980          (87,348)           29,044       (2,599,750)
                                             --------------   --------------    -------------    --------------
Net loss                                     $ (1,647,429)    $   (508,125)     $ (4,855,060)    $ (3,202,757)
                                             ==============   ==============    =============    ==============
Preferred stock dividends in arrears                    -          (30,625)         (886,142)         (61,250)
                                             --------------   --------------    -------------    --------------
Net loss applicable to common stockholders   $ (1,647,429)    $   (538,750)       (5,741,202)    $ (3,264,007)
                                             ==============   ==============    =============    ==============
Net loss per share                           $      (0.03)    $      (0.01)     $      (0.10)    $      (0.07)
                                             ==============   ==============    =============    ==============
Shares used in per share calculations          59,329,251       54,299,591        58,012,419       45,559,169
                                             ==============   ==============    =============    ==============

</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,

                                                           2000                  1999
                                                     ---------------         ------------

<S>                                                  <C>                     <C>
Net cash used in operating activities                $    (3,037,819)        $   (437,439)
Cash flows used in investing activities:
   Purchase of property and equipment                       (108,057)             (42,139)
   Purchase of short-term investments                     (4,952,852)                   -
                                                     ---------------         ------------
Net cash used in investing activities                     (5,060,909)             (42,139)
Cash flows from financing activities:
   Proceeds from sale of common stock                      9,560,345            1,150,346
   Proceeds from exercise of options and warrants             37,917               32,402
   Proceeds from notes payable to stockholders               233,026               33,500
   Payments on notes payable to stockholders                 (60,000)             (33,500)
   Proceeds from notes payable to directors                        -                1,860
   Payments on notes payable to directors                    (23,324)                   -
                                                     ---------------         ------------
Net cash provided by financing activities                  9,747,964            1,184,608
                                                     ---------------         ------------
Net increase in cash                                       1,649,236              705,030
Cash at beginning of period                                1,909,421               32,642
                                                     ---------------         ------------
Cash at end of period                                $     3,558,657         $    737,672
                                                     ===============         ============

</TABLE>

See accompanying notes to condensed financial statements.


<PAGE>5

                     ALTERNATIVE TECHNOLOGY RESOURCES, INC.
                     Notes to Condensed Financial Statements
                                December 31, 2000
                                   (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,
2000.

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 and
June 30, 2000,  results of operations  for the three and six month periods ended
December 31, 2000 and 1999, and cash flows for the six months ended December 31,
2000 and 1999.  The  results  for the period  ended  December  31,  2000 are not
necessarily  indicative of the results to be expected for the entire fiscal year
ending June 30, 2001.

The  Company has taken steps to refocus  its  operations  and obtain  additional
financing,  and  believes  that is has  developed a viable plan to continue as a
going concern, at least through the end of fiscal year 2001. However,  there can
be no assurance  that this plan will be  successfully  implemented.  The Company
does not expect to generate  positive  cash flow from  operations  during fiscal
2001 to be able to pay off  obligations  and  pursue  the  establishment  of the
Internet  Exchange [see Part I, Item 2 "Management's  Discussion and Analysis of
Financial  Condition  and Results of  Operations -  Overview"];  therefore,  the
Company  has  raised  additional  financing  during  fiscal  2001,  as  well  as
negotiated deferral of payment under its existing  obligations [see Part I, Item
2  "Management's  Discussion and Analysis of Financial  Condition and Results of
Operations - Liquidity and Capital Resources"].

Note 2 - Cash Equivalents and Short-Term Investments

The Company considers all highly liquid investments with an original maturity of
three months or less from the date of purchase to be cash equivalents.

Pursuant to Statement of Financial Accounting Standards No. 115, "Accounting for
Certain  Investments  in Debt and Equity  Securities",  all debt  securities are
designated as available-for-sale.  Available -for-sale securities are carried at
fair  value,  which is  determined  based upon the quoted  market  prices of the

<PAGE>6


securities  with unrealized  gains and losses  reported in  stockholders  equity
(deficit).  Realized  gains and losses and  declines in value judged to be other
than temporary on available-for-sale securities are included in interest income.
The cost of  securities  sold is based on the  specific  identification  method.
Interest and  dividends  on  securities  classified  as  available-for-sale  are
included in interest income.

Note 3 - Comprehensive Loss

Total  comprehensive  loss for the three months ended December 31, 2000 and 1999
was  $1,643,330, and $508,125, and  $4,850,961 and $3,202,757 for the six months
ended  December  31, 2000 and 1999,  respectively.  Other  comprehensive  income
represents  the net change in unrealized  gains  (losses) on  available-for-sale
securities.

Note 4 - Related Party Transactions

On October 17, 2000,  the Company  engaged  Saturn  Capital,  Inc. to assist the
Company on certain financial advisory and business matters. In consideration for
Saturn Capital's  services,  the Company issued 55,000 shares of common stock at
that  day's  closing  value of $1.90 per share.  Accordingly,  the  Company  has
recorded an expense of $105,000 for these consulting services. Saturn Capital is
an affiliate  company of Saturn Asset  Management,  Inc. of which Mr. McCormick,
the Company's Chief Executive Officer, is a managing director.

Note 5 - Financing Arrangements

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

<PAGE>7

PART I.   FINANCIAL INFORMATION
Item 2    Managements discussion and Analysis of Financial Condition and
          Results of Operations


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 10-K for the fiscal year
ended June 30, 2000.

Overview

Alternative  Technology Resources,  Inc. ("ATR" or the "Company") was founded as
3Net Systems,  Inc. in 1989 to develop and sell medical  laboratory  information
systems.  In 1996,  the Company  began to focus on the  business of  recruiting,
hiring,  training and placing foreign computer  programmers with U.S.  companies
and soon changed its name to Alternative Technology Resources, Inc.

In August 1999,  James W. Cameron,  Jr.,  ATR'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  an  Internet  Exchange  for
healthcare services under the name "DoctorAndPatient." In line with its business
strategy  to focus on the  establishment  of an Internet  Exchange,  the Company
suspended recruitment for the contract programming division in December 1999 and
is pursuing the  conversion  of computer  programmers  to become the  customers'
employees.

In February  2000,  Jeffrey S.  McCormick  assumed  the  position of ATR'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 ATR's CEO, Mr. McCormick is responsible for all phases of
development,  implementation  and  operation  of ATR's  Internet  Exchange.  Mr.
Cameron  still acts as  Chairman  and  expects to continue to play an active and
substantial role in formulating ATR's business strategy and policy.  Mr. Cameron
and Mr.  McCormick  have focused ATR on using the  experience of the  management
team in  health  care and  information  technology  to  establish  the  Internet
Exchange.  The  development  of this business has become the  Company's  primary
focus.

The  purpose of the  Internet  Exchange  is to utilize  the  Internet  and other
technologies to provide administrative, billing and re-pricing services, as well
as a direct and efficient  connection  between  Providers and  Purchasers  (both
defined  below) and/or their  agents.  ATR is developing a "proof of concept" of
its Internet  Exchange,  which it has begun testing in the quarter  ending March
31, 2001.  The results of the  Company's  testing will  determine the amount and
timing of remaining development related costs and when the Internet Exchange may
become commercially available.

<PAGE>8

The Company is recruiting medical doctors,  medical groups,  hospitals and other
health care  practitioners  (collectively,  "Providers") to offer their services
through the Internet  Exchange,  on a  non-exclusive  basis,  to individuals and
others  who  purchase  or  facilitate  the  purchase  of  health  care  services
("Purchasers").  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  Internet  exchange  for  healthcare
services. ATR is also evaluating other potential technology vendors.

ATR will not  provide  health  care  services,  but rather  expects to act as an
intermediary  between  Providers and  Purchasers  that should  benefit both. 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.

Financial Condition

Cash and cash equivalents  increased  approximately  $1.6 million and short-term
investments  increased  approximately $4.9 million since June 30, 2000 primarily
as a result of the Company  selling  3,333,334  shares of its common  stock at a
price of $3.00 per share in a private placement in August 2000 [See Part I, Item
2  "Management's  Discussion and Analysis of Financial  Condition and Results of
Operations -- Liquidity and Capital  Resources."].  The transaction was also the
primary cause for the Company's  stockholders' deficit of $2,974,406 at June 30,
2000 becoming positive  stockholders' equity of $4,160,138 at December 31, 2000.
At December 31, 2000  substantially  all of ATR's cash was invested in corporate
bonds,  commercial paper and money market accounts.  Such investments  where the
original maturity date is 90 days or less are considered to be cash equivalents,
short-term investments are those with maturity dates of 91 days to one year from
the date of purchase.

Because the Company is emphasizing the development of the Internet  Exchange and
phasing out its contract programming services,  the results of operation for the
six  months  ended  December  31,  2000  may not be  indicative  of  results  of
operations for the year ended June 30, 2001.

Results of Operation

Contract programming

Contract  Programming  Revenue.  Contract  programming revenue results primarily
from sales of programmer  services.  Revenue for the three and six months period
ended December 31, 2000 decreased $652,814 or 93% and $1,419,446 or 86% over the
same period of the  previous  year.  This  decrease is due to a reduction in the
monthly average number of contract  programmers working at customer sites in the

<PAGE>9

period ended  December 31, 2000,  compared to the same period in the prior year.
This decline in the number of  programmers at customer sites started in the last
half of fiscal  year 1999 is due to several  customers  choosing  to  exercise a
contract  termination  provision which allowed them to convert, for a fee, ATR's
programmers to their employees.  The Company  escalated this conversion  process
during  fiscal years 2000 and 2001 to enable it to focus its  business  strategy
toward developing its Internet Exchange for healthcare services.

The  Company  estimates  by June 30,  2001,  the end of this  fiscal  year,  the
remaining  contract  programmers will be converted to customer employees and the
phase out of contract  programming  services  will be complete  and all expenses
will be incurred.

Contract  Termination Fees. Contract  termination fees are amounts received from
customers when they exercise the contract provision which allows them to convert
ATR's programmer to their employee. In addition, these fees can also be received
from programmers when they exercise their contract  provision to terminate their
relationship  with the Company prior to the termination  date of their contract.
These fee amounts are stipulated in customer and programmer contracts, are based
on the  length of time  remaining  under the  contract,  and are  recognized  as
revenue when such contract provisions are invoked. Although contract termination
fees are common in the  industry,  the number and  frequency of exercises of the
"buy-out" provisions is unpredictable.

Programmer  Costs.  Programmer costs are the salary,  and other wage and benefit
costs of ATR's programmer  employees.  These costs decreased 90% and 84% for the
three and six month period ended December 31, 2000, compared to the same periods
last year.  This  decrease is  primarily  due to the  reduction in the number of
contract  programmers  working at customer sites as discussed above in "Contract
Programming Revenue".

Start-up and Other Costs.  Start-up and other costs are 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 are expenses as incurred.

Included  in this  category  of  costs  is  compensation  paid  by ATR  whenever
programmer employees are hired and enter the United States or are relocated once
in the United States but before these  programmers begin working at a customer's
work site. There are times when under  immigration  law, ATR, as employer,  must
pay a  programmer  employee  at least  95% of  prevailing  wages  for his or her
specialty even when the programmer is not placed.

Start-up  and other costs  decreased  $151,763 and $348,686 in the three and six
month period ended  December 31, 2000,  as compared to the same period in fiscal
2000.  This  decrease is due to ceasing to recruit  programmer  employees  and a

<PAGE>10

decrease  in the number of  programmers  who were in the  United  States but not
working at customer sites.

Contract  Programming  Gross  Profit.  The gross profit on contract  programming
revenue was 2% and 19% for the three and six month  periods  ended  December 31,
2000,  compared to 13% and 11% for the same periods in fiscal 2000. The decrease
for the three month period  ending  December  31, 2000 is  primarily  due to the
average  number of three  programmers  placed at customer  sites compared to the
average  number of  thirty-two  for the same quarter at December  31, 1999.  The
increase for the six month period  ending  December 31, 2000 is primarily due to
the significant decrease in start-up and other costs compared to the same period
of the previous year.

Product Development Costs

In October  1999 the  Company  began  incurring  costs to develop  its  Internet
Exchange.  Costs  incurred are  primarily  the salary and other wage and benefit
costs of ATR's  employees  involved  in  recruiting  the  network of  healthcare
providers and preliminary  stage  development  costs.  Since this date, no costs
have been  capitalized as all costs have been incurred during the planning stage
and have been expensed.

ATR is  developing  a proof of concept of its  Internet  Exchange,  which it has
begun testing in the quarter ending March 31, 2001. The results of the Company's
testing will  determine the amount and timing of remaining  development  related
costs and when the Internet Exchange may become commercially available.

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  Internet  exchange  for  healthcare  services.  The
agreements  are for 66 months.  They require  payment of an initial base license
fee of $250,000,  set-up, training and implementation fees estimated to be about
$145,000,  monthly  minimum  payments  currently of about $35,000 and additional
fees that are transaction based if volumes exceed levels included in the monthly
minimums.

Selling, General and Administrative Expenses

Selling,  General and Administrative  Expenses ("SG&A"). SG&A expenses increased
$210,948 and  $2,077,078  for the three and six month period ended  December 31,
2000  respectively,  compared to the same periods of the prior fiscal year. This
increase is due primarily to non-cash  compensation  in the engagement of Saturn
Capital  Inc., in a financial  advisory  capacity  ($105,000) in November  2000,
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  ($1,458,000)  and due to conversion of Series D Preferred

<PAGE>11

Stock into common stock by the  Company's  Chairman of the Board  ($317,000)  in
September 2000 [see "Liquidity and Capital Resources"]

Other Income (Expense)

Interest  Income.  Interest  income in fiscal 2001 is related to the  short-term
investment of cash  balances.  In fiscal 2000 interest  income is related to the
short-term  investment of cash balances and to notes  receivable  from employees
and officers of the Company. The increase is the result of greater cash balances
in fiscal 2001 over fiscal 2000.

Interest  Expense.  Interest expense  increased $9,774 in the three months ended
December  31, 2000 due to the  September  2000  extension  of notes  payable and
accrued  interest  and fees to Mr.  Cameron  and the  other  note  holder  until
December 31, 2001. Interest expense decreased $2,382,066 in the six months ended
December  31,  2000  primarily  due to the benefit  accruing to note  holders in
fiscal 2000 when conversion terms of a $1,000,000  convertible note were amended
and  due to the  resulting  decrease  in  Notes  Payable  to  Stockholders  [see
"Liquidity and Capital Resources"].

Income Taxes

As of June 30,  2000,  the Company had a net  operating  loss  carryforward  for
federal  and  state  income  tax  purposes  of  $30  million  and  $13  million,
respectively.  The federal net operating loss carryforward  expires in the years
2006 through 2019 and the state net operating loss carryforward  expires in 2000
through 2005. In connection with the Company's initial public offering, a change
of ownership (as defined in Section 382 of the Internal Revenue Code of 1986, as
amended)  occurred.  As a result, the Company's net operating loss carryforwards
generated  through  August  10,  1992 are  subject  to an annual  limitation  of
approximately $300,000.

Net Loss

Net loss  increased  $1,652,303  for the six months  ended  December  31,  2000,
compared to the same period in fiscal 2000  primarily  due to the  increases  in
product development and selling, general and administrative costs, offset by the
increase in interest income and decrease in interest expense.

Preferred Stock Dividends in Arrears

Dividends  are  $824,892  higher for the six months  ended  December  31,  2000,
compared to the same period in fiscal  2000 due to the benefit  associated  with
the exchange of the Series D Preferred  Stock on  September  11, 2000 for common
stock in the amount of $862,033 [see "Liquidity and Capital Resources"].

<PAGE>12

Basic and Diluted Net Loss Per Share

The  Company's  net loss per share has been  computed by dividing net loss after
deducting Preferred Stock dividends ($886,142 in fiscal year 2001 and $61,250 in
fiscal  year  2000) by the  weighted  average  number of shares of Common  Stock
outstanding during the periods presented.  Common Stock issuable upon conversion
of Preferred Stock (for fiscal year 2001), common stock options and common stock
warrants have been excluded  from the net loss per share  calculations  as their
inclusion would be anti-dilutive

Liquidity and Capital Resources

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 $45,487,278 at December 31, 2000. The Company's  working
capital at the end of December 31, 2000 was $7,419,488.

The Company has received short-term,  unsecured financing to fund its operations
in the form of notes payable of $3,567,424 as of June 30, 2000, 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 April 21, 1997,  the Company  issued an unsecured note payable (the "Straight
Note") to Mr.  Cameron  for  $1,000,000  in  accordance  with the  Reimbursement
Agreement  the Company  signed on February 28, 1994.  Terms of the note provided
for an interest rate of 9.5% and monthly interest payments. No maturity date was
stated in the note;  however,  under the terms of the  Reimbursement  Agreement,
upon written  demand by Mr.  Cameron,  the Straight Note was to be replaced by a
note convertible into ATR's common stock (the "Convertible Note") in a principal
amount equal to the  Straight  Note and bearing  interest at the same rate.  The
conversion price of the Convertible Note was equal to 20% of the average trading
price of the  Company's  common stock over the period of ten trading days ending
on the trading day next preceding the date of issuance of such Convertible Note.

Subsequent to June 30, 1999, Mr.  Cameron  disposed of a portion of his interest
in the Straight  Note,  reducing  the balance due him to $711,885,  plus accrued
interest.  On August 19, 1999, the Company's Board of Directors  agreed with the
Straight Note holders to fix the  conversion  price of the  Convertible  Note to

<PAGE>13

$0.044 in exchange for the Straight and/or  Convertible  Notes ceasing to accrue
interest  as of that date.  Because of the  decline  in  revenues  caused by the
non-renewal  of programmer  contracts and the steady decline in the quoted value
of the Company's common stock at that time (trading price was at $0.25 on August
19,  1999),  the Board  agreed it was in the best  interest  of the  Company  to
eliminate the future market risk that the  conversion  price become lower than a
fixed  conversion  price of $0.044.  The benefit  accruing  to the note  holders
resulting from the amendment to the conversion  terms, as measured on August 19,
1999,  was  approximately  $2.4 million and was recorded as additional  interest
expense in the quarter ended September 30, 1999.

Subsequent  to August 19, 1999,  Mr.  Cameron  elected to replace his  remaining
interest in the Straight Note, including accrued interest,  with the Convertible
Note and then  simultaneously  converted the  Convertible  Note into  19,762,786
shares of ATR's common  stock.  All other  Straight  Note holders also  replaced
their Straight Notes,  including  accrued  interest,  with Convertible Notes and
converted such  Convertible  Notes into an aggregate of 7,998,411  shares of the
Company's common stock during fiscal 2000.

The  Company  received  $3,712,348  in private  sales of its common  stock at an
average price of $3.42 per share during fiscal year 2000.

ATR's Internet Exchange development efforts will require substantial funds prior
to generating  revenues.  Therefore,  ATR engaged a New York based financial and
investment banking firm to assist the Company in raising capital.  On August 28,
2000,  the  Company  sold $10  million of its  common  stock at $3.00 per share.
Proceeds net of offering  costs were  approximately  $9.6 million.  The proceeds
from the  private  placement  will be used to  develop  the  Company's  proposed
Internet  Exchange  and are  expected  to be  sufficient  to meet ATR's  working
capital needs through at least this fiscal year. 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  approximately  $1,458,000 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  $317,000 in compensation  expense and $862,000 in preferred stock
dividends.

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  Internet  exchange  for  healthcare  services.  The
agreements  are for 66 months.  They require  payment of an initial base license
fee of $250,000,  set-up, training and implementation fees estimated to be about

<PAGE>14

$145,000,  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 2001.  However,  there can be no assurance  that this plan will be
successfully implemented.

Effects of Inflation

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

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

The Company has  long-term  debt in the  aggregate  amount of  $3,740,450  as of
December 31, 2000  payable to two  stockholders  of the Company.  The debt bears
interest at 10.25% per annum and is due December 31, 2001.  The Company does not
believe  that any change in  interest  rates will have a material  impact on the
Company during fiscal 2001.  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 October 17, 2000 the Company  engaged  Saturn  Capital Inc., an affiliate
company of Saturn Asset Management,  Inc. of which Mr. McCormick,  the Company's
Chief  Executive  Officer,  is a managing  director,  to assist  the  Company on
certain  financial  advisory and business  matters.  In consideration for Saturn
Capital's  services the Company issued 55,000 shares of the common stock at that
days closing value of $1.90 per share.  The  financial  impact was an expense to
consultant  fees of  $105,000.  The  issuance  of common  stock was exempt  from
registration pursuant to Regulation D & Section 4 (2).

Item 3    None

<PAGE>15

Item 4    Submission of Matters to a Vote of Security Holders

An annual  meeting of  stockholders  was held November 21, 2000 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:
          53,911,365 shares were received in favor of Mr. Cameron,  6,080 shares
          were  withheld;  53,908,865  shares  were  received  in  favor  of Mr.
          Lammerding 8,580 shares were withheld; 53,910,465 shares were received
          in favor of Mr.  McCormick 6,980 shares were withheld;  and 53,911,465
          shares  were  received  in  favor  of Mr.  O'Neil  5,980  shares  were
          withheld.

Item 5    None

Item 6    Exhibit

     10.40  Master Agreement for Computer Software Products and Related Services
            between  Alternative   Technology  Resources,   Inc.   and  Resource
            Information Management Systems, Inc.

<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 14, 2001           /s/   JAMES W. CAMERON, JR.
                                    -------------------------------------------
                                    James W. Cameron, Jr.
                                    Chairman of the Board and Chief Financial
                                    Officer (Principal Executive and Financial
                                    Officer)