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

                                 (916) 231-0400
              (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 April 30, 2001: 59,368,844


<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
                                                                          March 31,             June 30,
                               Assets                                        2001                 2000
                               ------                                   -------------        --------------
<S>                                                                   <C>                 <C>
Current assets:
  Cash and cash equivalents                                             $   3,068,272        $   1,909,421
  Short-term investments                                                    3,360,286                    -
  Trade accounts receivable                                                    19,945               98,128
  Other current assets                                                        307,059               84,183
                                                                        -------------        -------------
Total current assets                                                        6,755,562            2,091,732
                                                                        -------------        -------------
Property and equipment:
  Equipment and software                                                      310,125              175,415
  Accumulated depreciation and amortization                                   (76,871)             (14,444)
                                                                        -------------        -------------
  Property and equipment, net                                                 233,254              160,971
                                                                        -------------        -------------
Prepaid annual license and service fees                                       526,170              250,000
                                                                        -------------        -------------
                                                                        $   7,514,986        $   2,502,703
                                                                        =============        =============

                 Liabilities and Stockholders' Equity (Deficit)
                 ----------------------------------------------
Current liabilities:
  Accounts payable and accrued interest payable to stockholders         $     648,781        $     613,630
  Notes payable to directors                                                        -               23,324
  Trade accounts payable                                                      147,346               97,205
  Accrued payroll and related expenses                                        163,621              167,507
  Accrued preferred stock dividends                                           283,195              735,001
  Other current liabilities                                                   212,769              273,018
                                                                        -------------        -------------
Total current liabilities                                                   1,455,712            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;
    59,368,844 shares issued and outstanding at March 31, 2000
(55,329,605 at June 30, 2000)                                                 593,689              553,297
  Additional paid-in capital                                               49,058,044           35,879,513
  Accumulated other comprehensive income (loss)                                 1,610                    -
  Accumulated deficit                                                     (47,334,519)         (40,632,218)
                                                                        -------------        -------------
Total stockholders' equity (deficit)                                        2,318,824           (2,974,406)
                                                                        -------------        -------------
                                                                        $   7,514,986        $   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                 Nine Months Ended
                                                        March 31,                         March 31,
                                                  2001             2000            2001              2000
                                             ------------     ------------     ------------     ------------
<S>                                        <C>             <C>               <C>               <C>
Contract Programming
   Contract programming revenue              $     46,385     $    543,133     $    272,215     $  2,188,410
   Contract termination fees                            -                -                -            5,453
   Programmer costs                               (35,937)        (377,446)        (210,108)      (1,483,913)
   Start-up and other costs                          (982)         (36,104)          (9,265)        (393,074)
                                             ------------     ------------     ------------     ------------
Contract programming gross profit                   9,466          129,583           52,842          316,876

Product development and start-up costs         (1,227,696)        (307,854)      (3,523,618)        (543,674)

Selling, general and administrative              (640,279)        (322,242)      (3,271,838)        (876,722)
                                             ------------     ------------     ------------     ------------
Loss from operations                           (1,858,509)        (500,513)      (6,742,614)      (1,103,520)

Other income (expense)
   Interest income                                114,057           23,588          379,693           42,495
   Interest expense to stockholders
     and directors                               (102,789)        (173,457)        (339,380)      (2,792,114)
                                             ------------     ------------     ------------     ------------
Total other income (expense)                       11,268         (149,869)          40,313       (2,749,619)
                                             ------------     ------------     ------------     ------------
Net loss                                     $ (1,847,241)    $   (650,382)    $ (6,702,301)    $ (3,853,139)
                                             ============     ============     ============     ============
Preferred stock dividends in arrears                    -          (30,625)        (886,142)         (91,875)
                                             ------------     ------------     ------------     ------------
Net loss applicable to common stockholders   $ (1,847,241)    $   (681,007)      (7,588,443)    $ (3,945,014)
                                             ============     ============     ============     ============
Net loss per share                           $      (0.03)    $      (0.01)    $      (0.13)    $     (0.08)
                                             =============    ============     ============     ===========
Shares used in per share calculations          59,358,090       55,056,986       58,454,427       48,702,083
                                             =============    ============     ============     ============
</TABLE>


See accompanying notes to condensed financial statements.

<PAGE>4

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


<TABLE>
<CAPTION>
                                                                      Nine Months Ended
                                                                          March 31,
                                                                 2001                   2000
                                                             ------------          ------------

<S>                                                          <C>                   <C>
Net cash used in operating activities                        $ (5,100,044)         $ (1,247,688)
Cash flows used in investing activities:
   Purchases of property and equipment                           (134,709)              (54,198)
   Purchases of short-term investments
     (net of securities)                                       (3,358,676)                    -
                                                             ------------          ------------
Net cash used in investing activities                          (3,493,385)              (54,198)

Cash flows from financing activities:
   Proceeds from sale of common stock                           9,560,345             3,712,346
   Proceeds from exercise of options and warrants                  42,233               120,584
   Proceeds from notes payable to stockholders                    233,026               342,834
   Payments on notes payable to stockholders                      (60,000)              (33,500)
   Proceeds from notes payable to directors                             -                 2,780
   Payments on notes payable to directors                         (23,324)              (21,646)
                                                             ------------          ------------
Net cash provided by financing activities                       9,752,280             4,123,398
                                                             ------------          ------------
Net increase in cash                                            1,158,851             2,821,512
Cash at beginning of period                                     1,909,421                32,643
Cash at end of period                                        $  3,068,272          $  2,854,155
                                                             ============          ============

</TABLE>

See accompanying notes to condensed financial statements.

<PAGE>5

PART I. FINANCIAL INFORMATION
Item 1  Financial Statements



                     ALTERNATIVE TECHNOLOGY RESOURCES, INC.
                     Notes to Condensed Financial Statements
                                 March 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,
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 March 31, 2001
and June 30, 2000,  results of  operations  for the three and nine month periods
ended  March 31, 2001 and 2000,  and cash flows for the nine months  ended March
31,  2001 and 2000.  The  results  for the period  ended  March 31, 2001 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.  At March
31, 2001  substantially  all of ATR's cash was invested in  corporate  bonds 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.

Pursuant to Statement of Financial Accounting Standards No. 115, "Accounting for
Certain  Investments  in Debt and Equity  Securities",  all debt  securities are

<PAGE>6

PART I. FINANCIAL INFORMATION
Item 1  Financial Statements


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
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 - WebMD Corp. Agreement

In fiscal year 2000,  the  Company  paid  $250,000  to WebMD upon a  promotional
announcement  of the Company's  Internet  Exchange  program on WebMD's  Internet
consumer portal.  This payment is an annual service fee, which will be amortized
over a 12-month  period  beginning  in the month that the  Internet  Exchange is
available on WebMD's Internet consumer portal. No amounts have been amortized to
date.

Note 4 - Financing Arrangements

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

Note 5 - Commitments

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 a term of 66  months.  They  require  payment  for  set-up,
training and  implementation  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. In addition, an
initial base  license fee of $250,000  was paid in the quarter  ending March 31,
2001.  This  license  fee is  classified  as a  non-current  asset  and is being
amortized over the term of the agreement.

These  agreements may be terminated  upon the occurrence of an event  permitting
termination outlined in the Master Agreement without penalty to either party.

Note 6 - Comprehensive Loss

Total  comprehensive loss for the three months ended March 31, 2001 and 2000 was
$1,849,730,  and $650,382,  and  $6,700,691  and  $3,853,139 for the nine months
ended March 31, 2001 and 2000,  respectively.  Other comprehensive income (loss)
represents  the net change in unrealized  gains  (losses) on  available-for-sale
securities.

<PAGE>7

PART I. FINANCIAL INFORMATION
Item 1  Financial Statements


Note 7 - 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,  in November 2000, the
Company  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 8 - Derivative Financial Instruments

In June 1998,  the FASB issued  Statement of Financial  Accounting  Standard No.
133, "Accounting for Derivative Instruments and Hedging Activities",  (SFAS 133)
which was adopted by the Company on January 1, 2001. This statement, as amended,
establishes  accounting and reporting  standards requiring that every derivative
instrument,   including  certain  derivative   instruments   embedded  in  other
contracts,  be  recorded in the  balance  sheet as either an asset or  liability
measured at its fair value.  The  statement  also  requires  that changes in the
derivative's  fair  value  be  recognized  in  earnings  unless  specific  hedge
accounting  criteria are met. The adoption of SFAS 133 did not have an effect on
the  Company's  financial  statements,  since  the  Company  does not  invest in
derivative instruments or engage in hedging activities.

Note 9 - Product Development and Start-Up Costs

In accordance  with SOP 98-5  "Reporting  on the Costs of Start-Up  Activities",
start-up costs associated with the Internet Exchange business have been expensed
as incurred.

<PAGE>8


PART I.   FINANCIAL INFORMATION
Item 2    Management's 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 currently  finalizing the conversion of the remaining 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 the Company's  Chief Financial  Officer,  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 began testing with a limited number of providers in

<PAGE>9

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


this quarter ending March 31, 2001. The Company is still  receiving,  processing
and analyzing  data and 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 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  $1.2 million and short-term
investments  increased  approximately $3.4 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 $2,318,824 at March 31, 2001. At
March 31, 2001  substantially  all of ATR's cash was invested in corporate bonds
and money market accounts.

Because the Company is emphasizing the development of the Internet  Exchange and
phasing out its contract programming services,  the results of operation for the
nine months ended March 31, 2001 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 nine month periods
ended March 31, 2001  decreased  $496,748 or 91% and  $1,916,195 or 88% over the

<PAGE>10

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


same periods 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
period ended March 31, 2001, 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,  and 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 remaining  contract  programmers will be converted to customer employees and
the phase out of contract  programming  services is expected to be complete  and
all expenses incurred by the end of this fiscal year, June 30, 2001.

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.  These fee amounts are stipulated in
customer  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 86% for the
three and nine month periods ended March 31, 2001,  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 expensed 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  $35,122 and $383,809 in the three and nine
month  periods  ended March 31, 2001,  as compared to the same periods in fiscal

<PAGE>11

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


2000.  This  decrease is due to ceasing to recruit  programmer  employees  and a
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 20% and 19% for the three and nine month  periods  ended  March 31,
2001,  compared to 24% and 14% for the same periods in fiscal 2000. The decrease
for the three month period ending March 31, 2001 is primarily due to the average
number of two  programmers  placed at  customer  sites  compared  to the average
number of  twenty-six  for the same quarter at March 31, 2000.  The increase for
the six month period ending March 31, 2001 is primarily  due to the  significant
decrease in start-up and other costs compared to the same period of the previous
year.

Product Development and Start-Up 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 other start-up  costs.  In accordance  with SOP 98-5 "Reporting on
the Costs of Start-Up  Activities",  start-up costs associated with the Internet
Exchange business have been expensed as incurred.

ATR is  developing a proof of concept of its Internet  Exchange,  which it began
testing with a limited  number of  providers  in this  quarter  ending March 31,
2001.  The Company is still  receiving,  processing  and analyzing  data and 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.

Selling, General and Administrative Expenses

Selling,  General and Administrative  Expenses ("SG&A"). SG&A expenses increased
$318,037 and  $2,395,116  for the three and nine month  periods  ended March 31,
2001  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),  non-cash  compensation due to conversion of
Series D Preferred  Stock into  common  stock by the  Company's  Chairman of the
Board ($317,000) in September 2000 [see "Liquidity and Capital Resources"],  and
due to increased  number of employees and related  costs to support  development
efforts of the Internet 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 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 decreased $70,668 in the three months ended
March 31, 2001 due to the September 2000 extension, from December 31, 2000 until
December 31, 2001, of notes payable and accrued interest and fees to Mr. Cameron
and the other note holder.  Interest  expense  decreased  $2,452,734 in the nine
months  ended  March 31,  2001  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 $2,849,162 for the nine months ended March 31, 2001, 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 $794,267 higher for the nine months ended March 31, 2001, 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>13

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


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 $91,875 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 2000), 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  $47,334,519  at March 31, 2001.  The Company's  working
capital at the end of March 31, 2001 was $5,299,850.

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

<PAGE>14

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


Straight Note holders to fix the  conversion  price of the  Convertible  Note to
$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 for set-up,  training and
implementation  estimated  to  be  about  $145,000,   monthly  minimum  payments
currently of about $35,000 and  additional  fees that are  transaction  based if

<PAGE>15

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


volumes exceed levels included in the monthly minimums.  In addition, an initial
base license fee of $250,000 was paid in this quarter ending March 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 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.

<PAGE>16

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 March
31, 2001 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, 2, 3, 4, 5, 6
None

<PAGE>17

                                   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:  May 8, 2001          /s/   JAMES W. CAMERON, JR.
                             ------------------------------------------
                             James W. Cameron, Jr.
                             Chairman of the Board and Chief Financial Officer
                             (Principal Executive and Financial Officer)