U.S. Securities and Exchange Commission
                             Washington, D.C. 20549


                                   Form 10-QSB



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

     For the quarterly period ended December 31, 1998

     Commission file number   0-20468


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



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



                       629 J Street, Sacramento, CA 95814
                    (Address of principal executive offices)

                                 (916) 231-0400
                           (Issuer's telephone number)


                  (Former address if changed since last report)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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, 1999:  26,135,478


<PAGE>2


PART I.   FINANCIAL INFORMATION
Item 1.   Financial Statements



                     ALTERNATIVE TECHNOLOGY RESOURCES, INC.
                             Condensed Balance Sheet
                                December 31, 1998
                                   (Unaudited)


                                     Assets
                                     ------

Current assets:
  Cash                                                          $        53,346
  Accounts receivable, net                                              572,528
  Other current assets                                                  118,020 
                                                                ---------------
     Total current assets                                               743,894
                                                                --------------- 
                                                                $       743,894 
                                                                ===============

                      Liabilities and Stockholders' Deficit
                      -------------------------------------

Current liabilities:
  Notes payable to stockholders                                       4,267,252
  Notes payable to officers                                              39,779
  Accounts payable to stockholders                                      573,114
  Accounts payable                                                       82,068
  Accrued payroll and related expenses                                  340,314
  Accrued preferred stock dividends                                     551,251
  Other current liabilities                                              88,883
                                                                ---------------
     Total current liabilities                                        5,942,661
                                                                ---------------

Commitments and contingencies

Stockholders' deficit:
  Preferred stock, $6.00 par value - 1,200,000 shares
     authorized, 204,167 Series  D shares issued and 
     outstanding; liquidation preference value of $1,776,253          1,225,002
  Common stock, $0.01 par value - 100,000,000 shares
     authorized, 26,120,499 shares issued and outstanding               261,205
  Additional paid-in capital                                         28,785,441
  Accumulated deficit                                               (35,470,415)
                                                                ---------------
    Total stockholders' deficit                                      (5,198,767)
                                                                ---------------
                                                                $       743,894
                                                                =============== 


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                        Six Months
                                                       Ended December 31,                 Ended December 31,
                                                       ------------------                 ------------------
                                                     1998              1997            1998              1997
                                                     ----              ----            ----              ----
<S>                                            <C>              <C>              <C>               <C>  
Contract programming:
  Contract programming revenue                   $ 1,809,755      $ 1,107,947       $ 3,519,763      $ 2,029,689
  Programmer costs                                (1,291,561)        (723,009)       (2,562,819)      (1,432,934)
  Start-up and other costs                          (239,068)        (238,968)         (397,591)        (396,457)
                                                 -----------      -----------       -----------      -----------
    Contract programming gross profit                279,126          145,970           559,353          200,298 
                                                 -----------      -----------       -----------      -----------
Selling, general and administrative                 (302,151)        (353,703)         (642,345)        (687,488)
                                                 -----------      -----------       -----------      -----------

Loss from operations                                 (23,025)        (207,733)          (82,992)        (487,190)

Other income (expense):
  Interest expense                                  (175,766)        (140,362)         (287,594)        (224,026)
                                                 -----------      -----------       -----------      -----------
                                                    (175,766)        (140,362)         (287,594)        (224,026)
                                                 -----------      -----------       -----------      -----------

Net loss                                         $  (198,791)     $  (348,095)      $  (370,586)     $  (711,216)
                                                 ===========      ===========       ===========      ===========

Preferred stock dividends in arrears                 (30,625)         (30,625)          (61,250)         (61,250)
                                                 -----------      -----------       -----------      -----------
Net loss applicable to
  common stockholders                            $  (229,416)     $  (378,720)      $  (431,836)     $  (772,466)
                                                 ===========      ===========       ===========      ===========

Net loss per share                               $     (0.01)     $     (0.01)      $     (0.02)     $     (0.03)
                                                 ===========      ===========       ===========      ===========

Shares used in per share calculations             26,120,499       25,829,309        26,120,499       25,811,394 
                                                 ===========      ===========       ===========      ===========

</TABLE>


See accompanying notes to condensed financial statements.


<PAGE>4

PART I.   FINANCIAL INFORMATION
Item 1.   Financial Statements



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


<TABLE>
<CAPTION>


                                                                                        Six Months
                                                                                    Ended December 31,      
                                                                                    ------------------
                                                                                1998                 1997
                                                                                ----                 ----

<S>                                                                    <C>                  <C>            
Net cash used in operating activities                                  $     (298,897)      $     (747,789)

Cash flows from investing activities:
   Sale of property and equipment                                                   -                2,061  
                                                                       --------------       --------------
Net cash provided by investing activities                                           -                2,061  
                                                                       --------------       --------------
Cash flows from financing activities:
  Proceeds from exercise of options and warrants                                    -               47,063
  Proceeds from notes payable to stockholders                                 273,647              805,303
  Proceeds from notes payable to officers                                       1,860                    -
  Payments on notes payable to stockholders                                   (12,960)                   -
  Payments on notes payable and capital leases                                      -              (23,539) 
                                                                       --------------       --------------
Net cash provided by financing activities                                     262,547              828,827 
                                                                       --------------       --------------

Net (decrease) increase in cash                                               (36,350)              83,099
Cash at beginning of period                                                    89,346               59,743 
                                                                       --------------       --------------

Cash at end of period                                                  $       53,346       $      142,842
                                                                       ==============       ==============

</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
                                December 31, 1998

                                   (Unaudited)

Note 1 - Basis of Presentation

The accompanying  unaudited condensed financial statements have been prepared in
accordance with generally accepted  accounting  principles 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 generally  accepted  accounting  principles  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-KSB for
the fiscal year ended June 30, 1998.

In the opinion of  management,  the  unaudited  condensed  financial  statements
contain all  adjustments  considered  necessary to present  fairly the Company's
financial position at December 31, 1998, results of operations for the three and
six month periods ended  December 31, 1998 and 1997,  and cash flows for the six
months  ended  December  31, 1998 and 1997.  The  results  for the period  ended
December 31, 1998 are not  necessarily  indicative of the results to be expected
for the entire fiscal year ending June 30, 1999.

The report of  independent  auditors on the  Company's  June 30, 1998  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  uncertainties  related
to  the   recoverability  and  classification  of  assets  or  the  amounts  and
classification  of liabilities that may result from the inability of the Company
to  continue  as a going  concern.  Based on the steps the  Company has taken to
reduce its expenses and refocus its operations, 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 the end of fiscal year 1999. However,  considering,  among other
things, the Company's  historical  operating losses and its short history in the
contract computer programming industry, there can be no assurance that this plan
will be successfully implemented.  The Company expects to generate positive cash
flow from operations during fiscal 1999, but not at levels sufficient to pay off
current  obligations  and fund growth of its contract  computer  programming and
consulting  services;  therefore,  the  Company  contemplates  needing  to raise
additional financing during fiscal 1999, the receipt of which cannot be assured.

Note 2 - Financing Arrangements

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


<PAGE>6


PART I.   FINANCIAL INFORMATION
Item 2.   Management's Discussion and Analysis 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-KSB for the fiscal year
ended June 30, 1998.

Overview

Alternative  Technology  Resources,  Inc. ("ATR" or the  "Company"),  a Delaware
corporation,  was  founded  in 1989 to  develop  and  sell  computer  integrated
laboratory  systems  ("LIS").  The Company operated under the name 3Net Systems,
Inc. and was never successful in the LIS market.  Therefore, in fiscal 1996, the
Company stopped new system development and later decided to exit LIS entirely.

During  fiscal  1997,  the Company  changed its name to  Alternative  Technology
Resources,  Inc. It has since  focused its efforts  entirely  upon its  computer
programmer  placement  business,  whereby  it  recruits  experienced,  qualified
computer  programmers  primarily from the former Soviet Union, obtains necessary
visas,  and places  them for  assignment  in the United  States.  Recently,  the
Company has begun to recruit programmers from South Korea for future placement.

Year 2000 Issues

Management  has made an assessment of its computer  programs and has  determined
that it has no Year 2000 impairment in its computer systems  developed  in-house
and is relying on vendor  declarations  that their  systems and programs have no
impairment  related  to the Year  2000  issue.  Therefore,  management  does not
currently anticipate that the Company will incur significant  operating expenses
or be required to invest  heavily in computer  systems  improvements  to be Year
2000 compliant.

Results of Operation

Contract programming

Contract  Programming  Revenue.  Contract  programming revenue results primarily
from  sales  of  programmer  services.  During  fiscal  1998,  sales  of  custom
programming and software  development and acting as an intermediary in providing
such services are also  included in Contract  Programming  Revenue.  These sales
were immaterial in fiscal 1998 and are expected to be immaterial in fiscal 1999.

Revenue for the three and six month  periods ended  December 31, 1998  increased
$702,000 or 63% and  $1,490,000 or 73%,  respectively,  over the same periods of
the previous  year.  The  increased  revenue is due to billing  rate  increases,
growth in the number of contract programmers working at customer sites in fiscal
1999 compared to fiscal 1998, and the length of time contract  programmers  were
at customer sites during each of the periods ended December 31.


<PAGE>7

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


Programmer  Costs.  Programmer costs are the salary,  and other wage and benefit
costs of ATR's programmer  employees.  These costs increased 79% for each of the
three and six month  periods  ended  December  31,  1998,  compared  to the same
periods last year. This increase is primarily due to almost doubling the average
number of programmers  working at customer sites in the current quarter compared
to the comparable quarter in fiscal 1998 and due to increasing salaries for more
experienced programmers.

Start-up and Other Costs.  Start-up and other costs are the costs of recruiting,
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.

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 sometimes  periods of several days 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 yet placed.

ATR  expenses  start-up  and other costs as  incurred,  which  results in timing
differences  between the  incurring  of expense  and  recognition  of  resulting
revenue.  Such differences may be particularly  evident in ATR's case because of
its  relatively  small  revenue  base  and  rapid  growth.  The  affect  may  be
particularly  noticeable  whenever  the timing of placement of employees is such
that the  major  start-up  costs  occur  late in one  reporting  period  and the
revenues appear in subsequent periods.

Start-up and other costs  increased less than $1,000 and slightly over $1,000 in
the three and six month periods ended December 31, 1998, as compared to the same
periods in fiscal 1998.  This small increase is due to an increase in recruiting
and training  efforts  overseas  offset by a decrease in placing and  relocating
programmers during the first six months of fiscal 1999 compared to fiscal 1998.

Contract  Programming  Gross  Profit.  The gross profit on contract  programming
revenue was 15% and 16% for the three and six month periods  ended  December 31,
1998, respectively,  compared to 13% and 10% in the same periods in fiscal 1998.
Increases are  primarily due to the increase in the total number of  programmers
generating  revenues at higher  billing  rates  during  fiscal 1999  compared to
fiscal 1998.

Selling, General and Administrative Expenses

Selling,  General and Administrative  Expenses ("SG&A"). SG&A expenses decreased
$52,000 or (15%) and $45,000 or (7%) for the three and six month  periods  ended
December  31,  1998,  respectively,  compared  to the same  periods of the prior
fiscal year.  This  decrease is  principally  due to reducing the use of outside
financial consultants and reducing the cost of general insurance coverage during
the first six months of fiscal 1999 compared to fiscal 1998.


<PAGE>8

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

Other Income (Expense)

Interest  Expense.  Interest expense  increased $35,000 and $64,000 in the three
and six month periods  ended  December 31, 1998,  respectively,  compared to the
same  periods in fiscal 1998 due to a net  increase  in notes  payable and other
debt of $0.7 million since December 31, 1997.

Income Taxes

As of June 30,  1998,  the Company had a net  operating  loss  carryforward  for
federal  and  state  income  tax  purposes  of  $24  million  and  $13  million,
respectively.  The federal net operating loss carryforward  expires in the years
2006 through 2013 and the state net operating loss carryforward  expires in 1998
through 2003.  The Company  expects that annual  limitations  on the use of loss
carryforwards generated before September 13, 1993 will result in $3.6 million of
net operating loss carryovers  which may not be utilized prior to the expiration
of the carryover period.

Net Loss

Net loss  decreased  $341,000 or 48% for the six months ended  December 31, 1998
compared to the same period in fiscal 1998.

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  ($30,625 in each of the three months ended
December 31, 1998 and 1997, and $61,250 in each of the six months ended December
31, 1998 and 1997,  respectively)  by the weighted  average  number of shares of
Common Stock  outstanding  during the periods  presented.  Common stock issuable
upon  conversion  of  Preferred  Stock,  Common  Stock  options and Common Stock
warrants have been excluded  from the net loss per share  calculations  as their
inclusion would be anti-dilutive.  Net loss per share decreased as a result of a
smaller  loss  and  only  a  slightly  greater  number  of  shares  used  in the
calculation  in the periods ended  December 31, 1998 compared to the  comparable
periods of fiscal 1998.

Liquidity and Capital Resources

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.

As a result,  the report of independent  auditors on the Company's June 30, 1998
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
uncertainties  related to the recoverability and classification of assets or the
amounts and  classification of liabilities that may result from the inability of
the Company to continue as a going  concern.  Based on the steps the Company has
taken to reduce its expenses and refocus its  operations,  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 the end of fiscal year 1999. However,  considering,  among
other things, the Company's historical operating losses and its short history in
the contract computer programming industry,  there can be no assurance that this
plan will be successfully implemented.  The Company expects to generate positive

<PAGE>9

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

cash flow from  operations  during fiscal 1999, but not at levels  sufficient to
pay off current obligations and fund growth of its contract computer programming
and consulting  services;  therefore,  the Company contemplates needing to raise
additional financing during fiscal 1999, the receipt of which cannot be assured.

The  Company  received  short-term,  unsecured  financing  in the  form of notes
payable of  approximately  $0.3  million in the first six months of fiscal 1999,
and $1.3 million,  $1.0 million, and $0.7 million during fiscal years 1998, 1997
and 1996,  respectively ($3.3 million in the aggregate),  from two stockholders,
Mr. James W. Cameron,  Jr. ("Cameron") and Dr. Max Negri ("Negri"),  to fund its
operations.  These notes bear interest at 10.25%. In December 1998,  Cameron and
Negri  extended  the  maturity  date on all notes  payable  originally  maturing
December  31, 1998,  to the earlier of December  31,  1999,  or such time as the
Company obtains replacement financing.

On April 21, 1997,  the Company  issued an unsecured note payable (the "Straight
Note") to Cameron for $1,000,000 in accordance with the Reimbursement  Agreement
the  Company  signed on  February  28,  1994.  Terms of the note  provide for an
interest rate of 9.5% and monthly interest payments.  No maturity date is stated
in the  note;  however,  under the terms of the  Reimbursement  Agreement,  upon
written  demand by Cameron,  the Straight Note will be replaced by a convertible
note (the  "Convertible  Note") in a principal amount equal to the Straight Note
and bearing  interest at the same rate. The conversion  ratio of the Convertible
Note is equal to 20%  multiplied  by 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. Since the Company has
not made interest payments on the note, accrued interest of $161,370 is included
in accounts payable to stockholders.

The Company must obtain additional funds during fiscal 1999 in order to meet its
obligations  while  attempting to grow revenues to a level necessary to generate
cash from  operations.  Although  the Company  has not entered  into any written
agreements with Cameron or Negri, management believes, based on discussions with
these two individuals, that they will continue to fund operations and extend the
maturity  dates of the various  notes  payable  until at least June 30, 1999, or
until such time as the  Company  can repay the notes.  However,  there can be no
assurance that events may arise which may affect these stockholders'  ability to
finance  the  Company  or  that  the  Company  may  experience  significant  and
unanticipated  cash flow  problems  which may cause  these two  stockholders  to
reconsider their investment.  Further,  if the Company  experiences  significant
cash flow  problems,  the  Company  may be  required  to reduce the level of its
operating  activities  or  be  forced  into  seeking  protection  under  federal
bankruptcy laws.

On December 31, 1996,  the Board of Directors  named Mr. W. Robert Keen as Chief
Executive  Officer of the  Company.  In  exchange  for his  services,  Mr.  Keen
initially  received  225,000  shares of common stock with a fair market value on
the date of issuance of  $168,750,  and on November  18, 1997 Mr. Keen  received
275,000  shares of common stock with a fair market value on the date of issuance
of  $154,688.  Both the  275,000  shares and the  225,000  shares are subject to
forfeiture in the event Mr. Keen voluntarily leaves the Company prior to January
1, 1999.  Mr. Keen  retired as Chief  Executive  Officer on January 15, 1999 but
will continue as a  non-employee  board member and will consult with the Company
on a regular basis.

<PAGE>10

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


Effects of Inflation

The Company's most significant cost is personnel.  To the extent personnel costs
increase,  management of the Company believes that customer billing rates can be
increased to cover such personnel increases.


PART II. OTHER INFORMATION


Items 1, 2, 3

None

Item 4.  Submission of Matters to a Vote of Security Holders

An annual  meeting of  stockholders  was held November 17, 1998 at the Company's
offices in  Sacramento,  California.  The  stockholders  voted on the  following
matters and approved:

1)   The election of W. Robert Keen, Edward L. Lammerding, and Thomas W. O'Neil,
Jr., as directors of the Company:  19,567,834  shares were  received in favor of
Mr. Keen , Mr. Lammerding, and Mr. O'Neil and 12,675 shares were withheld.

Items 5 and 6

None


<PAGE>11


                                   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 9, 1999                       EDWARD L. LAMMERDING
                                     -------------------------------------------
                                     Edward L. Lammerding
                                     Chairman of the Board
                                     (Principal Executive and Financial Officer)