As filed with Commission on November 19, 2002             File No. 333-_________


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549


                                    FORM S-1
             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                     Alternative Technology Resources, Inc.
             (Exact name of registrant as specified in its charter)


               Delaware                       7371              93-1011046
               --------                       ----              ----------
(State or other jurisdiction   (Primary Standard Industrial  (I.R.S. Employer
    of incorporation or            Classification Code)      Identification No.)
       organization)


                 33 Jewel Court, Portsmouth, New Hampshire 03801
                            Telephone: (916) 231-0400
          (Address and telephone number of principal executive offices)



                  Jeffrey S. McCormick, Chief Executive Officer
                     Alternative Technology Resources, Inc.
                                 33 Jewel Court
                         Portsmouth, New Hampshire 03801
                            Telephone: (916) 231-0400
            (Name, address and telephone number of agent for service)


                         Copies to: Daniel B. Eng, Esq.
                              Bartel Eng & Schroder
           300 Capitol Mall, Suite 1100, Sacramento, California 95814
                            Telephone: (916) 442-0400



Approximate  date of  commencement  of proposed  sale to the public:  As soon as
practicable after the effective date of this registration statement.

If any of the  securities  being  registered on this Form are to be offered on a
delayed or continuous  basis  pursuant to Rule 415 under the  Securities  Act of
1933, check the following box. [X]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the  Securities  Act  registration  statement  number of the  earlier  effective
registration statement for the same offering. [ ]

If this Form is a  post-effective  amendment filed pursuant to Rule 462(c) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ]

If this Form is a  post-effective  amendment filed pursuant to Rule 462(d) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ]

If delivery  of the  prospectus  is  expected  to be made  pursuant to Rule 434,
please check the following box. [ ]







                                                                                            

                         CALCULATION OF REGISTRATION FEE

====================================================================================================================
    Title of each class of       Amount of shares     Proposed maximum        Proposed maximum        Amount of
  securities to be registered    to be Registered    offering price per      aggregate offering    registration fee
                                                            share                   price
====================================================================================================================
Common Stock, par value $0.01         6,422,315           $0.90 (1)                 $5,780,084
--------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01,
that may be issued upon the
conversion of Convertible Note        1,000,000           $0.90 (1)                 $  900,000
--------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01,
that may be issued upon
exercise of warrants                    675,000           $0.90 (1)                   $607,500
--------------------------------------------------------------------------------------------------------------------
          Total                       8,097,315                                     $7,287,584            $671
====================================================================================================================


(1) Fee calculated in accordance with Rule 457 of the Securities Act of 1933, as
    amended  ("Securities  Act").  Estimated for the sole purpose of calculating
    the registration  fee  and based upon the average  quotation of the high and
    low price per share of our common stock on  November  18,  2002,  as  quoted
    on the OTC Bulletin Board.

     The  registrant  hereby amends this  registration  statement on the date or
dates as may be necessary to delay its effective date until the registrant shall
file a further  amendment  which  specifically  states  that  this  registration
statement shall  thereafter  become effective in accordance with Section 8(a) of
the  Securities  Act of 1933 or until the  registration  statement  shall become
effective on the date as the  Commission,  acting pursuant to said Section 8(a),
may determine.



                                                           Subject to Completion
PROSPECTUS                                               Dated November 19, 2002


                                8,097,315 Shares

                     Alternative Technology Resources, Inc.

                                  Common Stock

                           --------------------------

     This prospectus relates to the resale by the selling  stockholders of up to
8,097,315 shares of common stock including 1,675,000 shares of common stock that
may be resold by selling  stockholders upon the exercise of outstanding warrants
and upon the conversion of convertible notes. The selling  stockholders may sell
the  common  stock  from  time  to time in the  over-the-counter  market  at the
prevailing market price or in negotiated transactions.

     We will not receive any proceeds  from the resale of shares of common stock
by the selling stockholders. We will pay for expenses of this offering.

     Our common stock is quoted on the OTC Bulletin Board under the symbol ATEK.
On __________, 2002, the closing bid quotation for one share of common stock was
$___. We do not have any other securities that are currently traded on any other
exchange or quotation system.


                           --------------------------

Investing in our common stock involves a high degree of risk. See "Risk Factors"
beginning on page 5 of this prospectus.
                              --------------------


     Neither the  Securities and Exchange  Commission  nor any state  securities
commission has approved or disapproved of these securities or determined if this
prospectus  is truthful or  complete.  Any  representation  to the contrary is a
criminal offense.

                              --------------------


                  The Date of this Prospectus is _____________

The  information in this  prospectus is not complete and may be changed.  We may
not sell  these  securities  until the  registration  statement  filed  with the
Securities and Exchange Commission becomes effective.  This prospectus is not an
offer to sell these  securities  and we are not soliciting an offer to buy these
securities  in any state  where the offer or sale is not  permitted  or would be
unlawful prior to registration or qualification under the securities laws of any
such state.





                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
PROSPECTUS SUMMARY............................................................3


RISK FACTORS..................................................................5


FORWARD LOOKING STATEMENTS...................................................10


THE OFFERING.................................................................10


USE OF PROCEEDS..............................................................11


PRICE RANGE OF OUR COMMON STOCK................. ............................11


DIVIDEND POLICY..............................................................11


SELECTED FINANCIAL DATA......................................................12


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
 AND RESULTS OF OPERATIONS...................................................13


DESCRIPTION OF BUSINESS......................................................21


MANAGEMENT...................................................................27


PLAN OF DISTRIBUTION.........................................................33


SELLING SHAREHOLDERS.........................................................35


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............................37


DESCRIPTION OF SECURITIES....................................................38


EXPERTS......................................................................39


AVAILABLE INFORMATION........................................................39


INDEX TO FINANCIAL STATEMENTS...............................................F-1




     You should rely only on the information  contained in this  prospectus.  We
have not authorized anyone to provide you with different information. We are not
making  an  offer  of these  securities  in any  state  where  the  offer is not
permitted.  You  should  not  assume  that  the  information  provided  by  this
prospectus  is  accurate  as of any date other than the date on the front  cover
page for this prospectus.




                               PROSPECTUS SUMMARY

     You should  read the  following  summary  together  with the more  detailed
information and the financial statements appearing elsewhere in this prospectus.
This  prospectus  contains  forward-looking  statements  that involve  risks and
uncertainties. Our actual results could differ materially from those anticipated
in these  forward-looking  statements as a result of certain factors,  including
those set forth under "Risk Factors" and elsewhere in this prospectus.

Our Business

     We have  developed and are currently  operating an Exchange for  healthcare
services ("Healthcare  Exchange").  The purpose of the Healthcare Exchange is to
utilize the Internet and other  technologies to facilitate  healthcare  provider
initiated discounts and administrative,  billing and remittance services for all
commercial lines of business in the healthcare industry. The Healthcare Exchange
offers a direct and efficient  conduit between medical doctors,  medical groups,
hospitals and other  healthcare  practitioners  (collectively  "Providers")  and
those  who  purchase  or  facilitate   the  purchase  of   healthcare   services
("Purchasers").

     We do not provide healthcare services,  but rather act as a neutral conduit
to promote  efficiency between  Providers,  Purchasers and their  intermediaries
including preferred provider organizations.  Providers submit their bills to us,
and we process and reprice the bills to the rate set by the Providers, including
adding a  transaction-processing  fee. We then route the  adjusted  bills to the
Purchasers  or their  intermediaries.  Upon  receipt  of the  payments  from the
Purchasers,  we remit the payments to  Providers.  We believe that  reducing 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.

     Our Healthcare Exchange began operations with a limited number of Providers
and  Purchasers  in the quarter  ending June 30,  2001.  We continue to receive,
process  and  analyze  operating  data,  and the  results of our  analysis  will
determine the amount and timing of remaining development related efforts.

     Our business  address is 33 Jewel Court,  Portsmouth,  New Hampshire 03801,
and our telephone number is (916) 231-0400.

Offering Summary

     The selling  shareholders  may sell up to 8,097,315  shares of common stock
for resale,  including  1,675,000 shares that may be resold upon the exercise of
outstanding warrants and conversion of a convertible note.

     The selling  stockholders  listed in the  prospectus may sell all, some, or
none of their common shares registered pursuant to this Prospectus.  We will not
receive any proceeds from the offering.


Summary of Selected Financial Data


                                                                                                        

                                                                                                                As of and for the
                                                                                                               Three Months Ended
                                                  As of and for the Years Ended June 30                           September 30
                                     -----------------------------------------------------------------------------------------------
                                         2002          2001          2000          1999           1998          2002        2001
Statement of Operations Data:

Healthcare exchange revenue           $ 1,642,565  $    50,944   $         -   $         -   $         -   $   776,560  $   108,218
Healthcare exchange gross profit(loss $   179,048  $   (33,584)  $         -   $         -   $         -   $   232,858  $  (116,570)
Contract programming revenue          $         -  $   308,469   $  2,561,101  $ 6,340,235   $ 5,250,002   $         -  $         -
Selling, market and product
   development costs                  $(7,076,558) $(5,097,513)  $ (1,154,244) $         -   $         -   $(1,397,306) $(1,105,195)
General and administrative expenses   $(2,482,272) $(3,850,971)  $ (1,276,726) $(1,223,539)  $(1,336,342)  $  (509,015) $  (505,834)
                                      $(9,379,782) $(8,919,271)  $ (2,008,908) $  (192,646)  $  (805,963)  $(1,673,463) $(2,127,599)
Loss from operations
                                      $(9,815,906) $(8,914,755)  $ (4,815,641) $  (716,747)  $(1,243,944)  $(1,886,806) $(2,233,983)
Net loss
Basic and diluted net loss per share  $     (0.16) $     (0.17)  $      (0.10) $     (0.03)  $     (0.05)  $     (0.03) $     (0.04)
Shares used in per share
   calculations                        59,936,435   58,686,778     50,329,614   26,127,730    25,964,142    61,016,315   59,401,860

Balance Sheet Data:

Total assets                          $ 1,203,309  $ 5,577,658   $  2,502,703  $   599,440   $   837,353   $ 1,812,858  $ 3,733,569
Long-term obligations                 $         -  $ 3,740,450   $  3,567,424  $ 4,258,090   $ 4,006,565   $         -  $ 4,054,352
Accrued preferred stock dividends     $   283,195  $   283,195   $    735,001  $   612,501   $   490,001   $   283,195  $   283,195
Redeemable preferred stock, Series D  $         -  $         -   $  1,225,002  $ 1,225,002   $ 1,225,002   $         -  $         -
Stockholders' equity (deficit)        $(5,890,914) $   156,237   $ (2,974,406) $(5,587,475)  $(4,844,274)  $(7,315,766) $(2,058,472)


     Note:
     ----

     Through fiscal year 2001, our business was recruiting, hiring, training and
     placing foreign computer programmers with U.S. companies.  In line with our
     strategy  to focus on the  establishment  of the  Healthcare  Exchange  for
     healthcare  services,  we suspended  recruitment of foreign  programmers in
     December 1999 and began pursuing the conversion of computer  programmers to
     employees of our  customers.  This  conversion  was complete as of June 30,
     2001.






                                  RISK FACTORS

     In addition to the other  information  we provide in this  prospectus,  you
should carefully  consider the following risks before deciding whether to invest
in our common  stock.  These are not the only risks we face.  Some risks are not
yet known to us and there are others we do not  currently  believe are  material
but could  later turn out to be so.  All of these  could  impair  our  business,
operating results or financial  condition.  In evaluating the risks of investing
in us,  you  should  also  evaluate  the  other  information  set  forth in this
prospectus, including our financial statements.

Risks Related to Our Business

We  only  have a  limited  operating  history  in the  healthcare  and  Internet
industries that investors may use to assess our future prospects.

     We only recently began operating in the Internet and healthcare industries.
We have not generated  significant  revenues and may never  generate  sufficient
revenues  to  achieve  profitability  in  this  new  venture.  We  have  limited
experience addressing challenges frequently encountered by early-stage companies
in the electronic commerce and healthcare industries.  Accordingly,  our limited
operating  history  does not  provide  investors  with a  meaningful  basis  for
evaluating an investment in our common stock.

     The  likelihood of our success must be considered in light of the potential
problems,   expenses,   difficulties,   complications   and  delays   frequently
encountered  in connection  with any  enterprise  starting a new business with a
completely new business plan,  particularly in new and rapidly  evolving markets
such as the Internet. Such risks include an evolving, untested and unpredictable
business  model,  the creation of brand  identity,  the expansion or creation of
competing  services,  the uncertainty of the acceptance of the marketing  medium
and the management of anticipated growth.

Our current  operations  are not profitable and we have a history of significant
losses.

     We have experienced losses since our inception.  Our net loss applicable to
common  stockholders  for the years ended June 30, 2002 and 2001 was  $9,815,906
and  $9,800,897.  As of June 30,  2001 we had  completed  the  phase  out of the
contract  programmer  operations  that  resulted in previous  operating  losses.
However,  there is no assurance we can develop our  Healthcare  Exchange  into a
profitable  and  sustainable  business.  As a result,  the report of independent
auditors  on our June 30, 2002  financial  statements  includes  an  explanatory
paragraph indicating there is substantial doubt about our ability to continue as
a going  concern.  The financial  statements do not include any  adjustments  to
reflect the possible future effects on the  recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
outcome of this uncertainty.

Our  growth  depends on  industry  acceptance  of our  healthcare  products  and
services.

     The time,  expense  and effort of securing  Purchasers  and  Providers  may
exceed our  expectations  and may  negatively  impact our business and operating
results.  The decision to implement  our  products  and services  requires  time
intensive  education of both  Providers and  Purchasers of the advantages of our
products  and  services.  The  failure of  industry  participants  to accept our
services and products as a  replacement  for  traditional  methods of operations
could limit our revenue growth. We, therefore, will devote significant resources
and incur costs without any assurance  that  sufficient  medical  providers will
join our network or that  Purchasers  will use our products or services.  In the
event that Purchasers do not use our products or services,  we may have incurred
substantial  costs that cannot be recovered  and which will not result in future
revenues.


We need additional financing.

     Based on the steps we have  taken to  refocus  our  operations  and  obtain
additional financing, we believe that we have developed a viable plan to address
our ability to continue as a going concern, and that this plan will enable us to
continue as a going concern through at least the end of fiscal 2003. However, we
may need to raise additional funds in the future to fully develop our Healthcare
Exchange and implement our business  plan. If we are unable to raise  additional
funds,  we may be required to reduce the  development  efforts of our Healthcare
Exchange or be forced into seeking  protection  under federal  bankruptcy  laws.
Traditionally, we have relied on major stockholders or affiliates to finance our
operations. However, there can be no assurance that they will continue to do so.
The issuance of  additional  shares of common stock will dilute the ownership of
existing stockholders.

Our future  revenue  growth depends upon our  establishment  and  maintenance of
successful  relationships  with  Providers  and  strategic  vendors  in order to
attract Purchasers to our products and services.

     We  believe  that  our  future  revenue  growth  depends  in part  upon the
successful creation and maintenance of relationships with Providers,  Purchasers
and strategic  vendors.  To date we have established  relationships with a small
number of the Providers that we are targeting.  In order to successfully attract
Purchasers,  we may need to have a large number of relationships  with Providers
with diverse  practices and over broad  geographic  areas. We may not be able to
adequately  develop  relationships  with the number of  Providers  necessary  to
achieve  this type of coverage and those  already  existing  relationships  with
Providers may not be ultimately successful.

     We have signed  agreements  effective in January  2001 with an  application
services provider to license,  support and run software to process medical bills
submitted to our Healthcare Exchange.  We have also signed agreements to receive
claims from Providers  through  electronic  clearing houses and to convert paper
claims into electronic formats. These relationships are non-exclusive.

     In September 1999, we entered into an agreement with WebMD Corp. to develop
a web-based  portal  through which patients can procure  health  services.  This
relationship  is  nonexclusive  and the status of the project is currently being
reevaluated by the parties.

     We may enter into additional strategic  relationships in the future and are
currently evaluating other potential  technology vendors.  Strategic vendors may
offer products or services of several different  companies,  including  products
and services that compete with our products or services.  Strategic  vendors may
be influenced by our competitors to scale back or end their  relationships  with
us.  We  may  not  establish   additional  strategic   relationships,   and  any
relationships we do establish ultimately may be unsuccessful.

     If we are unable to establish and maintain  successful  relationships  with
Providers  or  strategic  vendors,  we may  have to  devote  substantially  more
resources to the sales and marketing of our products and services.


The failure of our Providers to provide high quality  services will diminish our
brand  value and the number of  Purchasers  who use our  proposed  services  may
decline.

     Promotion  of our brand  value  depends  on our  ability  to provide a high
quality  experience for both  Purchasers and Providers.  If our Providers do not
provide  Purchasers  high quality  service,  the value of our services  could be
damaged and the number of Purchasers  using our proposed  services may decrease.
The failure by our Providers to provide the level of healthcare  that Purchasers
expect  will  result in low  satisfaction,  damage  to our brand  name and could
materially  and  adversely  affect  our  business,  results  of  operations  and
financial condition.

Failure to manage our growth  effectively  could harm our business and operating
results.

     We have hired a  significant  number of new  employees and will continue to
add  personnel  to maintain  our ability to grow in the future.  Our growth will
place  significant  strain  upon our  management  and  operational  systems  and
resources.  We must  integrate our new employees into a cohesive team and at the
same time  increase  the total  number of  employees  and train and  manage  our
employee work force in a timely and effective manner to expand our business.  We
may not be able to do so successfully.

Our  business  could  suffer if the  integrity of our systems and the systems of
those third parties we depend on are inadequate.

     We will  depend on third  parties to develop  significant  portions  of the
information systems for our Healthcare  Exchange.  Any failure of the systems we
are developing, or those of third parties, could harm our business and operating
results.  We intend for these  systems to process  vast  amounts of pricing  and
financial data and execute large numbers of payment  transactions.  Any delay or
failure in these systems or in our ability to  communicate  electronically  with
Purchasers or in our ability to collect,  store,  analyze or process  accurately
pricing and financial  data may result in the denial of claims,  or in the delay
or failure to execute  payment  transactions  accurately.  This type of delay or
failure would harm our business and operating results.

Our  business  and  reputation  may be harmed if we are  unable to  protect  the
privacy of our confidential health information.

     Our information  systems and Internet  communications  may be vulnerable to
damage from physical break-ins, computer viruses, programming errors, attacks by
computer hackers and similar disruptive  problems.  A user who is able to access
our computer or communication  systems could gain access to confidential  health
information of individuals. Therefore, a material security breach could harm our
business and our reputation or could result in liability to us.

Our future  revenue growth depends in part on increasing use of the Internet and
on the growth of e-commerce.

     Rapid  growth  in the use of the  Internet  is a  recent  phenomenon.  As a
result,  its acceptance and use may not continue to develop at historical  rates
and a sufficiently broad base of business customers and individual customers may
not adopt or continue to use the  Internet as a medium of  commerce.  Demand and
market  acceptance  for  recently  introduced  products  and  services  over the
Internet are subject to a high level of uncertainty,  and there exist few proven
products and services.




     Our future  profitability  depends,  in part,  upon increased  Provider and
Purchaser demand for additional Internet and e-commerce solutions that we are in
the process of developing or may develop in the future.

Our ability to comply with the Health Insurance  Portability and  Accountability
Act of 1996 (HIPAA) could harm our business and operating results.

     The Health  Insurance  Portability and  Accountability  Act of 1996 (HIPAA)
will impose obligations previously unknown on the healthcare industry.  HIPAA is
designed to reduce the amount of administrative waste in the healthcare industry
and to protect the privacy of patients' medical  information.  HIPAA establishes
new  requirements  for the  confidentiality  of patient health  information  and
standard formats for the secure transmission of healthcare data among healthcare
providers  and  purchasers.  HIPAA,  among other  things,  will  create  federal
criminal penalties for health plans,  providers and claims  clearinghouses  that
knowingly and improperly disclose  information or obtain information under false
pretenses.  The  regulations  regarding  the  standard  formats  for the  secure
transmission of healthcare  information  will become  effective in October 2002,
but extended to October 2003 if an extension is requested and a compliance  plan
is filed with  Secretary of the  Department  of Health and Human  Services.  The
regulations regarding privacy issues will become effective in April 2003.

     We were  aware of and  tried to  incorporate  HIPAA  requirements  or their
timely  adoption as our products and services  were  developed.  We have filed a
compliance  plan and a request for  extension to October 2003 to comply with the
standard formats requirements.  We are currently reviewing processes, systems or
policies  that  may  require  modification,  and we  are  working  to  implement
appropriate  changes  to avoid any  adverse  impact on our  ability  to  perform
services in accordance  with HIPAA  standards.  We are also  communicating  with
significant  third-party  service  providers to assess their  readiness  and the
extent to which we will need to modify our agreements or relationships with them
to comply with HIPAA standards.

     The cost of this  compliance  effort is estimated to be less than $100,000.
However,  there can be no guarantee  that the costs will not  materially  exceed
this, or that changes in federal  standards would require  expending  additional
resources.

State  and  local  laws  regarding   confidentiality   and  security  of  health
information could harm our business and operating results.

     The   confidentiality   of  patient   records   and  claims  data  and  the
circumstances  under  which  records and data may be released or must be secured
for inclusion in our databases may be subject to substantial regulation by state
governments.  These  state  laws  govern  both  the  disclosure  and  the use of
confidential  patient  medical  records.  Although  compliance  with  these laws
currently is principally the responsibility of Providers and health plans, these
regulations  may be extended to cover our business and the claims data and other
information  that we include in our  databases.  If these laws are  extended  to
cover our business,  we may be required to expend additional  resources in order
to comply with these laws, including changes to our security practices,  and may
be exposed to greater liability in the event we fail to comply with these laws.

State laws and regulations  concerning the marketing of health provider services
over the Internet could harm our business and operating results.

     The offering of health provider services is subject to extensive regulation
under state laws. Under some state laws, regulators may take the position that a



registration fee for Purchaser access to favorable fees from Providers  requires
meeting the  requirements  for licensing as a health plan or health insurer.  In
addition, to the extent that fees are paid by Providers,  state regulators could
assert that our  Healthcare  Exchange  is a referral  agency  and/or  collection
agency,  which requires  licensing  under many state laws, or that Providers are
paying prohibited referral fees, which could subject the Provider or us to civil
or criminal penalties. In addition, our relationship with Purchasers may require
licensing or certifications in some states.  Also,  although we do not currently
anticipate  entering the Medicare or state  Medicaid  markets,  similar  federal
regulations could adversely impact the business. Because the e-commerce business
is relatively  new to the provider  network  industry,  the impact of current or
future regulations is difficult to anticipate.

     As we develop our business plan,  compliance  with or prohibitions by state
regulations could delay or eliminate certain aspects of our business or force us
to modify  our  business,  which  could have a  material  adverse  impact on our
business and prospects.

Internet  commerce has yet to attract  significant  regulation,  but  government
regulations may result in administrative monetary fines, penalties or taxes that
may reduce our future earnings.

     There are  currently  few laws or  regulations  that apply  directly to the
Internet.  Because our business  utilizes the Internet,  the adoption of new (or
applications  of  existing)  local,  state,  national or  international  laws or
regulations  may  decrease  the growth of Internet  usage or the  acceptance  of
Internet commerce which could, in turn, decrease the demand for our services and
increase our costs or otherwise have a material  adverse effect on our business,
results of operations and financial condition.

We face a risk of litigation.

     Although  we are not  currently  involved in any  litigation,  we have been
involved in several significant litigation matters in our history. No assurances
can be given that additional legal proceedings will not be initiated against us.
In addition,  involvement  in  litigation  will require us to spend time and pay
expenses  to  defend  ourselves,  which  will  have  an  adverse  effect  on our
operations  and financial  condition and results.  The  healthcare  and Internet
industry  that we are entering  into may cause us to face an  increased  risk of
litigation.  Patients who file lawsuits against doctors often name as defendants
all persons and companies with any relationship to the doctors.

Risk Related to This Offering

Our common stock price is volatile and could be impacted by fluctuating  results
in the future and by general market conditions.

     Our common  stock  price is volatile  and could be impacted by  fluctuating
results  in the future and by general  market  conditions.  Our common  stock is
quoted and traded on the OTC Bulletin Board and the public market for our common
stock has been limited,  sporadic and highly volatile.  Between July 1, 2001 and
October 31, 2002, the closing price of a share of our common stock ranged from a
low of $1.20 to a high of $3.70.  There can be no  assurance  that a more active
trading market for our common stock will develop or be sustained.

The sale of a substantial  amount of stock through this  registration  statement
could negatively affect our stock price.

     Under an  agreement  with  the  selling  stockholders,  we have  agreed  to
register the common stock for resale by this prospectus. The number of shares of



common stock  available for resale by this prospectus  represents  approximately
13% of our  outstanding  common stock.  Because the trading price for our common
stock may be affected by the number of shares  available for resale,  the market
price of our common  stock could drop as a result of sales of a large  number of
shares of common stock in this market after this offering or the perception that
sales could occur.

Our executive officers and existing stockholders have significant control.

     Our executive officers,  directors and holders of over five percent (5%) of
our  stock  and  their  affiliates  beneficially  own  approximately  65% of the
outstanding  shares of our common stock as of October 31, 2002. As a result,  if
these  holders  act as a group,  they may be able to  control  us and direct our
affairs,  including  the  election of  directors  and  approval  of  significant
corporate  transactions  without further  approval by other  stockholders.  This
concentration of ownership also may delay,  defer or prevent a change in control
of our company,  and make some transactions more difficult or impossible without
the support of these stockholders.

We  have  not  paid  dividends,  and  expect  to  retain  our  earnings  for the
foreseeable future.

     We have not paid cash dividends on our common stock since our inception. We
do not  intend to pay cash  dividends  on our  common  stock in the  foreseeable
future so that we may  reinvest  earnings,  if any,  in the  development  of our
business.

                           FORWARD LOOKING STATEMENTS

     This  prospectus  contains  forward-looking  statements,  as  that  term is
defined in the Private Securities Litigation Reform Act of 1995, in the sections
entitled  "Prospectus  Summary,"  "Risk Factors,"  "Management's  Discussion and
Analysis of  Financial  Condition  and Results of  Operations,"  "Business"  and
elsewhere.  These  statements  relate to future  events or our future  financial
performance.  In some cases,  you can  identify  forward-looking  statements  by
terminology  such as  "may,"  "will,"  "should,"  "could,"  "expects,"  "plans,"
"anticipates," "believes," "estimates," "predicts," "potential" or "continue" or
the negative of these terms or other  comparable  terminology.  These statements
are only  predictions  and involve known and unknown  risks,  uncertainties  and
other factors, including the risks outlined under "Risk Factors," that may cause
our or our  industry's  actual  results,  levels  of  activity,  performance  or
achievements  to be  materially  different  from any future  results,  levels of
activity,   performance   or   achievements   expressed   or  implied  by  these
forward-looking statements.

     Although we believe that the expectations  reflected in the forward-looking
statements  are  reasonable,  we  cannot  guarantee  future  results,  levels of
activity,  performance or  achievements.  Except as required by applicable  law,
including the securities  laws of the United States,  we do not intend to update
any of the  forward-looking  statements  after  the date of this  prospectus  to
conform these statements to actual results.

                                  THE OFFERING

     The selling  stockholders  listed in the  prospectus may sell all, some, or
none of their common shares registered pursuant to this prospectus.  We will not
receive any proceeds from the offering.

     The shares of common stock  offered for resale by the selling  stockholders
were issued in connection  with a private  placement of the shares to accredited
investors  in January  2002 and October  2002;  warrants  to purchase  shares of



common stock were issued to the placement  agent in connection  with the October
2002 private  placement;  a private  placement of a $1,000,000  promissory  note
convertible  into shares of common stock and  warrants to purchase  common stock
were issued to an accredited  investor in July 2002;  and the issuance of shares
of common stock to certain service providers in September 2002.

                                 USE OF PROCEEDS

     We will not  receive  any  proceeds  from the sale of shares by the selling
stockholders.

                         PRICE RANGE OF OUR COMMON STOCK

     The table below sets forth the high and low  closing  prices for our common
stock for each of the quarter ending September 30, 2002 and each of the quarters
for the past two fiscal years.

      Period                                        High            Low

      Quarter ended September 30, 2002             $2.25           $1.30

      Quarter ended June 30, 2002                  $2.55           $2.00
      Quarter ended March 31, 2002                 $3.06           $2.06
      Quarter ended December 31, 2001              $3.09           $2.62
      Quarter ended September 30, 2001             $3.70           $2.08

      Quarter ended June 30, 2001                  $2.26           $1.90
      Quarter ended March 31, 2001                 $2.31           $1.34
      Quarter ended December 31, 2000              $3.38           $1.38
      Quarter ended September 30, 2000             $4.81           $2.75

     As of  October  31,  2002,  66,718,985  shares  were  outstanding  held  by
approximately  271 holders,  not including  those held in street name by several
brokerage  firms.  As of October 31, 2002, a total of  13,047,303  shares of our
common stock  underlie  outstanding  options,  warrants,  convertible  notes and
future issuance of options to employees and non-employee directors.

                                 DIVIDEND POLICY

     We  have  never  paid  a  cash  dividend  on out  common  stock  and do not
anticipate paying cash dividends on our common stock in the foreseeable  future.
Our Series D preferred  stock  carried a cumulative  dividend of $0.60 per share
per year until the Series D preferred  stock was  exchanged  for common stock on
September 11, 2000.  On September  11, 2000, in connection  with the exchange of
204,167 shares of Series D preferred  stock,  for 408,334 shares of common stock
based on a per share price of $3.00 per share, we declared accrued  dividends of
$759,110 in the  aggregate.  Of the  $759,110 in accrued  dividends,  two of the
Series D preferred  stockholders agreed to accept 158,638 shares of common stock
for $475,915 in accrued dividends based on a $3.00 per share value.

     The board of  directors,  on the basis of various  factors,  including  our
results of  operations,  financial  condition,  capital  requirements  and other
relevant factors, will determine our future dividend policy.




                             SELECTED FINANCIAL DATA

     In the table  below,  we  provide  you with  unaudited  summary  historical
financial  data of  Alternative  Technology  Resources,  Inc.  ("ATR").  We have
prepared this  information  using the  financial  statements of ATR for the five
years ended June 30, 2002 and the  three-month  periods ended September 30, 2002
and 2001. When you read this unaudited summary historical  financial data, it is
important  that you read along with it the historical  financial  statements and
related notes in our annual and quarterly reports, as well as the section titled
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."


                                                                                                   

                                                                                                             As of and for the
                                                                                                            Three Months Ended
                                                 As of and for the Years Ended June 30                         September 30
                                     ----------------------------------------------------------------  -----------------------------
                                         2002         2001          2000        1999         1998            2002          2001
Statement of Operations Data:
Healthcare exchange revenue          $ 1,642,565  $    50,944  $         -  $         -  $         -   $   776,560  $   108,218
Healthcare exchange gross profit
  (loss                              $   179,048  $   (33,584) $         -  $         -  $         -   $   232,858  $  (116,570)
Contract programming revenue         $         -  $   308,469  $ 2,561,101  $ 6,340,235  $ 5,250,002   $         -  $         -
Selling, market and product
  development costs                  $(7,076,558) $(5,097,513) $(1,154,244) $         -  $         -   $(1,397,306) $(1,105,195)
General and administrative expenses  $(2,482,272) $(3,850,971) $(1,276,726) $(1,223,539) $(1,336,342)  $  (509,015) $  (505,834)
Loss from operations                 $(9,379,782) $(8,919,271) $(2,008,908) $  (192,646) $  (805,963)  $(1,673,463) $(2,127,599)
Net loss                             $(9,815,906) $(8,914,755) $(4,815,641) $  (716,747) $(1,243,944)  $(1,886,806) $(2,233,983)
Basic and diluted net loss per share $     (0.16) $     (0.17) $     (0.10) $     (0.03) $     (0.05)  $     (0.03)       (0.04)
Shares used in per share
  calculations                        59,936,435   58,686,778   50,329,614   26,127,730   25,964,142    61,016,315   59,401,860

Balance Sheet Data:
Total assets                         $ 1,203,309  $ 5,577,658  $ 2,502,703  $   599,440  $   837,353   $ 1,812,858  $  3,733,569
Long-term obligations                $         -  $ 3,740,450  $ 3,567,424  $ 4,258,090  $ 4,006,565   $         -  $  4,054,35
Accrued preferred stock dividends    $   283,195  $   283,195  $   735,001  $   612,501  $   490,001   $   283,195  $    283,195
Redeemable preferred stock, Series D $         -  $         -  $ 1,225,002  $ 1,225,002  $ 1,225,002   $         -  $         -
Stockholders' equity (deficit)       $(5,890,914) $   156,237  $(2,974,406) $(5,587,475) $(4,844,274)  $(7,315,766) $ (2,058,472)


     Note:
     ----

     Through fiscal year 2001, our business was recruiting, hiring, training and
     placing foreign computer programmers with U.S. companies.  In line with our
     strategy  to focus on the  establishment  of the  Healthcare  Exchange  for
     healthcare  services,  we suspended  recruitment of foreign  programmers in
     December 1999 and began pursuing the conversion of computer  programmers to
     employees of our  customers.  This  conversion  was complete as of June 30,
     2001.




         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS


     The following  management's  discussion and analysis of financial condition
and results of operations contains forward-looking statements that involve risks
and  uncertainties.  Our  actual  results  could  differ  materially  from those
anticipated  in these  forward-looking  statements  as a result  of the  factors
described in the section entitled "Risk Factors" and elsewhere in this document.

Critical Accounting Policies

     Revenue  Recognition.  We recognize revenue for the  transaction-processing
fee when earned and when we have substantially  completed all of our obligations
under the contract.

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

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

     Prepaid  License and Service  Fees.  Prepaid  license and services fees are
recorded at cost and amortized on a straight-line basis over the service period.
Management  considers  whether  indicators  of  impairment  of these  assets are
present  at each  balance  sheet date and an  impairment  loss is  recorded,  if
necessary.  In assessing the  recoverability  of our prepaid license and service
fees, we must make assumptions  regarding  estimated future cash flows and other
factors to determine the fair value of the respective assets. If these estimates
or their related  assumptions change in the future, we may be required to record
impairment charges for these assets not previously recorded.

Financial Condition

     Cash and cash  equivalents  increased  $482,434  since  June 30,  2002.  At
September 30, 2002,  substantially  all of our cash was invested in money market
accounts.

     Because we are emphasizing the development of the Healthcare Exchange,  the
results of operation  for the three months ended  September  30, 2002 may not be
indicative of results of operations for the year ended June 30, 2003.

Three months ended  September 30, 2002 compared to three months ended  September
30, 2001

Results of Operation

Healthcare Exchange

     Healthcare  Exchange Revenue.  We began operations with a limited number of
Providers in the quarter ending June 30, 2001.  Providers  submit their bills to
us,  and we  process  and  reprice  the bills to the rate set by the  Providers,



including adding a transaction-processing  fee. We then route the adjusted bills
to Purchasers or their  intermediaries.  We receive  payments from Purchasers on
behalf of Providers,  and then remit payments to Providers. We recognize revenue
for the  transaction-processing  fee when earned and when we have  substantially
completed  all of our  obligations  under the  contract.  During the three month
period ending September 30, 2002, $776,560 of revenue was recognized as compared
to $108,218 for the three month period ending  September 30, 2001.  The increase
is  primarily  the result of an increase in the number of  healthcare  providers
contracted with the Healthcare Exchange.

     Healthcare  Exchange Costs.  Healthcare Exchange costs are the direct costs
related to the  processing  of the bills  submitted  by  Providers  and payments
received  from  Purchasers.  These  costs  include the salary and other wage and
benefit costs of the Healthcare Exchange operations staff and the operating cost
of the  application  services  provider.  The costs for the three  month  period
ending  September  30,  2002 were  $543,702,  an  increase of 142% over costs of
$224,788 for the three month period  ending  September 30, 2001. As of September
30, 2002, there were 31 operations staff members  responsible for the processing
of bills submitted by Providers and payments received from Purchasers,  compared
to 9 operations staff members as of September 30, 2001.

Selling, Marketing and Product Development Costs

     In  October  1999,  we began  incurring  costs to  develop  our  Healthcare
Exchange.  Costs incurred are primarily the salary, other wage and benefit costs
of our employees and other  operational  costs  associated  with  recruiting the
network of  healthcare  Providers.  The costs for the three month period  ending
September  30, 2002 were  $1,397,306,  a decrease of 7% over costs of $1,505,195
for the three month period ending September 30, 2001. This decrease is primarily
the result of a decrease in payroll costs and travel related costs.

General and Administrative Expenses

     General and  administrative  expenses  were  $509,015  for the  three-month
period ended  September 30, 2002, and did not fluctuate  significantly  from the
same period in the prior fiscal year.

Other Income (Expense)

     Interest Income. Interest income is related to the short-term investment of
cash balances, primarily in money market accounts. The decrease is the result of
reduced cash  balances in the three month period  ending  September  30, 2002 as
compared to the same period in fiscal 2001.

     Interest  Expense  to Third  Party.  Interest  expense  to  third  party of
$77,315,  for the  three  month  period  ending  September  30,  2002,  resulted
primarily  from  the  fair  value  of a  warrant  issued  in  connection  with a
convertible note and the beneficial  conversion  feature of the convertible note
to third party, which were recognized through interest expense, and the interest
accrued  on the  convertible  note.  No  interest  expense  to third  party  was
recognized during the same period in the prior fiscal year.

     Interest  Expense to Stockholders  and Directors.  The decrease of interest
expense of $3,059,  for  September  30, 2002 in comparison to the same period in
fiscal year 2001, despite the increase in Notes Payable, resulted primarily from
the  extension  of  stockholder  notes as of September  1, 2001.  The  extension
included a 2% refinance fee, increasing the interest expense for the three month
period ending September 30, 2001.




Year ended June 30, 2002 compared to year ended June 30, 2001

Healthcare Exchange

     Healthcare  Exchange Revenue.  We began operations with a limited number of
Providers in the quarter ending June 30, 2001. For fiscal year 2002,  $1,642,565
of revenue was  recognized  as  compared  to $50,944 in fiscal  year 2001.  This
increase  of  $1,591,621  was  primarily  due to an  increase  in the  number of
transactions  processed  by  the  Healthcare  Exchange  during  a full  year  of
operations.

     Healthcare  Exchange Costs.  Healthcare Exchange costs are the direct costs
related to the  processing  of the bills  submitted  by  Providers  and payments
received from  Purchasers.  The costs for fiscal year 2002 were  $1,463,517,  an
increase of 1,631%  over  fiscal year 2001 cost of $84,528.  As of June 30, 2002
there were 25 operations  staff members  responsible for the processing of bills
submitted by Providers  and payments  received  from  Purchasers,  compared to 7
operations staff members as of June 30, 2001.

Contract Programming

     Our previous business was recruiting,  hiring, training and placing foreign
computer programmers with U.S. companies.  In line with our strategy to focus on
the  establishment  of the  Healthcare  Exchange  for  healthcare  services,  we
suspended recruitment of foreign computer programmers in December 1999 and began
pursuing the  conversion of computer  programmers to employees of our customers.
This conversion process was complete as of June 30, 2001.

     Contract  Programming   Revenue.   Contract  programming  revenue  resulted
primarily from sales of programmer services.  There was no revenue recognized in
fiscal year 2002 due to the  conversion of all contract  programmers to customer
employees  and the  phase-out  of-contract  programming  services as of June 30,
2001. Revenue of $308,469 was recognized in fiscal year 2001

     Programmer Costs.  Programmer costs represent the salary and other wage and
benefit costs of our  programmer  employees.  There were no programmer  costs in
fiscal year 2002 due to the  conversion of all contract  programmers to customer
employees  and the  phase-out  of-contract  programming  services as of June 30,
2001. Programmer costs of $235,258 were recognized in fiscal year 2001.

     Start-up and Other Costs.  Start-up and other costs  represent the costs of
recruiting  fees,  training,  and travel for programmer  employees coming to the
United States from the former Soviet Union for the first time,  relocation costs
within the United  States,  and legal and other costs  related to obtaining  and
maintaining compliance with required visas, postings and notifications. Start-up
and other costs were expensed as incurred.

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

     There were no  start-up-and-other-costs  recognized in fiscal year 2002 due
to the  conversion  of all contract  programmers  to customer  employees and the
phase-out   of-contract    programming   services   as   of   June   30,   2001.
Start-up-and-other-costs of $10,414 were recognized in fiscal year 2001.



Selling, Marketing and Product Development Costs

     In  October  1999,  we began  incurring  costs to  develop  our  Healthcare
Exchange. Costs incurred were primarily the salary, other wage and benefit costs
of our employees and other  operational  costs  associated  with  recruiting the
network of healthcare  Providers.  The increase of the sales and marketing staff
from 55 in  fiscal  year 2001 to 77 in fiscal  year  2002  resulted  in the cost
increase of $1,979,045 for fiscal year 2002 as compared to fiscal year 2001.

General and Administrative Expenses

     General and administrative expense decreased $1,368,699 in fiscal year 2002
compared to fiscal year 2001.  This decrease was primarily due to non-cash stock
based compensation expense of $1,931,036 related to the purchase of common stock
in our August 2000 private  placement by our chief executive officer and related
entities and non-cash compensation due to conversion of Series D Preferred Stock
into common  stock by our  chairman  of the board in fiscal year 2001.  This was
partially  offset by an increase in the number of employees and related costs to
support the Healthcare Exchange,  and non-cash  compensation expense of $138,583
related to the purchase of common stock by our chairman.

Other Income (Expense)

     Interest  Income.  Interest income  decreased  $405,179 in fiscal year 2002
compared  to fiscal  year 2001  primarily  due to a  decrease  of  average  cash
balances generating interest income in fiscal year 2002.

     Interest  Expense.  Interest expense  increased $35,461 in fiscal year 2002
compared  to  fiscal  year  2001  due  to  the  increase  in  Notes  Payable  to
Stockholders  and  Convertible  Notes Payable to  Stockholders,  and interest of
$31,076 paid on Provider  claims when payment is received from the Purchaser and
paid to the Provider later than 21 days of receiving a claim in accordance  with
the terms of the Provider contracts.

Year ended June 30, 2001 compared to year ended June 30, 2000

Healthcare Exchange

     Healthcare  Exchange Revenue.  We began operations with a limited number of
Providers in the quarter  ending June 30, 2001.  During the quarter  ending June
30, 2001, the first quarter of operations, $50,944 of revenue was recognized.

     Healthcare  Exchange Costs.  Healthcare Exchange costs are the direct costs
related to the  processing  of the bills  submitted  by  Providers  and payments
received from Purchasers.  The costs for fiscal year 2001 were $84,528.  No such
costs were incurred in fiscal year 2000.

Contract Programming

     Contract  Programming   Revenue.   Contract  programming  revenue  resulted
primarily from sales of programmer services. Revenue decreased $2,252,632 or 88%
in fiscal year 2001  compared to fiscal year 2000.  This  decrease  was due to a
reduction  in the  monthly  average  number of contract  programmers  working at
customer sites in fiscal year 2001 compared to fiscal year 2000. This decline in
the number of programmers at customer sites,  started in the last half of fiscal
year  1999,  was due to  several  customers  choosing  to  exercise  a  contract
termination  provision which allowed them to convert, for a fee, our programmers
to their  employees.  We escalated this  conversion  process during fiscal years
2000 and 2001 to enable us to focus on our business  strategy toward  developing
our Healthcare Exchange.


     As of June  30,  2001,  all  contract  programmers  had been  converted  to
customer employees.  The phase out of contract  programming services is complete
and all expenses have been incurred.

     Contract  Termination  Fees.  Contract  termination fees represent  amounts
received  from  customers  when they  exercised  the contract  provision,  which
allowed them to convert our  programmer to their  employee.  In addition,  these
fees were also received from  programmers  when they  exercised  their  contract
provision to terminate their  relationship with us prior to the termination date
of their contract.  These fee amounts were stipulated in customer and programmer
contracts,  were based on the length of time remaining  under the contract,  and
were recognized as revenue when such contract provisions were invoked.

     Programmer Costs.  Programmer costs represent the salary and other wage and
benefit costs of our programmer  employees.  These costs decreased by $1,509,753
or 87% in fiscal  year 2001  compared  to fiscal year 2000.  This  decrease  was
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  represent the costs of
recruiting  fees,  training,  and travel for programmer  employees coming to the
United States from the former Soviet Union for the first time,  relocation costs
within the United  States,  and legal and other costs  related to obtaining  and
maintaining compliance with required visas, postings and notifications. Start-up
and other costs were expensed as incurred.

     Start-up and other costs  decreased  $389,067 or 97% in fiscal year 2001 as
compared to fiscal year 2000.  This decrease was due to a decrease in the number
of programmers  who were in the United States but not working at customer sites.
In fiscal year 2001 there were no programmers  temporarily unassigned compare to
2 in fiscal year 2000.

Product Development Costs

     In  October  1999,  we began  incurring  costs to  develop  our  Healthcare
Exchange.  Costs incurred are primarily the salary, other wage and benefit costs
of our employees and other  operational  costs  associated  with  recruiting the
network of healthcare  Providers.  The increase of the sales and marketing staff
from 23 in  fiscal  year 2000 to 55 in fiscal  year  2001  resulted  in the cost
increase of $3,943,269 for fiscal year 2001 as compared to fiscal year 2000.

General and Administrative Expenses

     General and administrative expense increased $2,574,245 in fiscal year 2001
compared to fiscal year 2000.  This increase was primarily due to non-cash stock
based  compensation  expense of  $1,931,036  and costs  relating to increases in
support staff, licensing and consulting fees and rent and facilities for the New
Hampshire headquarters.

Other Income (Expense)

     Interest  Income.  Interest income  increased  $360,070 in fiscal year 2001
compared to fiscal year 2000 primarily due to increased  interest  income earned
on higher  average cash balances as a result of funds  received from the sale of
our common stock in August 2000.


     Interest Expense. Interest expense decreased $2,451,179 in fiscal year 2001
compared  to fiscal  year 2000 due to the  charges  recorded  as a result of the
benefit  accruing to the note holders from amending the conversion  terms of the
$1,000,000 convertible note in fiscal year 2000.

Income Taxes

     As of June 30, 2002, we had net operating  loss  carryforwards  for federal
and state  income tax purposes of  approximately  $46,119,000  and  $26,245,000,
respectively.  The  federal  net  operating  loss  carryforwards  expire in 2004
through  2022 and the  state net  operating  loss  carryforwards  expire in 2002
through  2022.  We also have  approximately  $98,000 and $25,000 of research and
development tax credit  carryforwards for federal and state income tax purposes,
respectively.  The federal  research and  development  tax credit  carryforwards
expire in 2005.

     In connection  with our initial public offering in August 1992, a change of
ownership  (as defined in Section 382 of the Internal  Revenue Code of 1986,  as
amended) occurred.  As a result, our net operating loss carryforwards  generated
through  August 20,  1992  (approximately  $1,900,000)  are subject to an annual
limitation in the amount of approximately $300,000.

     In 1993, a controlling interest of our stock was purchased,  resulting in a
second annual limitation in the amount of approximately  $398,000 on our ability
to utilize net operating loss  carryforwards  generated  between August 11, 1992
and September 13, 1993 (approximately $7,700,000).

     In accordance  with  provisions  of the Internal  Revenue Code Section 382,
additional portions of the net operating loss carryforwards may be disallowed as
a result of additional changes in our ownership structure.

     We  expects  the  aforementioned  annual  limitations  will  result  in net
operating loss carryovers, which will not be utilized prior to the expiration of
the carryover period.

Liquidity and Capital Resources

     For the three month period ending September 30, 2002, we earned revenues of
$776,560 but incurred a net loss of $1,886,806.  For the fiscal year ending June
30,  2002,  we  earned  revenues  of  $1,642,565  but  incurred  a net  loss  of
$9,815,906.  Traditionally,  we have  used a  combination  of  equity  and  debt
financing and revenue  generated to fund operations but have incurred  operating
losses  since our  inception,  which has resulted in an  accumulated  deficit of
$61,249,685 at September 30, 2002. We had negative  working capital at September
30, 2002 of $8,025,655.

     In October 2002, we sold 4,125,000 shares of our common stock at a purchase
price of $1.00 per  share.  The  shares of common  stock  issued in the  private
placement are  restricted  securities.  Net cash proceeds from the offering were
$3,884,567.  In  connection  with the private  placement,  we engaged  Stonegate
Securities,  Inc. as placement  agent who received a placement  fee of 6% on the
gross  proceeds  received from the sale of common stock place by them and a five
year  warrant to purchase  10% of the common  stock  placed by them at $1.00 per
share.

     On July 26, 2002, we received short-term unsecured financing in the form of
a convertible  note of $1,000,000 from a lender.  This note bears interest at 8%
and is  payable  at the  earliest  of July  25,  2003 or when we,  in a  Private
Placement  of  Common  Stock,  raises  $8,000,000.  All  or  a  portion  of  the
convertible  note may be  converted  into shares of common stock at the lower of
$1.00 per share,  the  subscription  per share price of the October 2002 Private
Placement of Common Stock, or if further shares are offered at a lower price per
share at that price  through March 29, 2003.  In  consideration  for the loan we
issued three warrants.  We issued to the lender one warrant to purchase  100,000



shares of common stock. The lender received a second warrant to purchase 100,000
shares  of  common  stock  that may only be  exercisable  if we do not repay the
convertible  note within 180 days of the agreement.  The lender received a third
warrant to purchase 100,000 shares of common stock that may be exercisable if we
do not repay the convertible note within one year of the agreement.  Each of the
warrants has an exercise price of $1.00, the subscription per share price of the
October 2002 private placement of common stock, or if further shares are offered
at a lower price per share at that price through March 29, 2003.  When,  and if,
exercisable the lender may exercise these warrants through July 25, 2009.

     In connection with the issuance of the convertible note and the issuance of
the first  warrant,  we  estimated  the fair  value of the first  warrant  to be
$198,000  using  the   Black-Scholes   model.  In  accordance  with  EITF  98-5,
"Accounting for Convertible  Securities with Beneficial  Conversion  Features or
Contingently  Adjustable  Conversion  Ratios," and EITF 00-27,  "Application  of
Issue No. 98-5 to Certain  Convertible  Instruments," we have recognized $62,630
through  interest expense during the three months ended September 30, 2002 for a
portion of the fair value of the first  warrant and a portion of the  beneficial
conversion  feature of the convertible note, which was estimated to be $177,778.
We will record  additional  amounts  totaling  $313,148 through interest expense
until July 25, 2003 for the  remaining  fair value of the first  warrant and the
beneficial  conversion  feature of the Note recorded at the initial  transaction
date.

     Relating to the private  placement of 4,125,000  shares of our common stock
at a purchase price of $1.00 per share in October 2002, the conversion  price of
the  convertible  note and per share  exercise  price of the first  warrant were
reset to $1.00.  In accordance  with EITF 00-27, we will record $624,222 for the
additional  beneficial  conversion  amount  relating  to the  value of the reset
feature.  This amount will be recognized  ratably through interest expense until
July 25, 2003.

     During  the period  between  January  9, 2002 and March 28,  2002,  we sold
1,232,585 shares of our common stock at a purchase price of $2.25 per share. The
shares  of  common  stock  issued  in  the  private   placement  are  restricted
securities. Further pursuant to the private placement, it was agreed that in the
event  that  within  one year from the final  closing  we sell  shares of common
stock,  or securities  exercisable or convertible  into common stock, at a price
less than $2.25 per share, we would issue  additional  shares to these investors
in an amount  such that the overall  purchase  price will be equal to the lower,
subsequent  sales price.  The forgoing  shall  exclude  common stock that may be
issued in connection with a merger,  as a dividend,  pursuant to the exercise of
outstanding options,  warrants and other convertible  securities and pursuant to
options  subsequently  issued to employees.  Net proceeds from the offering were
$2,742,519. The proceeds from the private placement were used to fund operations
and repay debt.  Our  chairman and chief  financial  officer  purchased  222,222
shares our 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,  we
recorded  compensation  expense of $138,583  during fiscal year 2002. In October
2002,  resulting  from  the  closing  of the  October  2002  private  placement,
1,540,729  additional shares were issued to these investors based on the October
2002  private  placement  price of $1.00.  Compensation  expense to be  recorded
during the second quarter ended  December 31, 2002,  for the  additional  shares
issued to our chairman and chief financial officer will be $377,778.

     As of June 30, 2002,  we had received  short-term,  unsecured  financing to
fund our  operations  in the  form of  notes  payable  of  $4,636,352,  from Mr.
Cameron,  our chairman and chief  executive  officer,  and another  stockholder.
These notes bear  interest at 10.25%.  On September 1, 2001,  we agreed with Mr.
Cameron to extend the due date on notes  payable to him until  December 31, 2002
in exchange for an extension fee of 2%. These extended  notes total  $1,630,529,
including  accrued  interest and extension fees, and bear interest at 10.25% per
annum.  On September 1, 2001, we agreed with the other note holder to extend the



due date of his  convertible  promissory  notes until  December 31, 2002.  These
convertible promissory notes total $2,423,823,  including accrued interest, bear
interest at 10.25% per annum and are convertible  into common stock at $3.00 per
share  at the note  holder's  option.  During  the  three  month  period  ending
September  30,  2002,  Mr.  Cameron  loaned us an  additional  $619,000  bearing
interest at 10.25%  payable on December 31, 2002.  Subsequent  to September  30,
2002, we agreed with Mr.  Cameron to extend the due date on notes payable to him
until  December 31, 2003 in exchange for an extension fee of 2%. These  extended
notes total $2,873,691,  including accrued interest and extension fees, and bear
interest at 10.25% per annum.  Also  subsequent to September 30, 2002, we agreed
with the other note holder to extend the due date of his convertible  promissory
notes  until  December  31,  2003.  These  convertible  promissory  notes  total
$2,681,415,  including accrued  interest,  bear interest at 10.25% per annum and
are  convertible  into  common  stock at $3.00  per  share at the note  holder's
option.

     In January 2001, we signed agreements with an application services provider
to license,  support and run software to process  medical bills submitted to our
Healthcare  Exchange.  The agreements are for 66 months. The application service
provider  required payment of an initial base license fee of $250,000,  which is
being amortized over 66 months,  and start-up  costs,  including data center set
up,  training and  implementation  fees of  approximately  $145,000,  which were
expensed.  The  agreements  require  monthly  minimum  payments,   currently  of
approximately  $35,000,  and additional  fees,  that are  transaction  based, if
volumes exceed levels included in the monthly minimums.

     Our Healthcare Exchange  development efforts will require substantial funds
prior to  generating  sufficient  revenues  to fund  operations  and repay debt.
However,  based on the steps we have taken to refocus our  operations and obtain
additional financing, we believe that we have developed a viable plan to address
our ability to continue as a going concern, and that this plan will enable us to
continue as a going concern through at least the end of fiscal 2003. We may need
to raise additional funds in the future in order to fully develop our Healthcare
Exchange and implement  our business  plan.  However,  there can be no assurance
that we will be able to raise the  additional  funds  necessary to implement our
business  plan. If  unsuccessful,  we may be required to reduce the  development
efforts of our Healthcare  Exchange or be forced into seeking  protection  under
federal bankruptcy laws. As a result, the report of independent  auditors on our
June 30, 2002 financial statements includes an explanatory  paragraph indicating
there is substantial doubt about our ability to continue as a going concern. The
financial  statements  do not include any  adjustments  to reflect the  possible
future effects on the recoverability and classification of assets or the amounts
and  classification  of  liabilities  that may result  from the  outcome of this
uncertainty.

     The following  table  summarizes  the debt  requirements  pertaining to our
contractual obligations over the next five years as of September 30, 2002:


                                                                                                      
---------------------------------------------------------------------------------------------------------------------------
Contractual Obligations                                                  Payments Due by Period
---------------------------------------------------------------------------------------------------------------------------
                                                    Total         Less than 1      1-3 years       4-5 years      After 5
                                                                      year                                         years
---------------------------------------------------------------------------------------------------------------------------

Notes payable to stockholder                  $   2,831,529      $   2,831,529   $           -   $           -  $       -
Convertible notes payable to stockholder          2,423,823          2,423,823               -               -          -
Convertible note payable to third party           1,000,000          1,000,000               -               -          -
Operating leases - facilities - payable to
   stockholder                                      222,722            147,753          74,969               -          -
Operating leases - equipment                        145,455             44,847          90,481          10,127          -
Application services provider                     1,483,922            404,706       1,079,216               -          -
---------------------------------------------------------------------------------------------------------------------------
Total contractual cash obligations            $   8,107,451      $   6,852,658   $   1,244,666   $      10,127  $       -
---------------------------------------------------------------------------------------------------------------------------





Recent Accounting Pronouncements

     In July 2001, the Financial  Accounting  Standards Boards issued Statements
of  Financial  Accounting  Standards  No. 142,  "Goodwill  and Other  Intangible
Assets," or SFAS 142. SFAS 142 no longer  permits the  amortization  of goodwill
and indefinite-lived  intangible assets.  Instead, these assets must be reviewed
annually  (or more  frequently  under  certain  conditions)  for  impairment  in
accordance  with this statement.  Intangible  assets that do not have indefinite
lives will  continue to be  amortized  over their  useful lives and reviewed for
impairment in accordance with existing  guidance.  We adopted SFAS 142 effective
July 1,  2002.  Because  we have  historically  not been  party to any  business
combinations  and therefore  has not recorded  related  goodwill and  intangible
assets,  the  adoption  of SFAS 142 did not have an  effect  on our  results  of
operations, financial position or cash flows.

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

Effects of Inflation

     Management  does not  expect  inflation  to have a  material  effect on our
operating expenses.

Quantitative and Qualitative Disclosures About Market Risk

     We have notes payable in the aggregate amount of $6,255,352 as of September
30, 2002 payable to two of our stockholders  and another lender.  The notes bear
interest  at 8% to 10.25% per annum and are due from July 25,  2003 to  December
31, 2003,  or earlier if other  funding is obtained.  We do not believe that any
change in interest  rates will have a material  impact on us during fiscal 2003.
Further,  we have no foreign operations and therefore are not subject to foreign
currency fluctuations.

                             DESCRIPTION OF BUSINESS

General

     We have  developed and are operating an exchange for  healthcare  services.
The purpose of the  Healthcare  Exchange is to utilize  the  Internet  and other
technologies  to facilitate  Provider  initiated  discounts and  administrative,
billing and  remittance  services  for all  commercial  lines of business in the
healthcare  industry.  The  Healthcare  Exchange  offers a direct and  efficient
conduit  between  Providers and Purchasers of healthcare  services  and/or their
agents, such as Preferred Provider Organizations.

     Providers  submit  bills to us, and we process and reprice the bills to the
rate set by the Providers,  including  adding a  transaction-processing  fee. We
then route the adjusted bills to Purchasers or their intermediaries.  We receive
payments  from  Purchasers on behalf of  Providers,  and then remit  payments to
Providers.

     Our Healthcare Exchange began operations with a limited number of Providers
and  Purchasers  in the quarter  ending June 30,  2001.  We continue to receive,
process  and  analyze  operating  data,  and the  results of our  analysis  will
determine the amount and timing of remaining development related efforts.


     We are currently  recruiting  Providers in thirty-two markets in twenty-two
states to offer  their  services  through the  Healthcare  Exchange to those who
purchase or facilitate the purchase of healthcare services.

     We have  outsourced to multiple  vendors  portions of the  development  and
operations of the information systems for our Healthcare  Exchange.  We contract
with an application  services  provider to license,  support and run software to
process  medical bills submitted to our Healthcare  Exchange.  We also work with
vendors to receive claims from Providers through  electronic  clearinghouses and
to convert  paper  claims  into  electronic  formats.  We are  evaluating  other
potential technology vendors as well.

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

History

     Alternative Technology Resources, Inc. was founded as 3Net Systems, Inc. in
1989. In August 1999, James W. Cameron, Jr., our largest stockholder,  was named
chairman and chief executive officer. Under his direction, we identified what we
believe to be a significant business opportunity and began developing a business
model  involving  the  establishment  of a  Healthcare  Exchange  under the name
"DoctorandPatient."

     In  February  2000,  Jeffrey S.  McCormick  assumed  the  position of 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 our CEO, Mr.  McCormick is responsible for all phases of
development,  implementation  and  operation  of our  Healthcare  Exchange.  Mr.
Cameron still acts as chairman and chief financial officer and continues to play
an active and substantial role in formulating our business strategy and policy.

     We are utilizing our management's  experience in healthcare and information
technology  to  establish  the  Healthcare  Exchange,  which has become our sole
focus.  Our  Healthcare  Exchange  began  operations  with a  limited  number of
Providers  and  Purchasers  in the quarter  ending June 30, 2001. We continue to
receive,  process and analyze  operating  data,  and the results of our analysis
will determine the amount and timing of remaining  development  related efforts.
Our previous  business was recruiting,  hiring,  and training  foreign  computer
programmers and placing them with U.S.  companies.  In line with our strategy to
focus on the establishment of the Healthcare Exchange,  we suspended recruitment
of  foreign  computer  programmers  in  December  1999 and  began  pursuing  the
conversion of foreign computer programmers to become employees of our customers.
This  conversion  process was complete as of June 30, 2001, and we are no longer
in that business.

Overview of the Industry

     According to the  Healthcare  Financing  Administration  ("HCFA"),  in 1999
healthcare  in the United States was a $1.2 trillion  dollar  industry,  up 5.6%
from  1998 and  comprising  approximately  13% of gross  domestic  product.  The
industry  is   characterized   by  extremely   complex   decision-making,   high



fragmentation,  high  barriers  to entry,  rising  costs and slow  adoption  and
incorporation of many information  technologies.  The healthcare industry's poor
rate of investment in technological innovation has created a system rampant with
inefficiencies. According to the Health Data Directory, less than 39% of private
sector billing claims (including commercial, indemnity, PPO and HMO claims) were
automated in 1999. Even those that are automated  often have  processing  delays
because  of a myriad of  reasons,  including  improper  coding  of  information,
inaccurate data on patients and improper eligibility  information.  Waste in the
acquisition,  delivery and processing of billing and payment for health services
has been widely  reported  and  documented.  We believe  that there are gaps and
inefficiencies  in the purchasing  process and in billing and claims  processing
systems creating a key business opportunity for the Healthcare Exchange.

     In its  simplest  form,  healthcare  can be  described  as the  demand  for
services by  individuals  ("Patients")  and the supply of services by Providers,
which include medical doctors,  hospitals,  physical therapists and other health
practitioners. Providers often form groups and practice associations. Purchasers
include  Patients and various forms of third parties,  such as HMO's,  insurance
companies,  Medicare, Medicaid and self-insured employers, that act as purchaser
and payor for services provided to Patients.

     In most  instances,  Patients  are members of a health  service  purchasing
group or pool commonly  offered by Purchasers.  The members'  health coverage is
described  in a plan  that  spells  out what  care is  fully,  partially  or not
covered, rules relating to payment and deductibles,  selection of Providers, use
of  specialists,   required   permissions,   exclusions  and  so  on.  In  these
circumstances, Patients rarely pay Providers directly except for co-payments and
deductibles that represent only a fraction of the total bill.

     Purchasers pay Providers generally after considerable delay. Provider bills
are reviewed by Purchasers and their managed care companies to verify  Patient's
eligibility, plan group membership, compliance with treatment and billing format
and rules, and other plan provisions.  The Provider's bill often is adjusted for
violations and errors.  Providers,  like their Patients, often do not understand
many health plans and may accept incorrect payment lowered by reductions they do
not understand.

     There    are   a   large    number    of    variations    of   the    above
Patient-Provider-Purchaser relationship - such as HMOs, PPOs, Medicare, Medicare
enrolled   HMOs,   Medicaid  -  all  of  which  involve  some   combination   or
redistribution of some of the functions described.

     In a cash  model,  the Patient  will pay the  Provider  directly.  For many
Americans,  this simple cash model is the only one  possible  for all or much of
their care. In many cases, these individuals may have the financial  wherewithal
to pay for many health services.  However,  Providers  generally do not have the
time, inclination or capability to seek out these cash Patients.

Business Description

     The purpose of the Healthcare Exchange is to utilize the Internet and other
technologies  to facilitate  Provider  initiated  discounts and  administrative,
billing and  remittance  services  for all  commercial  lines of  business.  The
Healthcare  Exchange offers a direct and efficient conduit between Providers and
Purchasers of healthcare  services,  their PPOs' and/or their agents.  Providers
submit their bills to us, and we process and reprice the bills to the Provider's
Healthcare Exchange rate, including adding a transaction-processing fee. We then
route the  adjusted  bills to  Purchasers  or their  intermediaries.  We receive
payments  from  Purchasers on behalf of  Providers,  and then remit  payments to
Providers.



Relationship to the Provider

     We have developed the Healthcare Exchange for Providers (including Provider
groups) to market their  services to  Purchasers  more  efficiently.  We believe
eliminating  costs and delays in the billing  process should allow  Providers to
recover more of what they bill. In the United  States,  there are  approximately
750,000  medical  doctors,   6,000  hospitals  and  539,000  licensed  ancillary
Providers  (such  as  chiropractors,   optometrists,   physical  therapists  and
physician  assistants)  and  suppliers  (such  as  pharmacies,  durable  medical
equipment  suppliers,  and  transportation).  We are currently  marketing to and
entering into contracts with  Providers.  A  transaction-processing  fee will be
added to bills  received  from  Providers  and  routed  to  Purchasers  or their
intermediaries.

Relationship to Purchasers

     We have developed the Healthcare Exchange so Purchasers can access services
offered by  Providers.  We believe  eliminating  costs and delays in the billing
process should allow  Purchasers to reduce costs.  We will process medical bills
submitted to the Healthcare Exchange so as to add efficiencies to the purchasing
and processing  function.  We will make these additional  services  available to
Purchasers  on a  contractual  basis and  through  Provider  initiated  discount
offers.  Purchasers may contract with us in order to receive  Providers' offered
rates, and in order to lower their costs by receiving bills  electronically  and
pre-priced.  The goal of this system is to introduce  additional  cost certainty
and to streamline the billing and payment process. A transaction-processing  fee
will be charged to Purchasers or their intermediaries.

Relationship to Individual Uninsured and Under Insured Purchasers

     In September 1999, we entered into an agreement with WebMD Corp. to develop
a web-based portal through which individual uninsured and under-insured Patients
can procure  healthcare  services.  Currently both parties are reevaluating this
agreement,  given  changed  directions  and  priorities  of  each  company.  The
agreement  has not formally been  modified or  terminated,  nor has either party
proposed any specific changes.  However, neither party is currently devoting any
substantial resources to this project.

Application Services Provider

     In January 2001, we signed agreements with an application services provider
to license,  support and run software to process  medical bills submitted to our
Healthcare Exchange. The agreements are for a period of 66 months. They required
payment of an initial  base license fee of  $250,000,  which is being  amortized
over 66 months,  and start-up costs,  including data center set up, training and
implementation  fees  of  approximately  $145,000,   which  were  expensed.  The
agreements  require  monthly  minimum  payments  currently of about  $35,000 and
additional fees that are transaction  based if volumes exceed levels included in
the monthly minimums.

Competition

     Our Healthcare  Exchange  generally will endeavor to cooperate with certain
established  preferred provider  organizations,  integrated delivery systems and
health  plans  and  other  companies  offering  "discount  plans"  to  potential
Purchasers, and Internet companies. However, such plans and companies may choose
to compete  against the Healthcare  Exchange and its  purchasers,  providers and
affiliated organizations. These industries are intensely competitive and rapidly
evolving.


     Increased  competition  in the industry  could result in price  reductions,
reduced gross margins or loss of market share,  which could  seriously  harm our
business and operating results. Our success depends on the ability to market the
Healthcare  Exchange to potential  Providers and Purchasers and their agents. We
believe  that the  principal  competitive  factors in this market are health and
managed care expertise, data integration and transfer of technology,  ability to
persuade  Providers  and  Purchasers  to accept new  technology  and new models,
customer  service and support and  product  and  service  fees.  Competition  is
expected to increase in the future.

     As a new participant in the healthcare industry,  our potential competitors
have longer operating  histories,  significantly  greater financial,  technical,
marketing and other resources and  significantly  greater name  recognition.  In
addition,  many of our competitors have well-established  relationships with our
current and potential  Purchasers and have extensive  knowledge of the industry.
Current and potential  competitors have  established or may establish  strategic
relationships  among themselves or with third parties to increase the ability of
their products and services to address  Purchaser needs.  These  competitors may
seek and obtain business method patents on portions of or all their  operations,
which could  effectively  preclude  us from  competing  with the most  efficient
model. Also, other companies may implement a similar strategy.  Accordingly,  it
is possible that new competitors or alliances  among  competitors may emerge and
rapidly acquire significant market share. Government Regulation

     Our  operations  are subject to various  federal and state laws. We believe
that our  operations  currently  comply  with  such  laws,  but  there can be no
assurance that subsequent  laws, or subsequent  changes in current laws or legal
interpretations, will not adversely affect our operations.

     The Health  Insurance  Portability and  Accountability  Act of 1996 (HIPAA)
will impose obligations previously unknown on the healthcare industry.  HIPAA is
designed to reduce the amount of administrative waste in the healthcare industry
and to protect the privacy of patients' medical  information.  HIPAA establishes
new  requirements  for the  confidentiality  of patient health  information  and
standard formats for the secure transmission of healthcare data among healthcare
providers  and  purchasers.  HIPAA,  among other  things,  will  create  federal
criminal penalties for health plans,  providers and claims  clearinghouses  that
knowingly and improperly disclose  information or obtain information under false
pretenses.  The  regulations  regarding  the  standard  formats  for the  secure
transmission of healthcare  information  will become  effective in October 2002,
but extended to October 2003 if an extension is requested and a compliance  plan
is filed with  Secretary of the  Department  of Health and Human  Services.  The
regulations regarding privacy issues will become effective in April 2003.

     We were  aware of and  tried to  incorporate  HIPAA  requirements  or their
timely  adoption as our products and services  were  developed.  We have filed a
compliance  plan and a request for  extension to October 2003 to comply with the
standard formats requirements.  We are currently reviewing processes, systems or
policies  that  may  require  modification,  and we  are  working  to  implement
appropriate  changes  to avoid any  adverse  impact on our  ability  to  perform
services in accordance  with HIPAA  standards.  We are also  communicating  with
significant  third-party  service  providers to assess their  readiness  and the
extent to which we will need to modify our agreements or relationships with them
to comply with HIPAA standards.

     The cost of this  compliance  effort is estimated to be less than $100,000.
However,  there can be no guarantee  that the costs will not  materially  exceed
this, or that changes in federal  standards would require  expending  additional
resources.


     The   confidentiality   of  patient   records   and  claims  data  and  the
circumstances  under  which  records and data may be released or must be secured
for inclusion in our databases may be subject to substantial regulation by state
governments.  These  state  laws  govern  both  the  disclosure  and  the use of
confidential  patient  medical  records.  Although  compliance  with  these laws
currently is principally the responsibility of Providers and health plans, these
regulations  may be extended to cover the business and the claims data and other
information  that are included in our  databases.  If these laws are extended to
cover our business,  we may be required to expend additional  resources in order
to comply with these laws, including changes to our security practices,  and may
be  exposed to greater  liability  in the event of failure to comply  with these
laws.

     The offering of health provider services is subject to extensive regulation
under state laws. Under some state laws, regulators may take the position that a
registration fee for Purchaser access to favorable fees from Providers  requires
meeting the  requirements  for licensing as a health plan or health insurer.  In
addition, to the extent that fees are paid by Providers,  state regulators could
assert that our  Healthcare  Exchange  is a referral  agency  and/or  collection
agency,  which requires  licensing  under many state laws, or that Providers are
paying prohibited referral fees, which could subject the Provider or us to civil
or criminal  penalties.  In addition,  our  relationships  with  Purchasers  may
require  licensing or certifications  in some states.  Also,  although we do not
currently  anticipate  entering the Medicare or state Medicaid markets,  similar
federal regulations could adversely impact the business.  Because the e-commerce
business is  relatively  new to the  provider  network  industry,  the impact of
current or future regulations is difficult to anticipate.

     As we develop our business plan,  compliance  with or prohibitions by state
regulations could delay or eliminate certain aspects of our business or force us
to modify  our  business,  which  could have a  material  adverse  impact on our
business and prospects.

Legal Proceedings

     We are not currently a party to any pending legal proceedings.

Human Resources

     At October 31,  2002,  we had 129  employees,  consisting  of 82  employees
located in Sacramento,  California,  and 45 employees in satellite offices in 17
states,  including  California,  and 2 employees in our headquarters  located in
Portsmouth,  New Hampshire.  This includes provider  development staff of 78 who
are recruiting  medical providers for contracting in 32 markets in 22 states for
the Healthcare Exchange.

Insurance

     The annual coverage limits for our general premises liability, professional
liability  and  workers'  compensation  insurance  policies are  $3,000,000  for
liability insurance policies and $1,000,000 for workers'  compensation.  We also
have a $1,000,000 policy for errors and omissions insurance. Management believes
such limits are adequate for our  business;  however,  there can be no assurance
that potential claims will not exceed the limits on these policies.



Description of Property

     Our  headquarters are located in Portsmouth,  New Hampshire,  consisting of
approximately  2,340  square feet of office  space for a monthly rent of $3,263.
The lease commenced December 1, 2000, and runs through May 31, 2003.

     In addition, we have an office located in Sacramento, California. We occupy
approximately  7,523 square feet of office space, which it leases from Mr. James
W.  Cameron,  Jr., the chairman of our board and a majority  stockholder,  for a
monthly rent of $12,131.  A February 1, 2000 addendum to the lease  extended the
expiration of the lease to January 31, 2004.

                                   MANAGEMENT

Directors and Executive Officers

     The following table lists our current  directors and executive  officers as
of October 31, 2002:


              Name          Age   Position

   James W. Cameron, Jr.     54   Chairman of the Board, Chief Financial Officer

   Jeffrey S. McCormick      40   Director, Chief Executive Officer

   Edward L. Lammerding      73   Director

     James W.  Cameron,  Jr.,  54,  has served as our  chairman  of our board of
directors since November 1999 and chief  financial  officer since November 2000.
Mr. Cameron also currently serves as the chief executive  officer of Cameron and
Associates,  a company he founded in 1992.  From 1982 through 1992,  Mr. Cameron
was the chief executive officer and chairman of the board of Occupational Urgent
Care Health Systems,  Inc. ("OUCH"), a publicly-traded  company he founded that,
which when sold to First Health Group Corp. in 1992, had a market capitalization
of $400 million.  (Subsequent  to the sale,  Mr. Cameron served as a director on
the board of First Health Group.)

     Jeffrey S. McCormick,  40, has served as our chief executive  officer since
February  2000.  In November  2000,  he was elected  director.  For at least the
previous five years, Mr.  McCormick served as the founder and managing  director
of Saturn Asset  Management,  Inc., and its  affiliates,  a Boston based venture
capital  and  private  equity firm which  predominantly  focuses on  healthcare,
electronic  commerce,  digital  media  and  telecommunications.   Mr.  McCormick
identifies,  researches,  and capitalizes  emerging growth companies,  and works
extensively  with management  teams on strategic  partnerships,  capitalization,
strategy and  recruiting  senior  personnel.  He currently  sits on the board of
directors of Saturn and MediaSite, Inc., a Saturn portfolio company.

     Edward L.  Lammerding,  73, has served as our director  since November 1993
and served as chief financial officer from 1995 to November 2000. Mr. Lammerding
also served as the chairman of our board from 1995 to 1999,  president of Sierra
Resources  Corporation  from 1982 to 1996,  and chairman of the board of Digital
Power  Corporation  from 1989 to 1998. Mr.  Lammerding is a former member of the
California  Lottery  Commission;  a member of the St.  Mary's  College  Board of
Trustees  and was a  director  and  secretary  of OUCH  from  September  1983 to
February 1992.


Family Relationships.

     There are no family relationships between any of the directors or executive
officers.

Executive Compensation

                           Summary Compensation Table

     The following table contains information  regarding  compensation paid with
respect to the three preceding  fiscal years to our chief executive  officer and
each other  executive  officer whose salary and bonus exceeded  $100,000 for the
fiscal year ended June 30, 2002:



                                                                                            

                                                                                              Long-Term Compensation
                                                    Annual Compensation                               Awards
                                         -------------------------------------------    -----------------------------------
                                                                      Other              Securities         All Other
                               Fiscal                                 Annual             Underlying       Compensation
Name                           Year       Salary ($)   Bonus       Compensation         Options/SARs#         and LTIP
                                          ----------                                                          --------

Jeffrey S. McCormick (1)        2002     $  150,000     None           None                57,143(2)(3)        None
Chief Executive Officer         2001     $  150,000     None           None                25,000(7)           None
                                2000     $   25,000     None           None             7,000,000(4)           None

James W. Cameron, Jr. (5)       2002           None     None      $    120,000(6)          25,000(2)           None
Chief Financial Officer         2001           None     None      $    120,000(6)          25,000(7)           None
                                2000           None     None      $     90,000(6)          25,000(8)           None


(1)      Mr. McCormick was named our chief  executive  officer on  February  17,
         2000 and was elected to the board of directors  in  November 2000.  See
         "Employment Agreement with Jeffrey S. McCormick."
(2)      On  January  2, 2002,  we  granted to Mr.  McCormick and Mr. Cameron an
         option to purchase  25,000 shares of common stock at $2.90 per share.
(3)      On  June  7,  2002,  we  granted to Mr. McCormick an option to purchase
         32,143 shares of common stock at $0.01 per share.
(4)      On  April 14, 2000, we granted to Mr. McCormick a non-qualified  option
         to  purchase  7,000,000  shares  of  common stock at $3.00, the closing
         price  per  share  of our common stock as of the date of his employment
         agreement.
(5)      Mr.  Cameron was elected chairman of the board of directors in November
         1999.  From  August  1999  until  February 2000, he served as our chief
         executive officer and director, and was named chief financial officer
         in November 2000.
(6)      Amounts  were  paid  to  Cameron and Associates, a company owned by Mr.
         Cameron, for providing consulting services to ATR.
(7)      On  January  2,  2001,  we granted to Mr.  McCormick and Mr. Cameron an
         option to purchase  25,000 shares of common stock at $1.34 per share.
(8)      On January 3, 2000, we granted Mr. Cameron an option to purchase 25,000
         shares of common stock at $4.44 per share.




                      Option/Sar Grants In Last Fiscal Year

     The following table provides  information relating to stock options granted
during fiscal year ended June 30, 2002.


                                                                                                   

                                                  % of Total                                  Potential Realized Value at
                                                   Options                                      Assumed Annual Rates of
                                                  Granted to      Exercise                    Stock Price Appreciation for
                               Options/SARs      Employees in    Price per     Expiration             Option Term
                                                                                             -------------------------------
                                 Granted#        Fiscal Year       Share          Date             5%                10%
                                 --------        -----------       -----          ----             --                ---

James W. Cameron, Jr.               25,000            2.03%         $2.90      1/2/2012      $     45,595     $     115,546

Jeffrey S. McCormick                25,000            2.03%         $2.90      1/2/2012      $     45,595     $     115,546
                                    32,143            2.60%         $0.01      6/7/2012      $     41,238     $     104,504


     Percentages  shown under "Percent of Total Options  Granted to Employees in
the Last Fiscal Year" are based on an aggregate of 1,234,053  options granted to
our  employees  under the 1997 Stock Option Plan and outside of this plan during
the year ended June 30, 2002.

     Potential realizable value is based on the assumption that our common stock
appreciates  at the annual rate  shown,  compounded  annually,  from the date of
grant until the  expiration of the ten-year  term.  These numbers are calculated
based on Securities and Exchange  Commission  regulations and do not reflect our
projection or estimate of future stock price growth. Potential realizable values
are computed by:

o  Multiplying the number of shares of common stock subject to a given option by
   the exercise price.

o  Assuming  that  the  aggregate  stock  value  derived  from  that calculation
   compounds at the annual 5% or 10% rate shown in the table for the entire ten-
   year term of the option, and

o  Subtracting from that result the aggregate option exercise price.

                          Fiscal Year End Option Values

The following  table sets forth for each of the executive  officers named in the
Summary Compensation Table the number and value of exercisable and unexercisable
options and SARs at June 30, 2002:


                                                                                                     

                                                                 Number of Securities
                                                                Underlying Unexercised                Value of Unexercised
                                 Shares                              Options/SARs                  In-The-Money Options/SARs
                              Acquired on        Value             At June 30, 2002                     At June 30, 2002
                                                             ------------------------------     ---------------------------------
                              Exercise(#)     Realized ($)   Exercisable    Unexercisable         Exercisable     Unexercisable

James W. Cameron, Jr.                 0            0            25,000                0               $0               $0
                                      0                         25,000                0             $17,750            $0
                                      0            0            25,000                0               $0               $0

Jeffrey s. McCormick                  0            0         2,800,000        4,200,000               $0               $0
                                      0            0            25,000                0             $17,750            $0
                                      0            0            25,000                0               $0               $0
                                      0            0            32,143                0             $65,572            $0



Amounts shown under the column  "Value of  Unexercised  In-The-Money  Options at
June 30, 2002," represent the difference between the trading price of a share of
common stock  underlying  the options at June 30, 2002,  of $2.05 per share (the
closing price on June 30, 2002, as reported by the OTC Bulletin  Board) less the
corresponding exercise price of such options.

Compensation of Directors

     Directors do not receive cash  compensation  for serving as such;  however,
each  director  can be  granted  annual  stock  options  under  our  1997  Stock
Option/Stock  Issuance Plan.  Messrs.  Cameron,  McCormick and  Lammerding  were
granted  options to purchase  25,000  shares of our common  stock at an exercise
price equal to the fair market  value on the date of grant in January  2002 (for
fiscal year 2002 service).

Employment Agreement

     In April 2000, we entered into an employment  agreement with Mr.  McCormick
to become our chief executive  officer  effective  February 17, 2000.  Beginning
July 1, 2000 and for the remaining term of Mr. McCormick's employment, the board
shall  nominate him to serve as our director.  The initial term of the agreement
is 5 years, automatically continuing for successive terms of one (1) year unless
terminated  by either party by written  notice at least 30 days prior to the end
of  the  initial  or  any  succeeding  terms.  The  agreement   established  Mr.
McCormick's  initial  annual base salary at $150,000 per year  beginning  May 1,
2000, and provided for a grant to Mr. McCormick of a non-qualified  stock option
to purchase up to 7,000,000  shares of our common stock at an exercise  price of
$3.00 (the fair market value of our common stock on the date of grant.)

     The option vests  ratably  over 5 years and expires on April 14, 2010.  The
agreement  provides  that vesting  shall  accelerate  and the option become 100%
vested upon: death of Mr.  McCormick,  a change of control of ATR, a change of a
majority of the current board of directors during the term of his employment, or
a termination by Mr.  McCormick for a "good reason" or termination by us without
"cause".  "Piggy-back"  registrations  rights are applicable to all option stock
issued to Mr. McCormick,  including stock related to a 6,000,000 option from Mr.
Cameron to Mr. McCormick. The agreement provides that in the event Mr. McCormick
terminates  for a "good  reason"  or is  terminated  without  "cause,"  he shall
receive  an amount  equal to 18 months of his base  salary,  at the rate then in
effect,  to be paid in a lump sum no later than 30 days  following  termination,
and he shall  continue  to receive  fringe  benefits as in effect at the time of
termination for 18 months following such termination.  In addition he shall also
receive any bonus  amount,  or pro rata share of any bonus  amount that may have
been  awarded to him as the  compensation  committee  of the board,  in its sole
discretion, may have authorized as a bonus.

1993 and 1997 Stock Option/Stock Issuance Plans

     The 1993 Stock  Option/Stock  Issuance Plan (the "1993 Plan"),  pursuant to
which  our  key  employees  (including   officers)  and  consultants,   and  the
non-employee members of the board of directors may acquire an equity interest in
ATR,  was  adopted  by the board of  directors  on August  31,  1993 and  became
effective  at that time.  The 1993 Plan was approved by  stockholders.  The 1993
Plan provided that up to 400,000 shares of common stock could be issued over the
ten year term of the 1993  Plan.  Upon  stockholder  approval  of the 1997 Stock
Option Plan (the "1997 Plan"), the board of directors  terminated the 1993 Plan,
which  termination  shall not alter the vesting  provisions or any other term or
condition of any option granted prior to the termination of the 1993 Plan.


     The 1997  Plan,  pursuant  to which  key  employees  (including  officers),
consultants  and directors may acquire an equity interest in ATR, was adopted by
the board of directors  on November 18, 1997 and became  effective at that time.
This plan  expires at  November  17,  2002.  The 1997 Plan was  approved  by the
stockholders.

     An  aggregate  of  3,000,000  shares of common stock may be issued over the
five-year  term of the 1997  Plan.  Subject to the  oversight  and review of the
board of  directors,  the 1997  Plan  shall  generally  be  administered  by our
compensation  committee  consisting  of at least one  non-employee  directors as
appointed  by the board of  directors.  The  grant  date,  the  number of shares
covered by an option and the terms and conditions for exercise of options, shall
be determined by the committee, subject to the 1997 Plan requirements. The board
of directors  shall determine the grant date, the number of shares covered by an
option and the terms and  conditions  for  exercise  of options to be granted to
members of the committee.

     During  fiscal year 2002, we granted  options to purchase  shares of common
stock to  Messrs.  Cameron,  and  McCormick  under the 1997  Plan (see  table of
"Option/SAR  Grants in Last Fiscal  Year").  As of June 30, 2002,  approximately
329,279 shares are available under the 1997 Plan for grant.

Equity Compensation Plans Not Approved by Security Holders

     We have issued options to certain of our officers to purchase  common stock
pursuant to  agreements  outside of our stock option  plans (the  "Agreements").
These  are all  non-statutory  stock  options.  The grant of  options  under the
Agreements was administered by the compensation committee,  which has discretion
to determine  optionees,  the number of shares to be covered by each option, the
exercise  schedule  and other terms of the  options.  Shares  subject to options
under the Agreements may be purchased with (i) cash or (ii) promissory  note, if
permitted by the compensation committee.

     During  fiscal year 2000, in accordance  with an employment  agreement,  we
granted the current chief executive officer stock options to purchase  7,000,000
shares of common  stock at $3.00 per  share,  the fair  market  value of the our
common  stock on the date of grant.  The options  vest  ratably over 5 years and
expire on April 14, 2010.  As of June 30, 2002,  2,800,000  options have vested,
and 7,000,000  remain  outstanding.  After cessation of employment these options
remain exercisable until their expiration date.

     In August 1993, we granted the then chief  executive  officer and director,
stock  options to purchase  shares of common  stock with an  expiration  date of
August 10, 2003,  these options fully vested as of June 30, 1994. As of June 30,
2002,  370,000  options remain  outstanding at a purchase price of $0.10.  These
options remain exercisable until their expiration date.

     As of June 30, 2002,  options to purchase a total of 7,370,000  shares,  of
common stock issued under the Agreements were outstanding.  The weighted average
exercise price per share was $2.85 as of June 30, 2002.

     The  following  table sets forth certain  information  as of June 30, 2002,
concerning  securities issued under all our equity compensation plans (including
individual compensation arrangements):



                                                                                            
                                                                           Weighted-Average    Number of Securities
                                                                            Exercise Price    Remaining Available for
                                                                            of Outstanding     Future Issuance Under
                                                 Number of Securities to       Options,         Equity Compensation
                                                 be Issued Upon Exercise     Warrants and        Plans (Excluding
                Plan Category                    of Outstanding Options,        Rights        Securities Reflected in
                                                   Warrants and Rights           (b)                Column (a))
                                                           (a)                                          (c)
-----------------------------------------------------------------------------------------------------------------------
Equity compensation plans approved by
security stockholders:
   1993 Stock Option/Stock Issuance Plan                     140,000            $1.69                   31,173
   1997 Stock Option/Stock Issuance Plan                   2,449,203            $2.09                  329,279
                                               ------------------------------------------------------------------------
Sub-total                                                  2,589,203            $2.07                  360,452

Equity compensation plans not approved
by security holders:
   Options, Warrants and Rights not
     pursuant to any plan
        Jeffrey S. McCormick                               7,000,000            $3.00                     NA
        Other                                                370,000            $0.10                     NA
                                                -------------------------------------------
Sub-total                                                  7,370,000            $2.85

                                                -----------------------------------------------------------------------
Total                                                      9,959,203            $2.65                  360,452


Limitation of Liability and Indemnification

     Section  145 of the  General  Corporation  Law of  the  State  of  Delaware
empowers a  corporation  to indemnify  its  directors,  officers,  employees and
agents under certain circumstances.  Article Seventh of our Amended and Restated
Certificate  of  Incorporation  provides that we shall  indemnify to the fullest
extent  permitted by Section 145 of the General  Corporation Law of the State of
Delaware,  as  amended  from time to time,  all  persons  whom it may  indemnify
pursuant  thereto.  Article  Sixth of the Amended and  Restated  Certificate  of
Incorporation  further provides that our director shall not be personally liable
to us or our  stockholders for monetary damages for any breach of fiduciary duty
as a  director;  provided,  however,  that  such  clause  shall not apply to any
liability of a director (1) for any breach of the director's  duty of loyalty to
the us or our stockholders, (2) for acts or omissions that are not in good faith
or involve  intentional  misconduct or a knowing violation of the law, (3) under
Section 174 of the General Corporation Law of the State of Delaware,  or (4) for
any transaction from which the director derived an improper personal benefit.

Disclosure  of  Commission   Position  on  Indemnification  for  Securities  Act
Liabilities

     Insofar as indemnification for liabilities arising under the Securities Act
of  1933  may  be  permitted  to  directors,  officers  or  persons  controlling
Alternative  Technology Resources,  we have been informed that in the opinion of
the Securities and Exchange Commission, indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.

Security Ownership of Certain Beneficial Owners and Management

The  following  table sets forth  certain  information  as to (i) the persons or
entities  known to ATR to be  beneficial  owners of more  than 5% of our  common
stock as of  October  31,  2002,  (ii) all of our  directors,  (iii)  all of our



executive  officers and (iv) all of our directors  and  executive  officers as a
group. The number of shares or common stock  outstanding on October 31, 2002 was
66,718,985.  The address of all owners is 629 J Street,  Sacramento,  California
95814,  with the  exception of Mr.  McCormick  whose  address is 33 Jewel Court,
Portsmouth, New Hampshire 03801.


                                                        Common Stock
                                            ------------------------------------
  Name of Beneficial Owner                  Number of Shares           Percent
  ------------------------                  ----------------           -------

  James W. Cameron, Jr.                       39,966,783(1)             59.84%

  Jeffrey S. McCormick                        11,527,278(2)             16.56%

  Edward L. Lammerding                            67,000(3)               *

  All directors and executive officers        45,561,061(4)             65.33%
  as a group (3 persons)

* Less than 1.0%.
(1)  Includes 75,000 shares issuable upon exercise of options, none of which are
     subject  to  repurchase,  and  includes  6,000,000  shares  optioned to Mr.
     McCormick and immediately exercisable.
(2)  Includes  2,882,143  shares  issuable upon exercise of options, exercisable
     within  60  days,  none  of  which  are  subject to repurchase and includes
     6,000,000 shares under option from Mr. Cameron and immediately exercisable.
(3)  Represents  67,000  shares issuable upon exercise of options, none of which
     are subject to repurchase.
(4) Includes 3,024,143 shares issuable upon exercise of options.


                              PLAN OF DISTRIBUTION

     The  selling  stockholders  and  any  of  their  pledgees,  assignees,  and
successors-in-interest  may, from time to time, sell any or all or none of their
common shares on any stock exchange,  market,  or trading  facility on which the
shares  are traded or in private  transactions.  These  sales may be at fixed or
negotiated  prices.  The  selling  stockholders  may  use any one or more of the
following methods when selling common shares:

     o  ordinary   brokerage   transactions   and   transactions  in  which  the
        broker-dealer solicits purchasers;

     o  block trades in which the broker-dealer  will attempt to sell the shares
        as  agent  but  may  position  and  resell  a  portion  of  the block as
        principal to facilitate the transaction;

     o  purchases  by  a  broker-dealer  as  principal and resale by the broker-
        dealer for its account;

     o  an exchange distribution  in accordance with the rules of the applicable
        exchange;

     o  privately negotiated transactions;

     o  short sales;

     o  broker-dealers  may  agree  with  the  selling  stockholders  to  sell a
        specified number of such shares at a stipulated price per share;

     o  a combination of any of the above methods of sale; and

     o  any other method permitted pursuant to applicable law.


     The  selling  stockholders  may also sell  shares  under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

     The selling  stockholders  may also engage in short sales  against the box,
puts and calls and other  transactions  in securities of ours or  derivatives of
our securities  and may sell or deliver  common shares in connection  with these
trades. The selling stockholders may pledge their common shares to their brokers
under the margin  provisions of customer  agreements.  If a selling  stockholder
defaults on a margin loan, the broker may, from time to time, offer and sell the
pledged common shares.

     Broker-dealers  engaged by the selling  stockholders  may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the selling  stockholders  (or, if any  broker-dealer  acts as
agent for the purchaser of common  shares,  from the purchaser) in amounts to be
negotiated.  The  selling  stockholders  do not  expect  these  commissions  and
discounts to exceed what is customary in the types of transactions involved.

     The selling stockholders and any broker-dealers or agents that are involved
in selling  the  common  shares  may be deemed to be  "underwriters"  within the
meaning of the Securities Act in connection with such sales. In such event,  any
commissions  received  by such  broker-dealers  or agents  and any profit on the
resale  of the  shares  purchased  by  them  may be  deemed  to be  underwriting
commissions or discounts under the Securities Act.

     We are required to pay all fees and expenses  incident to the  registration
of the common shares, including fees and disbursements of counsel to the selling
stockholders.  We have agreed to indemnify  certain of the selling  stockholders
against certain losses, claims,  damages and liabilities,  including liabilities
under the Securities Act.




                              SELLING SHAREHOLDERS

     The following table identifies the selling stockholders,  as of October 31,
2002,  and  indicates  certain  information  known to us with respect to (i) the
number of common shares beneficially owned by the selling stockholder,  (ii) the
number of common shares to be offered for the selling stockholders' account, and
(iii) the number of common shares and percentage of outstanding common shares to
be beneficially  owned by the selling  stockholders after the sale of the common
shares offered by the selling stockholders.  The term "beneficially owned" means
common shares owned or that may be acquired within 60 days. The number of common
shares  outstanding  as  of  October  31,  2002,  was  66,718,985.  The  selling
stockholders may sell some, all, or none of their common shares.


                                                                                            

                                  Shares Beneficially Owned          Shares to be          Shares Beneficially
                                      Prior to Offering                 Offered           Owned After Offering
                                ----------------------------------   ------------------  --------------------------
Name of Shareholder                   Number        Percentage            Number             Number     Percentage
-------------------                   ------        ----------            ------             ------     ----------


Arizona Cardiology                     3,800            *                  3,800                0             0

Arizona Orthopaedic                    1,800            *                  1,800                0             0

Baron, Alan(1)                        37,500            *                 37,500                0             0

Baron, Sheri                         375,000            *                375,000                0             0

BFPI Partnership                     163,125            *                163,125                0             0

Louis H. Barnett                      22,500            *                 22,500                0             0

BGC Initial Partners                  90,000            *                 90,000                0             0

Burdick, George                        5,000            *                  5,000                0             0

Cetlin, Norman                        50,000            *                 50,000                0             0

Cohn, Lawrence H., MD                 22,500            *                 22,500                0             0

Collin Family Ltd Partnership         50,000            *                 50,000                0             0

CSM Partners(2)                    1,300,000           1.9%            1,300,000                0             0

D&G Partners, LP                      27,000            *                 27,000                0             0

Dahlson, Rick                         50,000            *                 50,000                0             0

Dolphin Offshore Partners, LP        800,000           1.2%              800,000                0             0

Downey, Walter L.                     56,250            *                 56,250                0             0

Dresher, Alan Richard                100,000            *                100,000                0             0

Duck Partners                         50,000            *                 50,000                0             0

Emerson Partners                     100,000            *                100,000                0             0

Emerson, J. Steven                   537,500            *                537,500                0             0

Epstein, Harry L.                    112,500            *                112,500                0             0

Gosman, Michael M.                    25,000            *                 25,000                0             0







                                                                                              

Griffiths Childrens Trust/
Catherine Harrison                    19,998            *                 19,998                0             0

Griffiths Childrens Trust/
Jessica Griffiths                     19,998            *                 19,998                0             0

Griffith, Scott(1)                   168,750            *                168,750                0             0

HPV Heart                              1,200            *                  1,200                0             0

J. Steven Emerson IRA II,            200,000            *                200,000                0             0
Bear Stearns Securities Corp.,
Cust.

J. Steven Emerson Roth IRA,        1,600,000           2.4%            1,600,000                0             0
Bear Stearns Securities Corp.,
Cust.

JM Hull Associates                   200,000            *                200,000                0             0

JMG Capital Partners, LP             251,000            *                251,000                0             0

JMG Triton Offshore Fund, Ltd.       251,000            *                251,000                0             0

Kovler, Everett                      125,000            *                125,000                0             0

Kruger, Paul A.                      100,000            *                100,000                0             0

LeNoir, Michael, MD                      500            *                    500                0             0

Little, Donald V.                     50,000            *                 50,000                0             0

Mathios, Anthony J., MD                  500            *                    500                0             0

McDonough, Sean                       90,000            *                 90,000                0             0

Metroplex Cardiology                     800            *                    800                0             0

Michaelides, Kyriakos M., MD           1,000            *                  1,000                0             0

Ramsdell Family Trust                100,125            *                100,125                0             0

Ramsdell Family Trust                100,000            *                100,000                0             0
u/a/d 7/7/94, W. Robert
and Marjorie F. Ramsdell,
TTEES

Ramsdell Irrevocable Trust           200,025            *                200,025                0             0

Ramsdell, Elyse A.                    49,950            *                 49,950                0             0

Ramsdell, W. Robert                  149,850            *                149,850                0             0

Saran, Nirmal, MD.                       800            *                    800                0             0

Shaw, John J.                        100,000            *                100,000                0             0

Shelmire, Jesse(1)                   168,750            *                168,750                0             0

Siegel Vorhoff & Rushing               3,100            *                  3,100                0             0

Stevenson Trust / Jane Meyer          19,998            *                 19,998                0             0

Stevenson Trust / Jeffery             19,998            *                 19,998                0             0
Stevenson




                                                                                                  

Stevenson Trust / Wendy Blau          19,998            *                 19,998                0             0

Theise, Jay F.                       100,000            *                100,000                0             0

Turgeon, Daniel G., MD                   500            *                    500                0             0

Virginia Women's Health Assoc.         3,500            *                  3,500                0             0

Zwelling-Aamot, Marcy, MD              1,500            *                  1,500                0             0



Footnotes to Table
------------------
*     Less than 1.0%
(1)   Represents  shares  that may be acquired upon the exercise of warrants and
      may be resold.
(2)   Includes  1,000,000  shares  that  may  be acquired upon the conversion of
      convertible notes.  Also includes 300,000 shares that may be acquired upon
      exercise of warrants.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Financing Arrangements

     We have has received short-term, unsecured financing to fund our operations
in the form of notes payable of $4,636,352 as of June 30, 2002 from Mr. Cameron,
our chairman and chief financial officer, and another  stockholder.  These notes
bear  interest at 10.25%.  On September 1, 2001,  we agreed with Mr.  Cameron to
extend the due date on notes payable to him until December 31, 2002, in exchange
for an extension fee of 2%. These  extended  notes total  $1,630,529,  including
accrued  interest and  extension  fees,  and bear  interest at 10.25% per annum.
During the quarter  ending June 30, 2002,  Mr.  Cameron  loaned us an additional
$582,000  bearing  interest at 10.25%  payable on to him on December  31,  2002.
During the three month period ending  September 30, 2002,  Mr. Cameron loaned us
an additional  $619,000 bearing interest at 10.25% payable on December 31, 2002.
Subsequent to September  30, 2002, we agreed with Mr.  Cameron to extend the due
date of his convertible promissory notes until December 31, 2003 in exchange for
an extension fee of 2%. These  convertible  promissory  notes total  $2,873,691,
including accrued interest, extension fee, and bear interest at 10.25% per annum
and are  convertible  into common stock at $3.00 per share at the note  holder's
option.

     During  the period  between  January  9, 2002 and March 28,  2002,  we sold
1,232,585 shares of our common stock at a purchase price of $2.25 per share. The
shares  of  common  stock  issued  in  the  private   placement  are  restricted
securities.  Further pursuant to the private placement, in the event that within
one year from the final  closing we sell shares of common  stock,  or securities
exercisable  to  convertible  into common stock,  at a price less than $2.25 per
share,  we would issue  additional  shares to these  investors in an amount such
that the overall  purchase  price will be equal to the lower,  subsequent  sales
price.  The forgoing shall exclude common stock that may be issued in connection
with a merger, as a dividend,  pursuant to the exercise of outstanding  options,
warrants and other convertible  securities and pursuant to options  subsequently
issued to  employees.  Net  proceeds  from the  offering  were  $2,742,519.  The
proceeds from the private placement were used to fund operations and repay debt.
Mr.  Cameron  purchased  222,222  shares  of our  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,  we  recorded  compensation  expense of
$138,583  during  fiscal year 2002.  In  addition,  in October 2002 we issued an
additional 277,778 of our common stock to Mr. Cameron as a result of the closing
of the  October  2002  private  placement  of common  stock at $1.00 per  share.
Compensation expense to be recorded during the second quarter ended December 31,
2002,  for the  additional  shares  issued to our chairman  and chief  financial
officer will be $377,778.

Other

     On  August  1,  2000,  Mr.  Cameron  entered  into an  agreement  with  Mr.
McCormick,  our chief  executive  officer,  to grant him the option to  purchase
6,000,000  shares of our common stock from Mr.  Cameron at the purchase price of
$3.625 per share, which represented the trading price of our stock on that date.
This option was vested  immediately,  and on September 17, 2001,  the expiration
date of the option grant was extended  from the original  date of August 1, 2003
until August 1, 2006.

     In November  1995, we entered into a lease  agreement  for our  Sacramento,
California, facility under a one-year lease with Mr. Cameron. The lease has been
extended to January 31, 2004. At June 30, 2002, $527,896 of rent owed for fiscal
years 1996  through  2002 is  included  in the  balance of  accounts  payable to
stockholders.  Rent expense  under this lease was $36,392 for the quarter  ended
September 30, 2002, and $148,302, $139,272 and $114,285 for the years ended June
30, 2002, 2001 and 2000, respectively.

     During  the fiscal  years  ended June 30,  2002,  2001 and 2000,  Cameron &
Associates,  which is wholly owned by Mr. Cameron,  provided consulting services
to us. Fees for such services  totaled  $30,000 for the quarter ended  September
30, 2002, and $120,000, $120,000 and $90,000 in fiscal year 2002, 2001 and 2000,
respectively.

                            DESCRIPTION OF SECURITIES

     We are authorized to issue  100,000,000  shares of common stock,  par value
$0.01 and 1,200,000  shares of preferred  stock,  par value $6.00. As of October
31, 2002, the number of outstanding shares of common stock is 66,718,985.  There
is no preferred stock outstanding.

     Holders of common  stock are  entitled to one vote per share on all matters
to be voted  upon by the  stockholders.  Common  stockholders  are  entitled  to
receive ratably such dividends,  if any, as may be declared from time to time by
the board of directors out of funds legally available  therefor,  subject to the
payment of any  preferential  dividends  declared  with respect to any preferred
stock  that  from  time to time may be  outstanding.  The  common  stock  has no
preemptive or conversion  rights or other  subscription  rights and there are no
redemptive  or sinking fund  provisions  application  to the common  stock.  All
outstanding shares of common stock are fully paid and nonassessable, and all the
shares of common stock issued by us upon the  exercise of  outstanding  warrants
will, when issued, be fully paid and nonassessable.

Transfer Agent and Registrar

     The Transfer  Agent and  Registrar  for our common  stock is  Computershare
Trust  Company,  Inc.,  located at 12039 West  Alameda  Parkway  Z-2,  Lakewood,
Colorado,  80228,  mailing address Post Office Box 1596,  Denver Colorado 80201,
telephone number (303) 986-5400.

Legal Matters.

     The  validity  of  the  share  of  common  stock  offered  by  the  selling
stockholders will be passed by Bartel Eng & Schroder of Sacramento, California.




                                     EXPERTS

     Ernst &  Young  LLP,  independent  auditors,  have  audited  our  financial
statements  at June 30,  2002 and 2001,  and for each of the three  years in the
period ended June 30,  2002,  as set forth in their  report  (which  contains an
explanatory  paragraph describing  conditions that raise substantial doubt about
our  ability  to  continue  as a going  concern  as  described  in Note 1 to the
financial statements). We've included our financial statements in the prospectus
and elsewhere in the  registration  statement in reliance on Ernst & Young LLP's
report given on their authority as experts in accounting and auditing.

                              AVAILABLE INFORMATION

     We have  filed a  registration  statement  on Form S-1,  together  with all
amendments  and exhibits,  with the  Securities  and Exchange  Commission.  This
prospectus,  which forms a part of that registration statement, does not contain
all information included in the registration  statement.  Certain information is
omitted and you should refer to the  registration  statement  and its  exhibits.
With respect to  references  made in this  prospectus to any of our contracts or
other  documents,  the  references are not  necessarily  complete and you should
refer to the exhibits  attached to the registration  statement for copies of the
actual  contracts  or  documents.  You may  review  a copy  of the  registration
statement at the Securities and Exchange Commission's public reference room, and
at Securities and Exchange  Commission's  regional  offices  located at 500 West
Madison  Street,  Suite 1400,  Chicago,  Illinois  60661,  and Seven World Trade
Center,  13th Floor,  New York,  New York 10048.  Please call the Securities and
Exchange  Commission at 1-800-SEC-0330 for further  information on the operation
of the public reference  rooms.  Our filings and the registration  statement can
also be reviewed by accessing the Securities and Exchange  Commission's  website
at http://www.sec.gov.






                          INDEX TO FINANCIAL STATEMENTS

                     Alternative Technology Resources, Inc.





                                                                            Page
                                                                            ----
Financial Statements as of September 30, 2002 and June 30, 2002
and for the Three Months Ended September 30, 2002 and 2001 (unaudited)

Condensed Balance Sheets....................................................F-2
Condensed Statements of Operations..........................................F-3
Condensed Statements of Cash Flows..........................................F-4
Notes to Condensed Financial Statements.....................................F-5

Financial Statements as of June 30, 2002 and 2001 and for the Three
Years Ended June 30, 2002

Report of Ernst & Young LLP, Independent Auditors...........................F-8
Balance Sheets..............................................................F-9
Statements of Operations....................................................F-10
Statement of Stockholders' Equity (Deficit).................................F-11
Statements of Cash Flows....................................................F-12
Notes to Financial Statements...............................................F-14




                     ALTERNATIVE TECHNOLOGY RESOURCES, INC.
                            Condensed Balance Sheets

                                   (Unaudited)


                                                                                                                   

                                                                                          September 30,               June 30,
                                       Assets                                                 2002                      2002
                                       ------
                                                                                      ----------------------    --------------------
Current assets:
  Cash and cash equivalents                                                           $         884,725         $         402,291
  Trade accounts receivable                                                                      20,651                     3,602
  Prepaid maintenance and service fees                                                           90,149                         -
  Prepaid expenses and other current assets                                                     107,444                    81,223
                                                                                      ----------------------    --------------------
Total current assets                                                                          1,102,969                   487,116
                                                                                      ----------------------    --------------------

Property and equipment:
  Equipment and software                                                                        817,076                   788,192
  Accumulated depreciation and amortization                                                    (361,333)                 (297,987)
                                                                                      ----------------------    --------------------
  Property and equipment, net                                                                   455,743                   490,205
                                                                                      ----------------------    --------------------

Prepaid financing costs                                                                          52,626                         -
Prepaid license and service fees                                                                191,321                   211,498
Other non-current assets                                                                         10,199                    14,490
                                                                                      ----------------------    --------------------

                                                                                      $       1,812,858         $       1,203,309
                                                                                      ======================    ====================

                   Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
  Payable to Healthcare Exchange participants                                         $         839,566         $         409,738
  Trade accounts payable                                                                        585,523                   438,460
  Accrued payroll and related expenses                                                          279,750                   274,777
  Accrued preferred stock dividends                                                             283,195                   283,195
  Accounts payable and accrued interest payable to stockholders                                 909,990                   797,232
  Notes payable to stockholder                                                                2,831,529                 2,212,529
  Convertible notes payable to stockholder                                                    2,423,823                 2,423,823
  Convertible notes payable to third party                                                      686,852                         -
  Accrued interest payable to third party                                                        14,685                         -
  Other current liabilities                                                                     273,711                   254,469
                                                                                      ----------------------    --------------------
Total current liabilities                                                                     9,128,624                 7,094,223
                                                                                      ----------------------    --------------------

Commitments and contingencies

Stockholders' equity (deficit):
  Convertible preferred stock, $6.00 par value - 1,200,000 shares authorized
     none issued and outstanding at September 30, 2002 and 2001, 204,167 shares
     Designated Series D, none issued and outstanding at September 30, 2002 and
June 30, 2002
  Common stock, $0.01 par value - 100,000,000 shares authorized; 61,069,255
     shares issued and outstanding at September 30, 2002
     (60,968,213 at June 30, 2002)                                                              610,693                   609,682
  Additional paid-in capital                                                                 53,323,226                52,862,283
  Accumulated deficit                                                                       (61,249,685)              (59,362,879)
                                                                                      ----------------------    --------------------
Total stockholders' equity (deficit)                                                         (7,315,766)               (5,890,914)
                                                                                      ----------------------    --------------------

                                                                                      $       1,812,858         $       1,203,309
                                                                                      ======================    ====================
See accompanying notes to condensed financial statements.



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


                                                                                         


                                                                           Three Months Ended
                                                                                September 30,
                                                                          2002                2001
       Healthcare exchange
           Revenue                                                   $     776,560      $    108,218
           Costs                                                          (543,702)         (224,788)
                                                                     --------------     ---------------------
       Gross profit (loss)                                                 232,858          (116,570)

       Selling, marketing and product development costs                 (1,397,306)       (1,505,195)

       General and administrative expenses                                (509,015)         (505,834)
                                                                     --------------     ---------------------

       Loss from operations                                             (1,673,463)       (2,127,599)

       Other income (expense)
           Interest income                                                     430            33,133
           Interest expense to third party                                 (77,315)                -
           Interest expense to stockholders and directors                 (136,458)         (139,517)
                                                                     --------------     ---------------------
       Total other income (expense)                                       (213,343)         (106,384)
                                                                     --------------     ---------------------

       Net loss                                                        $(1,886,806)      $(2,233,983)
                                                                     ==============     =====================


       Basic and diluted net loss per share                          $      (0.03)      $      (0.04)
                                                                     ==============     =====================

       Shares used in per share calculations                            61,016,315        59,401,860
                                                                     ==============     =====================


         See accompanying notes to condensed financial statements.




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


                                                                                                  
                                                                                  Three Months Ended
                                                                                     September 30,
                                                                           2002                         2001
                                                                  ------------------------      ----------------------

Net cash used in operating activities                             $       (1,062,532)           $    (2,005,312)
                                                                  ------------------------      ----------------------

Cash flows used in investing activities:
    Purchases of property and equipment                                      (28,884)                   (91,033)
    Maturities of short-term investments                                           -                  1,354,159
                                                                  ------------------------      ----------------------
Net cash provided (used) by investing activities                             (28,884)                 1,263,126
                                                                  ------------------------      ----------------------

Cash flows from financing activities:
    Prepaid financing costs                                                  (52,626)                         -
    Proceeds from exercise of options and warrants                             7,476                     19,251
    Proceeds from notes payable to stockholders                              619,000                    313,902
    Proceeds from convertible notes payable                                1,000,000                          -
                                                                  ------------------------      ----------------------
Net cash provided by financing activities                                  1,573,850                    333,153
                                                                  ------------------------      ----------------------


Net increase (decrease) in cash and cash equivalents                         482,434                   (409,033)
Cash and cash equivalents at beginning of period                             402,291                  3,159,017
                                                                  ------------------------      ----------------------

Cash and cash equivalents at end of period                        $          884,725            $     2,749,984
                                                                  ========================      ======================



See accompanying notes to condensed financial statements.




                     ALTERNATIVE TECHNOLOGY RESOURCES, INC.
                     Notes to Condensed Financial Statements
                               September 30, 2002
                                   (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, 2002.

     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 September 30,
2002 and June 30,  2002,  results  of  operations  for the  three  months  ended
September 30, 2002 and 2001, and cash flows for the three months ended September
30, 2002 and 2001.  The results for the period ended  September 30, 2002 are not
necessarily  indicative of the results to be expected for the entire fiscal year
ending June 30, 2003.

     The Company has  incurred  operating  losses  since  inception,  which have
resulted in an accumulated  deficit of $61,249,685 at September 30, 2002.  Based
on the  steps the  Company  has  taken to  refocus  its  operations  and  obtain
additional  financing,  the Company believes that it has developed a viable plan
to address the Company's  ability to continue as a going concern,  and that this
plan will enable the Company to continue as a going  concern,  at least  through
the end of fiscal year 2003. The Company  engaged a placement agent to assist in
the  sale of  shares  of the  Company's  common  stock in a  private  placement.
Subsequent  to  September  30,  2002,  the Company  received  gross  proceeds of
$4,125,000 through the sale of 4,125,000 shares pursuant to this offering.  Cash
proceeds net of offering costs were  $3,884,567.  In addition,  the due dates of
Notes Payable to Stockholder and Convertible  Notes Payable to Stockholder  were
extended from December 31, 2002 to December 31, 2003.  ["Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations - Liquidity and
Capital Resources"]

     There can be no assurance that this plan will be successfully  implemented.
If the offering is not fully  subscribed,  the Company may be required to reduce
the  development  efforts of its  Healthcare  Exchange or be forced into seeking
protection under federal bankruptcy laws. As a result, the report of independent
auditors  on the  Company's  June 30,  2002  financial  statements  includes  an
explanatory  paragraph indicating there is substantial doubt about the Company's
ability to continue as a going concern.  The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification  of assets or the amounts and  classification of liabilities that
may result from the outcome of this uncertainty.

Note 2.  Financing Arrangements

     On July 26, 2002,  the Company  received cash of $1,000,000 in exchange for
issuance of a convertible  note (the "Note").  The Note bears interest at 8% and
is payable at the earliest of July 25, 2003 or when the  Company,  in a proposed
private placement of common stock, raises $8,000,000 (the "Private  Placement").
Pursuant to the original  terms of the Note, all or a portion of the Note may be





converted  into  shares of common  stock at the  lower of $2.25 per  share;  the
subscription  per  share  price of the  proposed  Private  Placement;  or if the
Company sells shares of its common stock, or issues  options,  warrants or other
securities  convertible into shares of its common stock before March 29, 2003 at
a price less than the lower of $2.25 or the  subscription per share price of the
proposed Private  Placement  through March 29, 2003, then the per share price of
the common  stock  subsequently  sold  (excluding  common  stock that may be (i)
issued in connection with a merger, (ii) issued as a dividend, (iii) issued upon
the exercise of options subsequently issued after the closing to employees of or
consultants  to the  Company,  or (iv)  issued  upon the  exercise  of  existing
options, warrants or other convertible securities).

     In  connection  with the  issuance of the Note,  the Company  issued  three
warrants.  Each  warrant  provides  for the  purchase  of 100,000  shares of the
Company's  common stock at an exercise  price equal to the lower of $2.14 or the
subscription  per share price of the proposed Private  Placement,  or if further
shares are offered at a lower price per share  through  March 29, 2003,  then at
that price.  The First Warrant  became  exercisable on July 26, 2002. The Second
Warrant  will become  exercisable  if the Company does not repay the Note within
180  days  from  the  issuance  of the  Note.  The  Third  Warrant  will  become
exercisable  if the  Company  does not repay the Note  within  one year from the
issuance of the Note. When, and if,  exercisable,  the holder may exercise these
warrants through July 25, 2009.

     In connection with the issuance of the Note and First Warrant,  the Company
estimated  the  fair  value  of the  First  Warrant  to be  $198,000  using  the
Black-Scholes  model. In accordance with EITF 98-5,  "Accounting for Convertible
Securities  with  Beneficial  Conversion  Features  or  Contingently  Adjustable
Conversion  Ratios," and EITF 00-27,  "Application  of Issue No. 98-5 to Certain
Convertible  Instruments,"  the Company has recognized  $62,630 through interest
expense  during the three months ended  September  30, 2002 for a portion of the
fair  value of the First  Warrant  and a portion  of the  beneficial  conversion
feature of the Note, which was estimated to be $177,778. The Company will record
additional  amounts  totaling  $313,148  through interest expense until July 25,
2003 for the  remaining  fair  value of the  First  Warrant  and the  beneficial
conversion feature of the Note recorded at the initial transaction date.

     Relating to the private  placement  of  4,125,000  shares of the  Company's
common  stock at a  purchase  price of $1.00  per  share in  October  2002,  the
conversion  price of the Note and per share  exercise price of the First Warrant
were reset to $1.00.  In  accordance  with EITF 00-27,  the Company  will record
$624,222 for the additional  beneficial  conversion amount relating to the value
of the reset feature.  This amount will be recognized  ratably through  interest
expense until July 25, 2003.

     Also during the period ended  September 30, 2002,  Mr.  Cameron  loaned the
Company an additional  $619,000  which bears interest at 10.25% per annum and is
payable on December 31, 2002.

Note 3.  Comprehensive Loss

     Total  comprehensive loss for the three months ended September 30, 2002 and
2001 was $1,886,806,  and $2,233,961  respectively.  Other comprehensive  income
(loss)   represents   the  net   change  in   unrealized   gains   (losses)   on
available-for-sale securities.

Note 4.  Net Loss Per Share

     Loss per share  amounts for all periods have been  presented in  accordance
with Statement of Financial  Accounting  Standards Board No. 128,  "Earnings per
Share." As the Company has reported net losses in all periods  presented,  basic
and  diluted  loss per  share  have  been  calculated  on the  basis of net loss
applicable  to common  stockholders  divided by the weighted  average  number of
common stock shares  outstanding  without giving effect to outstanding  options,
warrants,  and convertible  securities whose effects are anti-dilutive.  For the
three months ended  September 30, 2002 and 2001 there were stock options,  stock





warrants,  and convertible  notes payable  outstanding,  which could potentially
dilute earnings per share in the future but were not included in the computation
of diluted  loss per share as their  effect  was  anti-dilutive  in the  periods
presented.

Note 5.  Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Boards issued Statement of
Financial  Accounting Standards No. 142, "Goodwill and Other Intangible Assets,"
or SFAS  142.  SFAS 142 no longer  permits  the  amortization  of  goodwill  and
indefinite-lived  intangible  assets.  Instead,  these  assets  must be reviewed
annually  (or more  frequently  under  certain  conditions)  for  impairment  in
accordance  with this statement.  Intangible  assets that do not have indefinite
lives will  continue to be  amortized  over their  useful lives and reviewed for
impairment in accordance  with existing  guidance.  The Company adopted SFAS 142
effective July 1, 2002.  Because the Company has  historically not been party to
any business  combinations  and therefore has not recorded  related goodwill and
intangible  assets,  the  adoption  of SFAS  142 did not have an  effect  on the
Company's results of operations, financial position or cash flows.

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

Note 6.  Subsequent Events

     The Company  engaged a  placement  agent to assist in the sale of shares of
the Company's common stock in a private  placement.  Subsequent to September 30,
2002,  the Company  received  gross  proceeds of $4,125,000  through the sale of
4,125,000 shares pursuant to this offering.  Cash proceeds net of offering costs
were $3,884,567.

     Subsequent to September 30, 2002, resulting from the closing of the October
2002 private placement of common stock,  1,540,729 additional shares were issued
to investors  who  purchased  shares of common stock in the January 2002 private
placement  based  on  the  October  2002  private   placement  price  of  $1.00.
Compensation expense to be recorded during the second quarter ended December 31,
2002,  for the  additional  shares  issued to the  Company's  Chairman and Chief
Financial Officer, will be $377,778.

     Subsequent to September 30, 2002,  the Company  agreed with Mr.  Cameron to
extend the due date on notes payable to him until  December 31, 2003 in exchange
for an extension fee of 2%. These  extended  notes total  $2,873,691,  including
accrued interest and extension fees, and bear interest at 10.25% per annum. Also
subsequent to September 30, 2002,  the Company agreed with the other note holder
to extend the due date of his  convertible  promissory  notes until December 31,
2003. These  convertible  promissory notes total  $2,681,415,  including accrued
interest,  bear  interest  at 10.25% per annum and are  convertible  into common
stock at $3.00 per share at the note holder's option.




                Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Stockholders
Alternative Technology Resources, Inc.

     We have audited the accompanying  balance sheets of Alternative  Technology
Resources,  Inc. as of June 30, 2002 and 2001,  and the  related  statements  of
operations, stockholders' equity (deficit), and cash flows for each of the three
years in the period  ended June 30, 2002.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all material  respects,  the  financial  position of  Alternative  Technology
Resources,  Inc. at June 30, 2002 and 2001 and the results of its operations and
its cash flows for each of the three years in the period  ended June 30, 2002 in
conformity with accounting principles generally accepted in the United States.

     The  accompanying  financial  statements  have been prepared  assuming that
Alternative Technology Resources, Inc. will continue as a going concern. As more
fully described in Note 1, the Company has incurred  recurring  operating losses
and has an  accumulated  deficit  of  $59,362,879  as of June  30,  2002.  These
conditions raise  substantial doubt about the Company's ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note 1. The financial  statements do not include any  adjustments  to reflect
the possible future effects on the  recoverability  and classification of assets
or the  amounts  and  classification  of  liabilities  that may result  from the
outcome of this uncertainty.

                                                           /S/ ERNST & YOUNG LLP

Sacramento, California
August 16, 2002




                     Alternative Technology Resources, Inc.

                                 Balance Sheets


                                                                                                         

                                                                                                    June 30,
                                                                                            2002               2001
                                                                                            ----               ----
                                      Assets
Current assets:
  Cash and cash equivalents                                                          $         402,291   $       3,159,017
  Short-term investments                                                                             -           1,354,137
  Trade accounts receivable                                                                      3,602              24,252
  Interest receivable                                                                                -              52,134
  Prepaid expenses and other current assets                                                     81,223             267,635
                                                                                     ------------------- ------------------
Total current assets                                                                           487,116           4,857,175

Property and equipment:
  Equipment and software                                                                       788,192             501,626
  Accumulated depreciation and amortization                                                   (297,987)           (107,848)
                                                                                     ------------------- ------------------
  Property and equipment, net                                                                  490,205             393,778

Prepaid license and service fees                                                               211,498             259,155
Other non-current assets                                                                        14,490              67,550
                                                                                     ------------------- ------------------

                                                                                     $       1,203,309   $       5,577,658
                                                                                     =================== ==================

                  Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
  Payable to Healthcare Exchange providers                                           $         409,738   $          40,756
  Trade accounts payable                                                                       438,460             151,371
  Accrued payroll and related expenses                                                         274,777             181,028
  Accrued preferred stock dividends                                                            283,195             283,195
  Accounts payable and accrued interest payable to stockholders                                797,232             728,941
  Notes payable to stockholder                                                               2,212,529                   -
  Convertible notes payable to stockholder                                                   2,423,823                   -
  Other current liabilities                                                                    254,469             295,680
                                                                                     ------------------- ------------------
Total current liabilities                                                                    7,094,223           1,680,971

Long term notes payable to stockholder                                                               -           1,511,635
Long term convertible notes payable to stockholder                                                   -           2,228,815
                                                                                     ------------------- ------------------
Total long term liabilities                                                                          -           3,740,450

Commitments and contingencies (Notes 1 and 6)

Stockholders' equity (deficit):
  Convertible preferred stock, $6.00 par value - 1,200,000 shares authorized,
     none issued and outstanding at June 30, 2002 and 2001, 204,167 shares
designated
     Series D, none issued and outstanding at June 30, 2002 and 2001 Common
  stock, $0.01 par value - 100,000,000 shares authorized
     60,968,213 shares issued and outstanding at June 30, 2002 (59,394,844 at
     June 30, 2001)                                                                            609,682             593,949
  Additional paid-in capital                                                                52,862,283          49,109,283
  Accumulated deficit                                                                      (59,362,879)        (49,546,973)
  Accumulated other comprehensive loss                                                               -                 (22)
                                                                                     ------------------- ------------------
Total stockholders' equity (deficit)                                                        (5,890,914)            156,237
                                                                                     ------------------- ------------------

                                                                                     $       1,203,309   $       5,577,658
                                                                                     =================== ==================

See accompanying notes.





                     Alternative Technology Resources, Inc.

                            Statements of Operations


                                                                                                     

                                                                              Years Ended June 30,
                                                       -------------------------------------------------------------------
                                                                 2002                   2001                 2000
                                                       ------------------------- -------------------- --------------------
Healthcare Exchange:
      Healthcare Exchange revenue                      $        1,642,565        $           50,944   $                -
      Healthcare Exchange costs                                (1,463,517)                  (84,528)                   -
                                                       ------------------------- -------------------- --------------------
Healthcare Exchange gross profit (loss)                           179,048                   (33,584)                   -

Contract Programming:
      Contract programming revenue                                      -                   308,469            2,561,101
      Contract termination fees                                         -                         -                5,453
      Programmer costs                                                  -                  (235,258)          (1,745,011)
      Start-up and other costs                                          -                   (10,414)            (399,481)
                                                       ------------------------- -------------------- --------------------
Contract programming gross profit                                       -                    62,797              422,062

Selling, marketing & product development costs                 (7,076,558)               (5,097,513)          (1,154,244)

General and administrative expenses                            (2,482,272)               (3,850,971)          (1,276,726)
                                                       ------------------------- -------------------- --------------------


Loss from operations                                           (9,379,782)               (8,919,271)          (2,008,908)
                                                       ------------------------- -------------------- --------------------

Other income (expense):
      Interest income                                              42,563                   447,742               87,672
      Interest expense to stockholders and directors             (478,687)                 (443,226)          (2,894,405)
                                                       ------------------------- -------------------- --------------------
Total other income (expense)                                     (436,124)                    4,516           (2,806,733)
                                                       ------------------------- -------------------- --------------------

Net loss                                                       (9,815,906)               (8,914,755)          (4,815,641)

Preferred stock dividends                                               -                  (886,142)            (122,500)
                                                       ------------------------- -------------------- --------------------

Net loss applicable to common stockholders             $       (9,815,906)       $       (9,800,897)  $       (4,938,141)
                                                       ========================= ==================== ====================

Basic and diluted net loss per share applicable to
common stockholders                                    $            (0.16)       $            (0.17)  $            (0.10)
                                                       ========================= ==================== ====================

Weighted-average common stock outstanding                      59,936,435                58,686,778           50,329,614
                                                       ========================= ==================== ====================

See accompanying notes.







                     Alternative Technology Resources, Inc.
                  Statements of Stockholders' Equity (Deficit)

                    Years ended June 30, 2002, 2001 and 2000


                                                                                                   


                              Convertible Preferred                                                     Accumulated        Total
                                     Stock                Common Stock       Additional                   Other        Stockholders
                              --------------------------------------------    Paid-In     Accumulated  Comprehensive      Equity
                              Shares      Amount      Shares      Amount      Capital       Deficit        Loss          (Deficit)
                              -------     ------      ------      ------      -------       -------        ----          ---------

Balance, June 30, 1999        204,167  $ 1,225,002  26,169,718  $  261,697  $28,742,403  $(35,816,577)  $         -    $ (5,587,475)

Issuance of common
  stock in settlement of
  accounts payable                  -            -      15,126         151        8,751            -              -         8,902
Issuance of common stock
  upon conversion of
  notes payable                     -            -  27,761,197     277,612    3,359,029            -              -     3,636,641
Private placement of
  common stock, net of
  issuance costs                    -            -   1,086,145      10,862    3,701,486            -              -     3,712,348
Options and warrants
  exercised                         -            -     309,919       3,100      190,219            -              -       193,319
Repurchase of common stock          -            -     (12,500)       (125)         125            -              -             -
Preferred stock dividends           -            -           -           -     (122,500)           -              -      (122,500)
Net loss                            -            -           -           -            -   (4,815,641)             -    (4,815,641)
                              -------  -----------  ----------- ----------  ------------ ------------   -----------  -------------

Balance, June 30, 2000        204,167    1,225,002  55,329,605     553,297   35,879,513  (40,632,218)             -    (2,974,406)

Issuance of common stock in
  settlement of accounts
  payable                           -            -      80,000         800      155,200            -              -       156,000
Issuance of common
  stock upon conversion of
  Series D preferred stock   (204,167)  (1,225,002)    566,972       5,670    2,011,949            -              -       792,617
Issuance of common stock
  upon conversion of note
  payable                           -            -      20,000         200       59,800            -              -        60,000
Private placement of common
  stock, net of issuance
  costs                             -            -   3,333,334      33,333   10,985,346            -              -    11,018,679
Options exercised                   -            -      64,933         649       41,584            -              -        42,233
Preferred stock dividends           -            -           -           -      (24,109)           -              -       (24,109)
Other comprehensive income
  (loss) - change in
  unrealized gain/loss on
  available-for-sale
  securities                        -            -           -           -            -            -            (22)          (22)
Net loss                            -            -           -           -            -   (8,914,755)             -    (8,914,755)
                              -------  -----------   ---------  ----------  -----------   ----------    -----------   ------------

Balance, June 30, 2001              -            -  59,394,844     593,949   49,109,283  (49,546,973)           (22)      156,237

Private placement of
  common stock, net of
  issuance costs                    -            -   1,232,584      12,325    2,868,777            -              -     2,881,102
Compensation expense
  related to grant of
  stock options to
  employees and issuance
  of stock to a consultant          -            -           -           -      649,028            -              -       649,028
Options and warrants exercised      -            -     340,785       3,408      235,195            -              -       238,603
Other comprehensive income
  (loss) - change in
  unrealized gain/loss on
  available-for-sale
  securities                        -            -           -           -            -            -             22            22
Net loss                            -            -           -           -            -   (9,815,906)             -    (9,815,906)
                              -------  -----------   ---------  ----------  -----------   ----------    -----------   ------------

Balance, June 30, 2002              -  $         -  60,968,213  $  609,682  $52,862,283 $(59,362,879)   $         -   $(5,890,914)
                              =======  ===========   =========  ==========  ===========   ==========    ================ =========
      See accompanying notes.






                     Alternative Technology Resources, Inc.

                            Statements of Cash Flows
                Increase (Decrease) in Cash and Cash Equivalents


                                                                                                         

                                                                                    Years ended June 30,
                                                                       2002                 2001                 2000
                                                                -------------------- -------------------- --------------------
Cash flows from operating activities:
    Net loss                                                    $       (9,815,906)  $       (8,914,755)  $       (4,815,641)
      Adjustments to reconcile net loss to net cash
used in operating activities:
        Depreciation and amortization                                      190,139               93,404               14,444
         Interest expense resulting from amendment to
conversion terms of notes payable                                                -                    -            2,415,223
        Interest expense included in notes payable to
stockholders                                                               313,902              233,026              309,334
        Write-off of WebMD prepaid service fee                                   -              250,000                    -
        Stock based compensation                                           787,611            1,931,036                    -
        Changes in operating assets and liabilities:
           Trade accounts receivable                                        20,650               73,876              374,008
           Interest receivable                                              52,134               52,135                    -
           Prepaid expenses and other current assets                       186,412             (287,721)            (239,521)
           Non-current assets                                              100,717             (326,705)                   -
           Payable to Healthcare Exchange providers                        368,982               40,756                    -
           Trade accounts payable                                          287,089               54,166               12,911
           Accrued payroll and related expenses                             93,749               13,521             (136,781)
           Accounts payable and accrued interest payable to
stockholders                                                                68,291              115,311               73,509
           Other current liabilities                                       (41,211)              22,662              157,329
                                                                -------------------- -------------------- --------------------
Net cash used by operating activities                                   (7,387,441)          (6,649,288)          (1,835,185)
                                                                -------------------- -------------------- --------------------

Cash flows from investing activities:
    Purchases of equipment and software                                   (286,566)            (326,211)            (175,415)
    Purchases of short-term investments                                          -           (6,306,989)                   -
    Maturities of short-term investments                                 1,354,159            4,952,830                    -
                                                                -------------------- -------------------- --------------------
Net cash provided (used) by investing activities                         1,067,593           (1,680,370)            (175,415)
                                                                -------------------- -------------------- --------------------











(Continued on next page)






                     Alternative Technology Resources, Inc.

                            Statements of Cash Flows
                Increase (Decrease) in Cash and Cash Equivalents
                                   (continued)


                                                                                                     


                                                                                  Years ended June 30,
                                                                     2002                 2001                2000
                                                              -------------------- ------------------- --------------------
Cash flows from financing activities:
    Proceeds from private placement of common stock           $        2,742,519   $        9,560,345  $        3,712,348
    Proceeds from exercise of options and warrants                       238,603               42,233             193,319
    Proceeds from notes payable to stockholders                          582,000                    -              33,500
    Payments on notes payable to stockholders                                  -                    -             (33,500)
    Proceeds from notes payable to directors                                   -                    -               3,361
    Payments on notes payable to directors                                     -              (23,324)            (21,649)
                                                              -------------------- ------------------- --------------------
Net cash provided (used) by financing activities                       3,563,122            9,579,254           3,887,379
                                                              -------------------- ------------------- --------------------

Net increase (decrease) in cash and cash equivalents                  (2,756,726)           1,249,596           1,876,779
Cash and cash equivalents at beginning of year                         3,159,017            1,909,421              32,642
                                                              -------------------- ------------------- --------------------
Cash and cash equivalents at end of year                      $          402,291   $        3,159,017  $        1,909,421
                                                              ==================== =================== ====================

Supplemental disclosure of cash flow information:
    Cash paid during the year for interest                    $          110,697   $           94,611  $           54,926
                                                              ==================== =================== ====================

Supplemental disclosure of non-cash financing activities:
    Conversion of notes payable to common stock               $                -   $           60,000  $        1,000,000
                                                              ==================== =================== ====================


See accompanying notes.







                     Alternative Technology Resources, Inc.
                    Notes to Financial Statements (continued)

                    Years Ended June 30, 2002, 2001 and 2000

1.       Summary of Significant Accounting Policies

Description of Business

     Alternative  Technology Resources,  Inc. (hereinafter referred to as "ATR,"
the  "Company,"  "we" or "us") has  developed  and is  operating an Exchange for
healthcare services ("Healthcare Exchange").  The Company contracts with medical
doctors,   medical  groups,   hospitals  and  other   healthcare   practitioners
(collectively,  "Providers")  to offer their  services  through  the  Healthcare
Exchange to those who purchase or facilitate the purchase of healthcare services
("Purchasers"). ATR's Healthcare Exchange began operations with a limited number
of Providers and Purchasers in the quarter ending June 30, 2001

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

     The  Company's   Healthcare  Exchange   development  efforts  will  require
substantial  funds.  The Company believes that it has developed a viable plan to
address the Company's ability to continue as a going concern, and that this plan
will enable the Company to continue as a going concern, at least through the end
of  fiscal  year  2003.  However,  the  Company  believes  it will need to raise
additional  funds during fiscal 2003. The Company has engaged a placement  agent
to  assist  in the sale of  shares  of the  Company  common  stock in a  private
placement,  but there can be no assurance that the Company will be able to raise
sufficient   funds  to   successfully   implement  its  business   plan.   Also,
traditionally,  the Company has relied on major  stockholders  or  affiliates to
finance  its  operations,  although  there  can be no  assurance  that they will
continue  to do so. If  unsuccessful  the  Company may be required to reduce the
development  efforts  of its  Healthcare  Exchange  or be  forced  into  seeking
protection  under  federal  bankruptcy  laws.  The  financial  statements do not
include  any   adjustments  to  reflect  the  possible  future  effects  on  the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.

Use of Estimates in Preparation of Financial Statements

     The  preparation of the financial  statements in conformity with accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

Cash, 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 June 30, 2002 and 2001  substantially all of the Company's cash
equivalents represent investments in money market accounts.




     As of June 30, 2002 the Company's had no  short-term  investments.  At June
30, 2001 short-term investments are corporate obligations with maturity dates of
91 days to one year from the date of purchase.

Prepaid License and Service Fees

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

Property and Equipment

     Property  and  equipment  are  recorded  at cost and are  depreciated  on a
straight-line  basis over the estimated  useful lives of the assets or the lease
term,  whichever is shorter. The estimated useful lives range from three to five
years.

Revenue Recognition

     The Company recognizes revenue for the  transaction-processing  fee when it
is earned and the Company has  substantially  completed  all of its  obligations
under the contract.

     Contract  programming  revenue  represented  work  performed for customers,
primarily on a time and materials  basis,  and was  recognized  when the related
services were rendered.  Contract  termination  fees were amounts  received from
customers  when they  exercised  the contract  provision,  which allowed them to
convert ATR's  programmer to their employee.  In addition,  these fees were also
received  from  programmers  when they  exercised  their  contract  provision to
terminate their  relationship  with the Company prior to the termination date of
their  contract.  These fee amounts were  stipulated in customer and  programmer
contracts,  were based on the length of time remaining  under the contract,  and
were  recognized as revenue when such contract  provisions  were invoked.  As of
June 30, 2001, the Company is no longer in the contract programming business.

Product Development Costs

     In  October  1999,  the  Company  began  incurring  costs  to  develop  its
Healthcare  Exchange.  In  accordance  with  SOP  98-5,  "Reporting  on Costs of
Start-Up  Activities,"  start-up costs  associated with the Healthcare  Exchange
have  been  expensed  as  incurred.  The  Company's  Healthcare  Exchange  began
operations in the quarter ending June 30, 2001.

Stock-Based Compensation

     As permitted  under the  provisions  of  Statement of Financial  Accounting
Standards No. 123 "Accounting for  Stock-Based  Compensation"  ("SFAS No. 123"),
the  Company  has  elected to account  for  stock-based  compensation  using the
intrinsic value method prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees"  ("APB No. 25").  Under the intrinsic
value  method,  compensation  cost is the excess,  if any, of the quoted  market
price or fair  value of the stock at the grant  date or other  measurement  date
over the amount an employee must pay to acquire the stock.  Disclosures required
under SFAS No. 123 are included in Note 7 to the financial statements.




Net Loss Per Share

     All  loss  per  share  amounts  for all  periods  have  been  presented  in
accordance  with  Statement of  Financial  Accounting  Standards  Board No. 128,
"Earnings  per Share".  As the Company  has  reported  net losses in all periods
presented, basic and diluted loss per share have been calculated on the basis of
net loss  applicable  to common  stockholders  divided by the  weighted  average
number  of common  shares  outstanding  without  giving  effect  to  outstanding
options,  warrants,  and convertible securities whose effects are anti-dilutive.
For the  fiscal  years  ended  June 30,  2002,  2001 and 2000,  there were stock
options, stock warrants and a convertible note payable outstanding,  and for the
fiscal  year ended  June 30,  2000 there was also  convertible  preferred  stock
outstanding  (Notes 3 and 7), which could potentially  dilute earnings per share
in the future but were not included in the computation of diluted loss per share
as their effect was anti-dilutive in the periods presented.

Segment Disclosures

     As of June 30,  2002,  the Company  operates in one  segment,  the selling,
marketing,  development  and operation of an Exchange for  healthcare  services.
Prior to beginning  operations with a limited number of Providers and Purchasers
in the  quarter  ending  June 30,  2001,  the  Company  was in the  business  of
recruiting,  hiring and training foreign  computer  programmers and placing them
with U.S. companies.

Comprehensive Loss

     Total  comprehensive  loss  for  fiscal  years  2002,  2001  and  2000  was
$9,815,884,  $8,914,777 and $4,815,641 respectively.  Other comprehensive income
(loss)   represents   the  net   change  in   unrealized   gains   (losses)   on
available-for-sale securities.

Concentrations of Risk

     The  Company   invests  its  cash  with  high  credit   quality   financial
institutions.  The Company  believes the financial  risks  associated with these
financial instruments are minimal.

     During fiscal year 2002, no single healthcare  provider  represented 10% or
more of the Company's  Healthcare  Exchange  revenues.  During fiscal year 2001,
three  customers  individually  accounted  for  41%,  39%  and  11% of  Contract
Programming  revenues.  During fiscal year 2000,  three  customers  individually
accounted for 40%, 21% and 10% of Contract Programming revenues.

     At June 30, 2001, two Contract Programming customers individually accounted
for 55% and 31% of accounts receivable.

Fair Value of Financial Instruments

     The Company's  financial  instruments  consist of cash,  cash  equivalents,
short-term  investments,  accounts  receivable,  and accounts and notes payable.





Fair  values  of  cash,  cash  equivalents,   short-term  investments,  accounts
receivable,  and accounts  payable (other than accounts payable to stockholders)
are considered to approximate their carrying values.

     Fair  values of  accounts  payable  to  stockholders  and notes  payable to
stockholders could not be determined with sufficient  reliability  because these
are instruments held by related parties and because of the cost involved in such
determination.  Principal  characteristics of these financial  instruments that,
along with information on the financial  position of the Company,  are pertinent
to their fair values are described in Notes 2 and 3.

Recent Accounting Pronouncements

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

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

2.   Investor Group Transactions

     In fiscal year 1994, the Company  entered into a series of agreements  with
James W.  Cameron,  Jr.  pursuant to which Mr.  Cameron and Dr. Max Negri became
principal  stockholders  of the Company.  As of June 30, 2002, Mr. Cameron owned
39,614,006  shares of the Company's  common stock. As of June 30, 2002 Dr. Negri
held less than 5% of the Company's common stock.

     During  fiscal  years 2002,  2001 and 2000,  the  Company did not  generate
sufficient  cash  flow  from  operations  and  borrowed  funds  from  these  two
stockholders. Notes payable to stockholders were $4,636,352 at June 30, 2002 and
$3,740,450 at June 30, 2001 (Note 3).  Accrued  interest of $269,435 at June 30,
2002 and  $232,469  at June 30,  2001 on these  notes is  included  in  accounts
payable and accrued interest payable to stockholders.

     The Company leases its office facilities in Sacramento, California from Mr.
Cameron  (Note 6).  Accrued  lease  expense  of  $527,896  at June 30,  2002 and
$496,472  at June 30,  2001 is also  included  in  accounts  payable and accrued
interest payable to stockholders.

     During fiscal years 2002,  2001 and 2000,  Cameron &  Associates,  which is
wholly owned by Mr. Cameron,  provided consulting services to the Company.  Fees
for such services totaled $120,000 in fiscal years 2002 and 2001, and $90,000 in
2000.


3.   Financing Arrangements

     The  Company  has  received  short-term,  unsecured  financing  to fund its
operations in the form of notes payable of $4,636,352 as of June 30, 2002,  from
Mr.  Cameron and another  stockholder.  These notes bear interest at 10.25%.  On
September 1, 2001, the Company agreed with Mr. Cameron to extend the due date on
notes payable to him until December 31, 2002,in exchange for an extension fee of
2%.  These  extended  notes total  $1,630,529,  including  accrued  interest and
extension  fees, and bear interest at 10.25% per annum.  During fiscal year June
30, 2002 Mr. Cameron loaned the Company an additional  $582,000 bearing interest
at 10.25% payable on December 31, 2002. On September 1, 2001, the Company agreed
with the other note holder to extend the due date of his convertible  promissory
notes  until  December  31,  2002.  These  convertible  promissory  notes  total
$2,423,823,  including accrued  interest,  bear interest at 10.25% per annum and
are  convertible  into  common  stock at $3.00  per  share at the note  holder's
option.  Subsequent to fiscal year end 2002,  Mr.  Cameron loaned the Company an
additional $426,000 bearing interest at 10.25% payable on December 31, 2002.

     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 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 $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  $2,415,222  and was recorded as  additional  interest
expense.

     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  have  since
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.

4.   WebMD Corp. Agreement

     In September  1999, the Company  entered into an agreement with WebMD Corp.
to develop a web-based  portal  through  which  individual  uninsured  and under





insured  Patients can procure  healthcare  services.  The  agreement  required a
prepaid  service  fee to be  paid  to  WebMD  of  $250,000  upon  a  promotional
announcement  on  WebMD's  Internet  portal,  and a  sharing  of  revenues  when
operational.  Currently  both parties are  reevaluating  this  agreement,  given
changed  directions  and  priorities  of each  company.  The  agreement  has not
formally been modified or terminated, nor has either party proposed any specific
changes.  However, neither party is currently devoting any substantial resources
to this project.  Accordingly, the prepaid service fee was written off in fiscal
year 2001 and is  included as a component  of product  development  costs in the
statement of operations.

5.   Income Taxes

     Significant components of the Company's deferred tax assets and liabilities
for federal and state income taxes as of June 30, 2002 and 2001 are as follows:


                                                                                         

                                                                                June 30,
                                                                      2002                    2001
                                                              ---------------------- -----------------------

         Net operating loss carry forwards                    $       18,043,000     $       14,603,000
         Research credits                                                123,000                123,000
         Common stock options                                          2,818,000              2,539,000
         Common stock warrants                                           789,000                789,000
         Other - net                                                     362,000               (572,000)
                                                              ---------------------- -----------------------
         Total deferred tax assets                                    22,135,000             17,482,000
         Valuation allowance for deferred tax assets                 (22,135,000)           (17,482,000)
                                                              ---------------------- -----------------------
         Net deferred tax assets                              $                -     $                -
                                                              ====================== =======================

     The  Company's  valuation  allowance  as of June  30,  2002  and  2001  was
$22,135,000  and  $17,482,000  respectively,  resulting  in a net  change in the
valuation  allowance of $4,653,000 and $2,893,000 in the fiscal years ended June
30, 2001 and 2000, respectively.

     As of June 30, 2002 the Company had net operating  loss  carryforwards  for
federal and state income tax purposes of approximately  $46,119,000  million and
$26,245,000 million,  respectively. The federal net operating loss carryforwards
expire  in 2004  through  2022 and the state net  operating  loss  carryforwards
expire in 2002  through  2022.  The Company also has  approximately  $98,000 and
$25,000 of research and  development  tax credit  carryforwards  for federal and
state income tax purposes,  respectively.  The federal  research and development
tax credit carryforwards expire in 2005.

     In connection with the Company's  initial public offering in August 1992, 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 20, 1992 (approximately  $1,900,000) are
subject to an annual limitation in the amount of approximately $300,000.

     In 1993,  a  controlling  interest of the  Company's  stock was  purchased,
resulting in a second annual limitation in the amount of approximately  $398,000
on the Company's ability to utilize net operating loss  carryforwards  generated
between August 11, 1992 and September 13, 1993 (approximately $7,700,000).




     In accordance  with  provisions  of the Internal  Revenue Code Section 382,
additional portions of the net operating loss carryforwards may be disallowed as
a result of additional changes in ownership of the Company.

     The Company expects that the aforementioned  annual limitations will result
in net  operating  loss  carryovers  which  will  not be  utilized  prior to the
expiration of the carryover period.

6.   Commitments and Contingencies

     The  Company  may  from  time  to time  become  a party  to  various  legal
proceedings  arising in the ordinary course of its business.  The Company is not
currently subject to any legal proceedings.

     The Company signed agreements effective in January 2001 with an application
services provider to license,  support and run software to process medical bills
submitted to the Company's Healthcare Exchange.  The agreements are for a period
of 66 months.  They required payment of an initial base license fee of $250,000,
which is being  amortized over 66 months,  and data center set up,  training and
implementation  fees of about  $145,000,  which were  expensed.  The  agreements
require monthly minimum payments  currently of about $35,000 and additional fees
that are  transaction  based if volumes  exceed  levels  included in the monthly
minimums.

     In  November  1995,  the Company  entered  into a lease  agreement  for its
facility in Sacramento,  California under a one-year lease with Mr. Cameron. The
lease has been  extended to January 31,  2004.  Payments  under this  facilities
lease are  approximately  $141,330 per year. At June 30, 2002,  $527,896 of rent
owed for fiscal  years 1996  through 2002 is included in the balance of accounts
payable and accrued  interest  payable to  stockholders.  Rental expense for all
operating leases was approximately  $230,897,  $196,390 and $189,121, for fiscal
years  June 30,  2002,  2001 and  2000,  respectively,  including  approximately
$148,302,  $139,272 and $114,285  related to the lease of the office  facilities
from Mr. Cameron.

     Minimum annual payments for all non-cancelable operating leases and amounts
due to an application services provider are as follows:

                2003                         $          604,100
                2004                         $          528,500
                2005                         $          445,717
                2006                         $          416,398
                2007                         $            8,220
                Thereafter                   $            3,888

7.   Stockholders' Equity (Deficit)

Series D Preferred Stock

     In June 1994,  existing  stockholders  purchased 204,167 shares of Series D
Convertible  Preferred  Stock for  $1,225,002.  ATR's  Series D Preferred  Stock
carried a  cumulative  dividend of $0.60 per share per year,  until the Series D
preferred  stock was  exchanged  for common  stock on  September  11,  2000.  On
September 11, 2000, in connection  with the exchange of 204,167  shares Series D
preferred  stock,  for 408,334 shares of common stock based on a per share price





of $3.00 per share, the Company  declared  accrued  dividends of $759,110 in the
aggregate.  Of the $759,110 in accrued dividends,  two of the Series D preferred
stockholders  agreed to accept  158,638  shares of common  stock for $475,915 in
accrued  dividends based on a $3.00 per share value. The benefit accruing to the
Series D Preferred stockholders recorded in the quarter ended September 30, 2000
was  approximately  $316,702 in  compensation  expense and $862,000 in preferred
stock  dividends.  As of  June  30,  2002,  cumulative  unpaid,  dividends  were
$283,195.

Common Stock

     The  Company's   Healthcare  Exchange   development  efforts  will  require
substantial  funds.  On January 9, 2002,  the Board of  Directors of the Company
unanimously  approved a private  placement of up to $12,000,000 of the Company's
common stock at a purchase price of $2.25 per share.  The shares of common stock
issued in the private placement are restricted  securities.  Further pursuant to
the private placement,  in the event that within one year from the final closing
the  Company  sells  shares  of  common  stock,  or  securities  exercisable  or
convertible into common stock, at a price less than $2.25 per share, the Company
will  issue  additional  shares to these  investors  in an amount  such that the
overall  purchase price will be equal to the lower,  subsequent sales price. The
forgoing  shall  exclude  common stock that may be issued in  connection  with a
merger, as a dividend, pursuant to the exercise of outstanding options, warrants
and other convertible  securities and pursuant to options subsequently issued to
employees.   Proceeds  to  date,  net  of  offering  costs,  are   approximately
$2,742,519.  Proceeds  were used for further  development  and  operation of the
Healthcare  Exchange.   The  Company's  Chairman  and  Chief  Financial  Officer
purchased 222,222 shares of the Company's common stock in the private placement.
Because the purchase  price of such stock was less than the public trading price
on the date of purchase,  the Company recorded  compensation expense of $138,583
in fiscal year 2002.

     The Company received  $9,560,345 in a private placement of its common stock
at a price of $3.00 in  fiscal  year  2001,  and in fiscal  year  2000  received
$3,712,348  in a private  placement of its common  stock at an average  price of
$3.42 per share.

Warrants

     Warrant activity during the periods indicated is as follows:

                               Number of        Range of        Weighted Average
                                 Shares      Exercise Prices     Exercise Price
                               -------------------------------------------------

Balance at June 30, 1999        559,800        $0.01-$25.00           $0.94
Exercised                       (20,000)       $0.75                  $0.75
                               ---------

Balance at June 30, 2000        539,800        $0.01-$25.00           $0.95
Expired/Canceled                (40,000)       $0.01                  $0.01
                               ---------

Balance at June 30, 2001        499,800        $0.01-$25.00           $1.02
Exercised                      (284,200)       $0.75                  $0.75
                               ---------
Balance at June 30, 2002        215,600        $0.01-$25.00           $1.38
                               =========

     At June  30,  2002,  the  weighted-average  remaining  contractual  life of
outstanding warrants was 4.9 years. All warrants are immediately exercisable for
common stock at June 30, 2002.




Stock Option/Stock Issuance Plans

     The 1993 Stock  Option/Stock  Issuance Plan (the "1993 Plan"),  pursuant to
which key employees  (including officers) and consultants of the Company and the
non-employee members of the Board of Directors may acquire an equity interest in
the Company, was adopted by the Board of Directors on August 31, 1993 and became
effective  at that time.  The 1993 Plan  provided  that up to 400,000  shares of
common stock could be issued over the ten-year term of the 1993 Plan. As of June
30, 2002, shares available for future issuance under this plan were 31,173.

     The 1997  Stock  Option  Plan  (the  "1997  Plan"),  pursuant  to which key
employees   (including   officers)  and  consultants  of  the  Company  and  the
non-employee members of the Board of Directors may acquire an equity interest in
the  Company,  was adopted by the Board of  Directors  on November  18, 1997 and
became  effective at that time. An aggregate of 3,000,000 shares of common stock
may be issued over the five-year term of the 1997 plan. Subject to the oversight
and  review  of the  Board  of  Directors,  the 1997  Plan  shall  generally  be
administered by the Company's  Compensation Committee consisting of at least two
non-employee  directors as appointed by the Board of Directors.  The grant date,
the  number of shares  covered  by an option  and the terms and  conditions  for
exercise of options shall be determined  by the  Committee,  subject to the 1997
Plan  requirements.  The Board of Directors  shall determine the grant date, the
number of shares  covered by an option and the terms and conditions for exercise
of options to be granted  to  members  of the  Committee.  As of June 30,  2002,
shares  available  for  future  issuance  under  this  plan were  329,279.  This
five-year plan will expire November 18, 2002.

     Option  activity  for the  1993  and the  1997  Plans  during  the  periods
indicated is as follows:

                                     Number of          Weighted Average
                                      Shares             Exercise Price
                                   ---------------------------------------------

     Balance at June 30, 1999        594,919                   $0.98
     Granted                         880,000                   $2.72
     Exercised                      (269,919)                  $0.65
     Cancelled                       (25,000)                  $0.25

                                   ------------
     Balance at June 30, 2000      1,180,000                   $2.36
     Granted                         920,600                   $2.77
     Exercised                       (49,933)                  $0.25
     Cancelled                      (317,500)                  $4.04

                                   ------------

     Balance at June 30, 2001      1,733,167                   $2.33
     Granted                       1,234,053                   $1.83
     Exercised                       (51,585)                  $0.45
     Cancelled                      (326,432)                  $2.60

                                  ------------
     Balance at June 30, 2002      2,589,203                   $2.07
                                  ============







     The following table summarizes  information about stock options outstanding
under the 1993 and the 1997 Plans at June 30, 2002:


                                                                             
                                                       Weighted
                                                       Average
                                       Weighted        Remaining                             Weighted
Range of Exercise      Options          Average       Contractual            Options          Average
      Prices         Outstanding     Exercise Price   Life (Years)         Exercisable     Exercise Price
-----------------------------------------------------------------------------------------------------------

$      0.01-1.95      1,028,369           $0.58            7                  894,479             $0.55
$      2.00-3.85      1,233,334           $2.50            9                  255,834             $2.85
$      4.00-6.63        312,500           $4.81            8                  208,333             $4.81
$           7.19          5,000           $7.19            8                    3,333             $7.19
$          13.10         10,000          $13.10            2                   10,000            $13.10

                      ----------                                           ----------
                      2,589,203           $2.07                             1,371,979             $1.73

                      ==========                                           ==========


     At June 30, 2001 and 2000 the number and weighted average exercise price of
options exercisable were 745,022 and $1.88 and 485,000 and $1.77, respectively.

     In  addition  to  options  granted  pursuant  to the 1993  and  1997  Stock
Option/Stock  Issuance  Plans,  the Company has granted options outside of these
plans.  In fiscal year 1994, the Company  granted to its former Chief  Executive
Officer and director  stock options to purchase  400,000  shares of common stock
exercisable at $0.10 per share. Of these options, 370,000 remain outstanding and
are fully vested as of June 30, 2002. These options expire on August 10, 2003.

     During fiscal year 2000, in accordance  with an employment  agreement,  the
Company  granted the current Chief  Executive  Officer stock options to purchase
7,000,000  shares of common  stock at $3.00 per share,  the fair market value of
the Company's common stock on the date of grant. The options vest ratably over 5
years and expire on April 14, 2010. As of June 30, 2002,  2,800,000 options have
vested, and 7,000,000 remain  outstanding.  Also, on August 1, 2000, Mr. Cameron
entered into an agreement with the Company's  current Chief Executive Officer to
grant him the option to purchase  6,000,000 shares of the Company's common stock
from Mr. Cameron at a purchase price of $3.625 per share,  the fair market value
of the  Company's  stock on that date.  As of June 30, 2002,  these  options are
fully vested and 6,000,000 remain outstanding.

     Non-cash stock based compensation expense was $787,611 for fiscal year 2002
and $1,931,036 for fiscal year 2001. No such expense was incurred in fiscal year
2000. Costs incurred in fiscal year 2002 primarily  represent  $637,528 recorded
in connection  with the grant of options to employees with an exercise less than
the  public  trading  price  on the  date of  grant  and  $138,583  recorded  in
connection with the purchase of 222,222 shares of the Company's  common stock by
the Company's Chairman and Chief Financial Officer because the purchase price of
such stock was less than the public trading price on the date of purchase.

     SFAS No. 123 requires  presentation of pro forma information  regarding net
loss and loss per share as if the Company had accounted  for its employee  stock





options  under the fair value  method of that  Statement.  The fair value of ATR
options was  estimated at the date of grant using the  Black-Scholes  model with
the following weighted average assumptions for fiscal years 2002, 2001 and 2000:
dividend yield of 0%, an expected life of five years, a risk-free  interest rate
of 5.0%, and expected volatility of 1.168, 1.271 and 0.959.

     The Black-Scholes  model was developed for use in estimating the fair value
of  traded  options,   which  have  no  vesting   restrictions   and  are  fully
transferable.  It  requires  the input of  highly  subjective  assumptions,  the
quality of which cannot be judged except by  hindsight.  The Company's pro forma
information is as follows:


                                                                                         

                                                                   Years Ended June 30,
                                               --------------------------------------------------------------
                                                       2002                  2001                2000
                                               ---------------------------------------------------------------
Net loss applicable to common stockholders:
      As reported                              $  (9,815,906)        $    (9,800,897)      $  (4,938,141)
      Pro forma                                $(13,815,109)         $  (14,153,429)       $  (6,224,858)

Basic and diluted net loss per share:
      As reported                              $           (0.16)    $        (0.17)       $        (0.10)
      Pro forma                                $           (0.23)    $        (0.24)       $        (0.12)


     Future pro forma results may be materially  different from amounts reported
as future years will include the effects of additional stock option grants.

     The weighted  average fair value of options granted during the fiscal years
June 30, 2002, 2001 and 2000 whose exercise price equals the market price of the
stock  on  the  grant  date  was  $1.95,  $2.30  and  $2.58  respectively.   The
weighted-average  fair  value of  options  granted  in fiscal  year  2002  whose
exercise  price was less than the market price of the stock on the date of grant
was $2.03.  For fiscal  years  2001 and 2000,  all  options  were  granted  with
exercise prices equal to the market price on the date of grant.

Stock Reserved for Issuance

     As of June 30, 2002, the Company has reserved a total of 11,404,268  shares
of common stock pursuant to outstanding  warrants,  options,  convertible  notes
payable to  stockholders,  and future  issuance  of  options  to  employees  and
non-employee directors.

                         Common Shares Reserved for Issuance
     ---------------------------------------------------------------------------
     Options                                                  10,319,655
     Warrants                                                    215,600
     Notes (including accrued interest)                          869,013
                                                          ----------------------

     Total                                                    11,404,268
                                                          ======================



8.   Subsequent Event

     The Company has received  short-term  unsecured  financing in the form of a
convertible  note of  $1,000,000  as of July 26,  2002 from a lender.  This note
bears interest at 8% and is payable at the earliest of July 25, 2003 or when the
Company,  in a proposed  Private  Placement  of Common  Stock  offering,  raises
$8,000,000.  All or a portion  of the  convertible  note may be  converted  into
shares of common stock at the lower of $2.25 per share or the  subscription  per
share price of the proposed Private  Placement of Common Stock. In consideration
for the loan the Company  will issue three  warrants.  The Company will issue to
the lender one warrant to purchase  100,000  shares of common stock.  The lender
will also receive a second  warrant to purchase  100,000  shares of common stock
that may only be exercisable if the Company does not repay the convertible  note
within 180 days of the  agreement.  The lender will also receive a third warrant
to  purchase  100,000  shares of common  stock  that may be  exercisable  if the
Company does not repay the  convertible  note within one year of the  agreement.
Each of the warrants will have an exercise  price equal to the lower of $2.14 or
the  subscription  per share price of the proposed  Private  Placement of Common
Stock. When, and if, exercisable, the lender may exercise these warrants through
July 25, 2009.

9.   Quarterly Results of Operations (Unaudited)

     The following table presents the Company's unaudited quarterly statement of
operations data for the four quarters of fiscal years 2002 and 2001. The Company
believes  that  this  information  has been  prepared  on the same  basis as its
audited consolidated  financial  statements and that all necessary  adjustments,
consisting only of normal recurring  adjustments,  have been included to present
fairly the selected quarterly  information.  The Company's  quarterly results of
operations for these periods are not necessarily indicative of future results of
operations.


                                                                                                               

                                                                                          2002
                                                     ------------------------------------------------------------------------------
                                                      September 30          December 31           March 31               June 30
Healthcare Exchange revenue                          $     108,218        $     253,876      $     430,308         $     850,163
Healthcare Exchange gross profit (loss)                   (116,570)             (96,337)            28,779               363,176
Contract Programming revenue                                     -                    -                  -                     -
Contract Programming gross profit                                -                    -                  -                     -
Selling, marketing and product development costs        (1,505,195)          (1,546,462)        (1,852,186)           (2,172,714)
General and administrative expenses                       (505,834)            (600,045)          (673,076)             (703,317)
Loss from operations                                    (2,127,599)          (2,242,844)        (2,496,483)           (2,512,855)
Total other income (expense)                              (106,384)            (105,364)          (110,929)             (113,447)
Net loss                                                (2,233,983)          (2,348,208)        (2,607,412)           (2,626,302)
Preferred stock dividends in arrears                             -                    -                  -                     -
Net loss applicable to common stockholders              (2,233,983)          (2,348,208)         (2,607,412)           (2,626,302)
Basic and diluted net loss per share                 $       (0.04)       $       (0.04)     $        (0.04)       $        (0.04)
Shares used in per share calculation                    59,401,860           59,421,866         61,261,644            60,945,581
-----------------------------------------------------------------------------------------------------------------------------------





                                                                                                               


                                                                                        2001
                                                    ------------------------------------------------------------------------------
                                                      September 30        December 31           March 31                June 30
Healthcare Exchange revenue                         $           -       $           -       $           -         $      50,944
Healthcare Exchange gross profit (loss)                         -                   -                   -               (33,584)
Contract Programming revenue                              178,019              47,812              46,385                36,253
Contract Programming gross profit                          42,217               1,160               9,466                 9,954
Product development costs                              (1,057,426)         (1,238,497)         (1,227,696)           (1,573,894)
General and administrative expenses                    (2,141,486)           (490,072)           (640,279)             (579,134)
Loss from operations                                   (3,156,695)         (1,727,409)         (1,858,509)           (2,176,658)
Total other income (expense)                              (50,935)             79,980              11,268               (35,797)
Net loss                                               (3,207,631)         (1,647,429)         (1,847,241)           (2,212,454)
Preferred stock dividends in arrears                     (886,142)                  -                   -                     -
Net loss applicable to common stockholders             (4,093,773)         (1,647,429)          (1,847,241)           (2,212,454)
Basic and diluted net loss per share                $       (0.07)      $       (0.03)      $        (0.03)       $        (0.04)
Shares used in per share calculation                   56,695,586          59,329,251          59,358,090            59,383,954
----------------------------------------------------------------------------------------------------------------------------------








                 PART II INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.  Other Expenses of Issuance and Distribution.

     The  following  table  sets forth the costs and  expenses  payable by us in
connection with the issuance and distribution of the securities being registered
hereunder.  No expenses  will be borne by the selling  stockholders.  All of the
amounts shown are estimates,  except for the SEC  registration  fee and the NASD
fee.

       SEC registration fee                             $        671
       Printing and engraving expenses                  $          *
       Accounting fees and expenses                     $          *
       Legal fees and expenses                          $          *
       Transfer agent and registrar fees                $          *
       Miscellaneous                                    $          *

            Total                                       $          *

* To be filed by amendment.

Item 14.  Indemnification of Directors and Officers.

     Our  certificate  of  incorporation   contains  provisions  eliminating  or
limiting  director  liability to us and our  stockholders  for monetary  damages
arising from acts or omissions in the capacity as a director.  The provisions do
not, however, eliminate the personal liability of a director for any breach of a
director's duty of loyalty to us or our stockholders,  for acts or omissions not
in good faith or which involve intentional  misconduct or a knowing violation of
law or for any transaction from which the director derived an improper  personal
benefit.  In addition,  these  provisions do not eliminate  personal  liability,
under a negligence  standard,  for violations of Delaware  statutory  provisions
concerning  unlawful  dividends  or  stock  repurchases  or  redemptions.   This
provision offers persons who serve on our board of directors  protection against
awards of monetary damages resulting from breaches of their duty of care, except
as discussed  above. As a result,  our ability or our  stockholders'  ability to
successfully  prosecute  an action  against a director  for breach of his or her
duty of care is limited. However, the provision does not affect the availability
of  equitable  remedies  such  as an  injunction  or  rescission  based  upon  a
director's breach of his duty of care.

     Our  certificate  of  incorporation  and bylaws also  provide  that we will
indemnify  our  directors  and  officers  to the  fullest  extent  permitted  by
applicable law, subject to limited  exceptions  against  liabilities  arising by
reason of their status or services as an officer or director.

Item 15.  Recent Sales of Unregistered Securities.

     In October 2002, we sold 4,125,000 shares of our common stock at a purchase
price of $1.00 per share to 17 accredited investors.  Net cash proceeds from the
offering were $3,884,567.  In connection with the private placement,  we engaged
Stonegate Securities, Inc. as placement agent who received a placement fee of 6%
on the gross proceeds  received from the sale of common stock placed by them and
a five year  warrant to purchase 10% of the common stock placed by them at $1.00
per share.  The  placement  of the common  stock was  exempt  from  registration
pursuant to pursuant to Rule 506 of Regulation D of the Securities Act.






     In July 2002, we received  short-term  unsecured financing in the form of a
convertible note of $1,000,000 from an accredited investor. The convertible note
bears  interest at 8% and is payable at the earlier of July 25, 2003 or when we,
in a private placement of common stock,  raise  $8,000,000.  All or a portion of
the  convertible  note may be converted into shares of common stock at the lower
of $1.00 per share,  the  subscription  share price of the October  2002 private
placement,  or, if further shares are offered at a lower price per share through
March 29,  2003,  at that  lower  price.  As  additional  consideration  for the
convertible note, we issued three warrants.  We issued to the lender one warrant
to purchase 100,000 shares of common stock. The lender received a second warrant
to purchase 100,000 shares of common stock that may only be exercisable if we do
not repay the  convertible  note  within 180 days of the  agreement.  The lender
received a third warrant to purchase  100,000 shares of common stock that may be
exercisable  if we do not  repay the  convertible  note  within  one year of the
agreement.  Each of the warrants  has an exercise  price of $1.00 or, if we sell
additional  shares in a financing  at a price less than $1.00 per share  through
March 29, 2003, at that lower price.  When, and if,  exercisable  the lender may
exercise these warrants  through July 25, 2009. The issuance of the  convertible
note was exempt from  registration  pursuant to Rule 506 of  Regulation D of the
Securities Act.

     During the period of May 2002 and September 2002, we issued an aggregate of
38,600 shares of our common stock to certain  service  providers in exchange for
their services valued at $78,700.  No commissions were paid. The issuance of the
shares was made pursuant to Section 4(2) of the Securities Act.

     During  the period  between  January  9, 2002 and March 28,  2002,  we sold
1,232,585  shares of our common stock at a purchase  price of $2.25 per share to
25 accredited investors.  Pursuant to the terms of the private placement, in the
event  that we sold  shares  of  common  stock,  or  securities  exercisable  or
convertible  into common stock,  at a price less than $2.25 per share within one
year from the final closing, we would issue additional shares to these investors
in an amount  such that the overall  purchase  price will be equal to the lower,
subsequent  sales price.  As  previously  disclosed,  during  October  2002,  we
completed a private  placement of 4,125,000  shares of our common stock at $1.00
per share. As a result of the October 2002 private placement at $1.00 per share,
we issued 1,540,729 additional shares to these investors. Included in such total
was 277,778  shares issued to our chairman of the board who initially  purchased
222,222  shares of common  stock in the  January  2002  private  placement.  The
placement of the common stock was exempt from registration  pursuant to Rule 506
of Regulation D of the Securities Act.

     In August 2000, we sold a total of 3,333,334  shares of our common stock at
$3.00 per share to 22 accredited investors. We engaged Shattuck Hammond Partners
as placement agent, who received a commission of $318,000. The sales were exempt
from registration pursuant to Rule 506 of Regulation D of the Securities Act.

     During the period of  September  1999 to January  2000,  we sold a total of
1,086,145  shares of common stock for  aggregate  proceeds of  $3,712,348 to two
stockholders who are accredited  investors.  No commissions were paid. The sales
were  exempt  from  registration  pursuant  to Rule 506 of  Regulation  D of the
Securities Act.




Item 16.  Exhibits and Financial Statement Schedules.

     Unless  otherwise  noted,  the  following  exhibits  are  filed  with  this
registration statement.

         Exhibit
         Number   Description of Document

         3.1      Second   Amended   and   Restated Bylaws  of  the   Registrant
                  (incorporated  by  reference to Exhibit 3.3 to Amendment No. 1
                  to Registration Statement on Form S-18, Reg. No. 33-48666).

         3.2      Amendment  to  Second  Amended  and  Restated  Bylaws  of  the
                  Registrant  (incorporated  by  reference to Exhibit 3.3 of the
                  Registrant's  Annual Report on Form 10-KSB for the fiscal year
                  ended June 30, 1994).

         3.3      Amended  and  Restated  Certificate  of  Incorporation  of the
                  Registrant (incorporated by reference to Exhibit 3.3  of  Form
                  10-KSB for the fiscal year ended June 30, 1997).

         4.1      Amended   and   Restated   Certificate   of  Incorporation  of
                  Registrant, including Certificates of Designation with respect
                  to  Series  A,  Series B,  Series C,  Series D,  and  Series E
                  Preferred    Stock,    including    any   amendments   thereto
                  (incorporated  by  reference  to  Exhibit  4.1 to Registration
                  Statement on Form S-3, Reg. No. 33-86962).

         10.1     Form  of  Director   and   Executive  Officer  Indemnification
                  Agreement  (incorporated   by  reference  to Exhibit  10.19 to
                  Registration Statement on Form S-18, Reg. No. 33-48666).


         10.11+   1993  Stock  Option/Stock  Issuance  Plan   (incorporated   by
                  reference  to Exhibit 10.47 to Form 10-KSB for the fiscal year
                  ended June 30, 1994).

         10.12+   Stock  Option  Agreement,  dated  August 11, 1993, between the
                  Registrant and Russell J. Harrison (incorporated  by reference
                  to Exhibit 10.51 to Form 10-KSB for the fiscal year ended June
                  30, 1994).

         10.18    Note Payable between the Registrant  and the Negri  Foundation
                  dated December 24, 1996 (incorporated by reference to  Exhibit
                  10.60 to Form 10-QSB for the quarter ended December 31, 1996).

         10.19    Note  Payable between the Registrant and the Negri  Foundation
                  dated December 31, 1996  (incorporated by reference to Exhibit
                  10.61 to Form 10-QSB for the quarter ended December 31, 1996).

         10.20    Note  Payable  between  the Registrant and the Max Negri Trust
                  dated December 31, 1996 (incorporated  by reference to Exhibit
                  10.62 to Form 10-QSB for the quarter ended December 31, 1996).

         10.21    Note  Payable  between   the   Registrant   and   the  Cameron
                  Foundation  dated December 31, 1996 (incorporated by reference
                  to Exhibit 10.63 to Form 10-QSB for the quarter ended December
                  31, 1996).




         10.22    Note Payable between the Registrant and the James W.  Cameron,
                  Jr., as an  individual, dated  December 31, 1996 (incorporated
                  by  reference  to Exhibit 10.64 to Form 10-QSB for the quarter
                  ended December 31, 1996).

         10.23    Note Payable between  the  Registrant  and  James W.  Cameron,
                  Jr., as an  individual, dated  January 16,  1997 (incorporated
                  by  reference  to Exhibit 10.65 to Form 10-QSB for the quarter
                  ended December 31, 1996).

         10.24    Note Payable between the Registrant and James W. Cameron, Jr.,
                  as  an  individual,  dated  January  31, 1997 (incorporated by
                  reference  to  Exhibit  10.66  to  Form 10-QSB for the quarter
                  ended December 31, 1996).

         10.25    Note Payable between the Registrant and James W. Cameron, Jr.,
                  as  an  individual,  dated February 7, 1997  (incorporated  by
                  reference  to  Exhibit  10.67  to  Form 10-QSB for the quarter
                  ended December 31, 1996).

         10.29    Note Payable between the Registrant and James W. Cameron, Jr.,
                  dated  April  21, 1997  (incorporated  by reference to Exhibit
                  10.29 to Form 10-KSB for the year ended June 30, 1997).

         10.33+   Alternative Technology Resources,  Inc. 1997 Stock Option Plan
                  (incorporated by reference to Exhibit 10.33 to Form 10-KSB for
                  the year ended June 30, 1998).

         10.34    Memorandum  regarding  rent  reduction  on  that Lease between
                  James W. Cameron, Jr., and the Registrant, dated July 15, 1998
                  (incorporated by reference to Exhibit 10.34 to Form 10-KSB for
                  the year ended June 30, 1998).

         10.35    Fourth  Addendum  to  Lease  between  James  W. Cameron,  Jr.,
                  and the Registrant, effective January 1, 1999 (incorporated by
                  reference  to  Exhibit  10.35  to  Form 10-QSB for the quarter
                  ended March 31, 1999).

         10.36    Fifth Addendum to Lease between James W. Cameron, Jr., and the
                  Registrant,  effective   January  1,  2000  (incorporated   by
                  reference  to  Exhibit 10.36 to Form 10-KSB for the year ended
                  June 30, 2000).

         10.37    Healtheon  Customer  Agreement  effective  September  16, 1999
                  (incorporated  by  reference to Exhibit 10.37 to Form 10-K for
                  the year ended June 30, 2001).

         10.38    Employment Agreement with Jeffrey McCormick.  (Incorporated by
                  reference  to Exhibit 10.38 to Form 10-K for year end June 30,
                   2001.)

         10.40    Master  Agreement for Computer  Software  Products and Related
                  Services between Alternative  Technology  Resources,  Inc. and
                  Resource Information Management Systems, Inc. (incorporated by
                  reference  to  Exhibit  10.40  to  Form 10-Q for the quarterly
                  period ended December 31, 2000).

         23.1.1   Consent of Ernst & Young LLP, Independent Auditors

         23.1.2   Consent of Bartel Eng & Schroder (contained in Exhibit 5.1)*

* To be filed by amendment.
+ Indicates a management contract or compensatory plan or arrangement as
  required by Item 13(a).





Item 17.  Undertakings.

The undersigned Registrant hereby undertakes:

     (1) To file,  during any period in which  offers or sales are being made, a
post-effective amendment to this registration statement:

          (i) To include  any  prospectus  required  by section  10(a)(3) of the
Securities Act of 1933;

          (ii) To reflect in the  prospectus  any facts or events  arising after
the effective date of the  registration  statement  (or the  most  recent  post-
effective amendment thereof) which,  individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of  securities
offered (if the total dollar value of securities offered  would not exceed  that
which was  registered)  and  any  deviation  from  the  low  or  high end of the
estimated  maximum offering range  may be  reflected  in the form of  prospectus
filed with the  Commission pursuant  to Rule  424(b) if, in the  aggregate,  the
changes in volume and  price  represent no more than a 20% change in the maximum
aggregate offering price set  forth in the  "Calculation  of  Registration  Fee"
table in the effective registration statement.

          (iii) To include any material  information with respect to the plan of
distribution  not  previously  disclosed  in  the registration  statement or any
material change to such information in the registration statement.

     (2) That, for the purpose of determining any liability under the Securities
Act of 1933,  each  such  post-effective  amendment  shall be deemed to be a new
registration  statement  relating to the  securities  offered  therein,  and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof.

     (3) To remove from registration by means of a post-effective  amendment any
of the securities  being registered that remain unsold at the termination of the
offering.

     (4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the  registrant  pursuant  to  the  foregoing  provisions,   or  otherwise,  the
registrant  has been advised that in the opinion of the  Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such  liabilities  (other than the payment by the registrant of expenses
incurred or paid by a director,  officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

     (5) For purposes of determining  any liability  under the Securities Act of
1933, the information  omitted form the form of prospectus filed as part of this
registration  statement in reliance  up[on Rule 430A and  contained in a form of
prospectus  filed by the registrant  pursuant to Rule 424(b)(1) or (4) or 497(h)
under  the  Securities  Act  shall  be  deemed  to be part of this  registration
statement as of the time it was declared effective.




     (6) For the purpose of determining  any liability  under the Securities Act
of 1933, each post-effective  amendment that contains a form or prospectus shall
be deemed to be a new registration  statement relating to the securities offered
therein,  and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.




                                   SIGNATURES

     Pursuant to the  requirements of the Securities Act of 1933, the registrant
has duly caused this  registration  statement  to be signed on its behalf by the
undersigned,  thereunder duly authorized, in Sacramento, California, on November
19, 2002.

                                  ALTERNATIVE TECHNOLOGY RESOURCES, INC.,
                                  a Delaware Corporation



                                  /S/ JEFFREY S. MCCORMICK
                                  ---------------------------------------
                                  Jeffrey S. McCormick,
                                  Chief Executive Officer

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
registration  statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.

     Known All  Persons  By These  Present,  that each  person  whose  signature
appears below appoints Jeffrey S. McCormick or James W. Cameron, Jr. as his true
and lawful attorney-in-fact and agent, with full power of substitution,  for him
and  in  his  name,   place  and  stead,   to  sign  any  amendment   (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities  and Exchange  Commission,  granting unto said  attorney-in-fact  and
agent,  full power and  authority to do and perform each and every act and thing
requisite  and  necessary to be done in  connection  therewith,  as fully to all
intents and purposes as he may do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or any of them, or of his substitutes,  may
lawfully do or cause to be done by virtue hereof.


Date: November 19, 2002           /S/ JEFFREY S. MCCORMICK
      -----------------           ----------------------------------------------
                                  Jeffrey S. McCormick,
                                  Chief Executive Officer
                                  (Principal Executive Officer)


Date: November 18, 2002           /S/ JAMES W. CAMERON, JR.
      -----------------           ----------------------------------------------
                                  James W. Cameron, Jr.,
                                  Chairman of the Board, Chief Financial Officer
                                  (Principal Accounting and Financial Officer)


Date: November 19, 2002           /S/ EDWARD L. LAMMERDING
      -----------------           ----------------------------------------------
                                  Edward L. Lammerding,
                                  Director





                                                                  EXHIBIT 23.1.1


               Consent of Ernst & Young LLP, Independent Auditors


We consent to the  reference to our firm under the caption  "Experts" and to the
use of our report dated August 16, 2002 in the Registration Statement (Form S-1)
and the related  Prospectus of Alternative  Technology  Resources,  Inc. for the
registration of 8,097,315 shares of its common stock.

                                                 /s/ ERNST & YOUNG LLP

Sacramento, California
November 14, 2002