UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

        FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
                                       OR
  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF
  1934


                          Commission File No.: 0-27878

                           MCGLEN INTERNET GROUP, INC.
                 (Name of small business issuer in its charter)

                               Delaware 13-3779546
                   (State or other jurisdiction (IRS Employer
              of incorporation or organization) Identification No.)

               3002 Dow Avenue Suite 114 Tustin, California 92780
               (Address of principal executive offices)(Zip code)

                    Issuer's telephone number: (714) 838-1240

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:


                               Title of each class
                               -------------------


                          Common Stock, $.03 par value

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the  registrant  was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes No

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

The issuer's revenues for the year ended December 31, 1999 were $27,494,000.

The aggregate market value of shares of Common Stock held by  non-affiliates  of
the registrant as reported by the NASDAQ  SmallCap  Market on April 12, 2000 was
$79,594,170  (computed on the basis of $2.50 per share,  April 13, 2000 the last
reported  sale  price for  shares of the  Company's  Common  Stock on the NASDAQ
SmallCap Market as of such date).

As of April 12, 2000, the registrant had 31,837,668 outstanding shares of Common
Stock.


<PAGE>

<TABLE>
<CAPTION>
                                Table of Contents


<S>                                                                                                              <C>
     Forward Looking Statements...................................................................................4
     --------------------------

PART I............................................................................................................4
------

   ITEM 1.  BUSINESS..............................................................................................4
   -----------------
     General......................................................................................................4
     -------
     Business.....................................................................................................4
     --------
     Discontinued Operations......................................................................................5
     -----------------------
     Industry Background..........................................................................................5
     -------------------
     Strategy.....................................................................................................5
     --------
     Websites.....................................................................................................5
     --------
     Products, Services, And Expansion............................................................................6
     ---------------------------------
     Marketing....................................................................................................6
     ---------
     Customer Service.............................................................................................8
     ----------------
     Warehousing, Fulfillment And Distribution....................................................................8
     -----------------------------------------
     Technology...................................................................................................8
     ----------
     Competition..................................................................................................8
     -----------
     Sales Tax....................................................................................................9
     ---------
     Government Regulation........................................................................................9
     ---------------------
     Employees...................................................................................................10
     ---------
     Research and Development....................................................................................10
     ------------------------
     Backlog.....................................................................................................10
     -------
     We may be unable to manage our growth.......................................................................13
     -------------------------------------
     The electronic commerce market is intensely competitive.....................................................14
     -------------------------------------------------------
     The Company's stock has a small amount of public float and low trading volume...............................17
     -----------------------------------------------------------------------------
     Shipping and postage could increase our operating expenses..................................................17
     ----------------------------------------------------------
   ITEM 2.  DESCRIPTION OF PROPERTY..............................................................................18
   --------------------------------
   ITEM 3.  LEGAL PROCEEDINGS....................................................................................18
   --------------------------
   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................................18
   ------------------------------------------------------------

                                       3
<PAGE>

PART II..........................................................................................................18
-------

   ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.............................................18
   -----------------------------------------------------------------
   ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................19
   ---------------------------------------------------------------------------------------------
     Overview....................................................................................................19
     --------
     Results of Operations.......................................................................................20
     ---------------------
     Liquidity and Capital Resources.............................................................................21
     -------------------------------
     Year 2000...................................................................................................23
     ---------
     Inflation...................................................................................................24
     ---------
   ITEM 7. FINANCIAL STATEMENTS..................................................................................24
   ----------------------------
   ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE..................24
   --------------------------------------------------------------------------------------------

PART III.........................................................................................................24
--------

   ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE
   ----------------------------------------------------------------------------------------------------------
   EXCHANGE ACT..................................................................................................24
   -------------
     (a) Information Relating to Executive Officers and Directors................................................24
     ------------------------------------------------------------
     (b) Section 16(a) Reporting Delinquencies...................................................................26
     -----------------------------------------
   ITEM 10. EXECUTIVE COMPENSATION...............................................................................26
   -------------------------------
     (d)  Executive Officer Employment Contracts.................................................................27
     -------------------------------------------
   ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......................................27
   -----------------------------------------------------------------------
   ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................................................28
   -------------------------------------------------------
     Acquisition of AMT..........................................................................................28
     ------------------
     Reverse Acquisition (Merger) with Mcglen Micro, Inc.........................................................28
     ----------------------------------------------------
     Mackenzie Shea, Inc.........................................................................................28
     --------------------
     Convertible Notes...........................................................................................28
     -----------------
     Finance Transaction with Synnex Information Technologies, Inc...............................................29
     --------------------------------------------------------------
     Brokers Fees for the Synnex Transaction.....................................................................29
     ---------------------------------------
     Pre-Merger Mcglen Financings................................................................................29
     ----------------------------
     Pre-Merger Adrenalin Financing by Escaldade.................................................................29
     -------------------------------------------
   ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.....................................................................30
   -----------------------------------------

SIGNATURES.......................................................................................................32
----------


Deferred.........................................................................................................39
--------

     Pre-Merger Mcglen Financings................................................................................46
     ----------------------------
     Pre-Reverse Acquisition (Merger) Adrenalin Financing........................................................46
     ----------------------------------------------------

</TABLE>



<PAGE>


Forward Looking Statements

This  Annual  Report  on Form  10-K and the  documents  incorporated  herein  by
reference  contain  forward-looking  statements  based on current  expectations,
estimates  and  projections  about  Mcglen  Internet  Group,   Inc.'s  industry,
management's  beliefs and certain  assumptions made by management.  When used in
this  report  and  elsewhere  by  management,  from  time  to  time,  the  words
"believes,"  "plans,"  "estimates,"   "intends,"   "anticipates,"  "seeks,"  and
"expects"  and similar  expressions  are  intended  to identify  forward-looking
statements.  These  forward-looking  statements  are not  guarantees  of  future
performance  and are  subject  to  certain  risks  and  uncertainties  that  are
difficult to predict.  Accordingly,  actual results may differ  materially  from
those  anticipated  or  expressed  in  such  statements.   Potential  risks  and
uncertainties  include,  among others,  those set forth herein under "Additional
Factors That May Affect Future Results."  Particular attention should be paid to
the  cautionary  statements  involving  Mcglen  Internet  Group,  Inc.'s limited
operating  history,  anticipated  losses,  unpredictability  of future revenues,
potential  fluctuations  in  operating  results,   systems  failures,   business
interruptions,  capacity constraints, systems development, management of growth,
the  intensely  competitive  nature  of the  electronic  commerce  industry  and
reliance on third parties,  manufacturers,  distributors and suppliers.  Readers
are cautioned  not to place undue  reliance on the  forward-looking  statements,
which speak only as of the date made. Except as required by law, Mcglen Internet
Group, Inc.  undertakes no obligation to update any  forward-looking  statement,
whether as a result of new  information,  future events or  otherwise.  Readers,
however,  should  carefully  review the  factors  set forth in other  reports or
documents  that Mcglen  Internet  Group,  Inc.  files from time to time with the
Securities and Exchange Commission ("SEC").

                                     PART I

ITEM 1.  BUSINESS

General

As used herein,  "Mcglen",  "we",  "us", "the Company" and "our" refer to Mcglen
Internet Group, Inc. and our subsidiaries  including Western Technologies,  Inc.
("Western"),  Mcglen Micro,  Inc., and AMT  Components,  Inc. unless the context
requires   otherwise.   Western  is  the   operating   subsidiary  of  Adrenalin
Interactive, Inc., see paragraph immediately below and "Discontinued Operations"
below.

We were incorporated in Delaware in May 1994. In March 1995, we changed our name
to  Wanderlust  Interactive,  Inc.,  and in May  1998,  we  changed  our name to
Adrenalin  Interactive,  Inc.  On  December  2,  1999,  we  completed  a reverse
acquisition  with Mcglen Micro,  Inc. in which the stockholders of Mcglen Micro,
Inc. acquired control of the Company through a reverse acquisition.  As a result
of the acquisition, each share of Mcglen Micro, Inc. was converted into 0.988961
shares of the  Company,  with  approximately  25,485,527  shares being issued to
Mcglen  shareholders.  On  December  17,  1999,  we  changed  our name to Mcglen
Internet Group, Inc., and changed our ticker symbol listed under NASDAQ SmallCap
System to MIGS.

Business

Mcglen Internet Group, Inc. is an Internet operating company focused on creating
multiple on-line business divisions targeting specific  business-to-business and
business-to-consumer markets. Our centralized technology backbone and operations
infrastructure  allows us to rapidly create focused on-line business  divisions,
operate at low overhead  cost,  and maximize  return on  investment  by creating
synergy among our business divisions. Our centralized operations division, which
includes call center, sourcing, warehousing,  fulfillment,  accounting, business
development, and information technology,  supports order processing,  logistics,
customer service,  financial transactions,  and core technology for our business
divisions are located in Tustin,  California. Our business divisions may include
sales, marketing, content management, product management, and service management
teams  to  focus on  building  unique  customer  experiences  for each  business
division.

We currently  offer more than 150,000  computer  products on our three operating
on-line retail websites:  Mcglen.com,  AccessMicro.com,  and  Techsumer.com.  We
offer   different   mixtures  of  computing   technology,   entertainment,   and
communications  products on these three websites  based on the different  target
market  segment's  buying  patterns.  Mcglen.com,  launched  in  May  1996,  and
AccessMicro.com,  launched in June 1996, both have achieved  Customer  Certified
Gold Merchant status on BizRate.com, an independent on-line retail rating guide.
Gomez  Advisor,  an  independent   business  rating  guide,   consistently  rank
Mcglen.com  and  Accessmicro.com  among  the best  sites to  purchase  computing

                                       4
<PAGE>

products on the web in their Internet  Computer Store  Scorecard.  Techsumer.com
was launched in November  1999.  Net sales  increased from $10.9 million for the
year ended  December 31, 1998 to $27.5  million for the year ended  December 31,
1999 with the Company's  acquisition  of  AccessMicro.com  in March 1999 and the
launch of Techsumer.com in November 1999.

The Company operates in one industry segment.

Discontinued Operations

In connection  with the reverse  acquisition of Adrenalin  Interactive,  Inc. in
December  1999,  the Board of  Directors  of  Mcglen  voted to  discontinue  the
operations  of Western  Technologies,  Inc,  Adrenalin's  operating  subsidiary.
Western  principally  developed video games for use with Sony, Nintendo and Sega
video game consoles  pursuant to funded  contracts  with video game  developers,
entertainment  titles  for  PCs  and  electronic  toys  including   interactive,
Web-powered  toys that are refreshed  from a PC via the  Internet.  Western also
created interactive  television games for digital set-top boxes and published or
licensed PC games in 24  countries  and 15  languages.  The Company  anticipates
fulfilling two of the software development contract obligations  currently being
conducted by Western  during  April 2000.  Western has  requested  for two other
contracts  to be  terminated.  An  additional  contract  has  been  assigned  to
Western's  former Vice President of Operations for completion,  releasing Mcglen
from  any  further  contractual  liability.   However,  Mcglen  would  still  be
responsible  for any  product  liability  issues  that  may  arise  from the two
completed contracts.

Industry Background

The Internet  allows  millions of consumers and businesses to share  information
and conduct business  electronically.  International  Data  Corporation  ("IDC")
estimates  that the  worldwide  Internet  economy  will grow past $1 trillion in
2001, and reach $2.8 trillion by 2003. IDC also reports that the number of users
who make  purchases  over the Web will jump from 31 million in 1998 to more than
183 million in 2003.

The growth of Internet is dependent upon a number of factors, including:

o   Increased  install-base and usage of personal computers and Internet devices

o   Widely  available  and  affordable  access  to  the  Internet

o   Awareness  and acceptance  of  Internet  among  consumers  and  businesses

o   Increase  in the capability and availability of network infrastructure


Strategy

Our goal is to create and operate market  focused  on-line  businesses.  We will
continue to expand our existing  operating business divisions by enhancing brand
recognition, building awareness to our websites, and increasing the products and
services  offerings  provided on the  websites.  We intend to  capitalize on our
existing  technology  backbone and operations  infrastructure  by developing and
operating new businesses targeting specific market segments worldwide. We intend
to  create  synergy  among  our  operating  businesses  to  maximize  return  on
investment.

Websites

We believe our  market-focused  websites  provide unique  on-line  experience to
different  target  market  segments.   Based  on  the  target  market  segment's
expectations and requirements,  each of our websites' content design and product
mixture  maximizes  the  perceived  value of our  offerings.  Mcglen.com  offers
computing technology products,  targeting information technology  professionals.
Accessmicro.com   offers   computing   technology   products,   targeting  small
businesses.  Techsumer.com offers computing technology,  communication products,
and  entertainment  products,  targeting  technology  proficient  consumers.  We
believe ease of use is essential in any  successful  web site. To provide simple
and  convenient  purchasing  experience,  we  developed  key  features  for  our
operating websites. The key features for our websites include:

o    Browsing - We have  categorized  our current  offering of more than 150,000
     products  into product  groups,  categories,  and  subcategories.  Links to
     product  groups  and  categories  are  placed on each  page for  convenient
     "one-click"  access.  Special  sections are created for special  offers and
     promotional  products  to enhance  exposure  for hot  selling,  high margin
     products that we update daily.

                                       5
<PAGE>

o    Specialized  Browsing -  Conventional  categorization  system  assigns  one
     department,  category, and subcategory to each product. For certain product
     groups,  finding the desired  product under this  categorization  system is
     difficult.  We  developed  specialized  categorization  system for  certain
     product groups to minimize the search effort.
o    Searching  -  We  developed   general  keyword  search,   specific  product
     identification  number search,  and  interactive  guided criteria search to
     facilitate precise product selection with minimal effort.
o    Product Information - We provide detailed technical information for many of
     the  products  we  offer.   Manufacturer   technical  support  and  contact
     information is also provided.
o    Custom  Configuration - We developed a configuration engine that allows our
     customers  to  interactively  configure  a personal  computer  based on the
     customer's specification.
o    Customizable  display  format  -  To  facilitate  the  purchasing  decision
     process,  visitors can customize the display  format,  sorting  order,  and
     selection criteria for product listings.
o    Related  Products  Links - At each product  detail  page,  links to related
     categories  are  conveniently  placed  for  one-click  access  to  relevant
     products. Links to selected products' options and accessories are placed on
     the same page for easy access.
o    On-line  Account  and  Ordering  System - Our  on-line  ordering  engine is
     designed  for  intuitive  usage and minimal data entry for  first-time  and
     repeat customers.  Customers can create an on-line account as they make the
     purchase for the first time.  Each  subsequent  visit the customer  will be
     able to check  order  status,  review  past  orders,  and place new  orders
     without entering shipping, billing, and credit card information again.

Our  websites  also  incorporate  features  that allow us to  leverage  web site
traffic to generate additional revenue sources:

o    Advertising - Several  locations on each page of our websites are available
     for  advertisers  seeking  exposure to our targeted  audience  base.  These
     locations are also available for in-house promotions and  cross-promotional
     activities.
o    Manufacturer Stores - We offer manufacturers the promotional opportunity to
     create a "manufacturer store" within our websites.  Each manufacturer store
     is dedicated to one  manufacturer's  product  offerings.  Manufacturers can
     create  promotional  programs,  detailed  literature,  and enhanced product
     images to merchandise their products.

Products, Services, And Expansion

We intend to offer  additional  products and  services on our  existing  on-line
stores.  We intend to create  additional  on-line  stores for  different  market
segments.  We intend to expand into  Asia/Pacific  regions by forming  strategic
partnerships with established companies in the region.

Marketing

Our Marketing strategy is to promote and increase brand awareness of our current
storefronts,  including  AccessMicro.Com  (the  leading  marketplace  for  small
business),  Mcglen.Com  (the  leading  marketplace  for IT  professionals),  and
Techsumer.com  (the  leading  marketplace  for  technology  consumers).  Through
various  incentive  programs and excellent  customer  care and support,  we also
intend to build customer loyalty,  and encourage repeat  purchases.  We also use
innovative marketing tactics to acquire low cost, high quality customers.

We are executing this strategy through the following channels:

o   forming alliance with various shopping portals
o   actively  maintaining  opt-in customer  mailing list
o   broadening  product  offering o creating  repeat buyer incentive programs
o   building partnerships with manufacturers and vendors

                                       6
<PAGE>

We believe  that the use of  multiple  marketing  channels  reduces  reliance on
anyone  source of customers,  lowers  customer  acquisition  costs and maximizes
brand awareness.

         On-line and Traditional Advertising

We  have  implemented  a  broad-based,  multi-media  advertising  campaign  that
includes both on-line and traditional advertising,  designed to drive high-value
traffic to our Web site. Our current on-line advertising focuses on a variety of
Websites that have a proven ability to drive buyers to our site.  These partners
include Ziff Davis,  CNET, and various  smaller partner sites. In April 1999, we
began deploying various  brand-building print ads with great success. We plan to
increase  our brand  exposure by moving  part of our  acquisition  program  into
catalog printings.  We believe these traditional advertising venues can increase
awareness of our websites,  increase  customer  loyalty and repeat  customer buy
rates,  and promote the benefits of e-commerce  to a much broader  audience than
can be addressed on the Internet alone. Additionally, effort in direct marketing
in 1999 resulted in high levels of success through e-mail marketing as well as a
weekly  promotional  newsletter.  We are currently  working with our advertising
vendors to bring more content and choice to enhance existing mailers. At Mcglen,
we believe our newsletter to be very  effective in informing  subscribers of the
latest and the best products  availability  today. Our no-nonsense  approach has
met  with  great  success  and in 2000 we  intend  to  increase  our  effort  to
personalize these offerings based on specific customer shopping habits.

Clicktrade.com,  a site of  Link-Exchange,  is our primary  outsource partner to
support our affiliate program. Mcglen pays Link-Exchange on a per click basis to
affiliate  partners.  Our affiliate  program has been in place since early 1998,
and Mcglen  intends to increase  its  exposure in the  Link-Exchange  network to
align itself with additional affiliate partners in 2000.

         Merchandising

Mcglen  currently  hosts  three sites with  product  compositions  ranging  from
computing,  entertainment,  and communication products. By utilizing these three
sites (www.Mcglen.com,  www.AccessMicro.com, and www.Techsumer.com),  Mcglen has
the ability to gear its marketing  campaigns to three different  segments of the
market--the consumer market, the SOHO market, and the IT Professionals market.

Our approach to merchandising  allows Mcglen to offer each segment of our target
audience an unique shopping experience;  therefore,  giving us the advantage of:
pricing flexibility, the ability to offer our customers only what is relevant to
their needs, focused cross-selling and up-selling of products, and the potential
of expanding our products and services to each one of these niche markets.

By utilizing  three  distinct  websites,  Mcglen is also able to tailor a unique
shopping  experience  for each  segment of its  target  audience.  For  example,
targeting IT professionals, Mcglen's Mcglen.com site offers a clean design, easy
access, together with a no-nonsense functionality that allows them to find their
desired products and purchase them in the shortest amount of time possible.

Because  each web site is  targeted  to a specific  audience,  Mcglen is able to
cross-sell and up-sell its products more effectively  than its competitors.  For
example, knowing that the customers from our AccessMicro.Com site is of the SOHO
market segment, we may up-sell a customer who is purchasing an ink-jet printer a
entry-level  laser printer  because speed of print jobs would be a major concern
with these customers.

Since  Mcglen  already has three  concentrated  customer  bases,  we are able to
expand our  services  to best  benefit  each  individual  market.  For  example,
Techsumer.com  offers and will  continue to expand its  offering of DVDs,  while
Mcglen.com  and  Accessmicro.com  will not carry this product line.  Mcglen will
continue to add products and services that will enhance,  rather than  fragment,
the shopping experience of each individual market segment.

These advantages are, of course,  in addition to the advantages Mcglen and other
e-tailers  already  enjoy over  traditional  retailers  such as: the  ability to
instantly change prices when our costs change,  a virtually  unlimited amount of
display and shelf  space,  and the ability of offer our  customers  much greater
access to product information.

                                       7
<PAGE>

Customer Service

We believe that our ability to establish  and maintain  long-term  relationships
with our customers,  and to encourage  repeat visits and purchases  depends,  in
part, on the strength of our customer support and service  operations as well as
our staff. We seek to achieve frequent  automated e-mail  communication with our
customers to continually  improve  customer service for our stores and services.
We offer  toll-free  phone  numbers and e-mail  addresses  for sales,  technical
support,  return merchandise,  and general customer service. We will continue to
acquire new tools and technology to improve customer satisfaction.

Warehousing, Fulfillment And Distribution

We  obtain  our   products   from  a  network  of   distributors,   wholesalers,
manufacturers  and software  publishers.  We carry a limited  amount of our most
popular products in inventory. A substantial amount of products that we carry in
inventory is purchased and shipped "on demand" (i.e.,  after we receive  orders,
we purchase  products required to fill orders  received.).  We "cross dock" on a
daily basis (i.e., receive products from vendors and ship those same products to
customers  the same day).  We carry  approximately  4 days worth of inventory in
house.  We also  rely  on our  distributors  and  wholesalers  to ship  products
directly to our customers. Our distribution partners, such as Ingram Micro, Tech
Data, and Synnex  Technologies,  have multiple  distribution  centers throughout
United States and can fulfill a majority of in stock  products  within 24 hours.
We  have  established  strategic   partnerships  with  manufacturers  to  custom
configure personal computers based on our customer's  requirement,  and ship the
configured system directly to our customers.

Technology

Our site management,  search,  customer interaction,  transaction processing and
fulfillment systems consist of a combination of our own proprietary technologies
and third-party technology. We plan to enhance the capability and scalability of
our systems  through  acquisition of new third-party  technologies  and in-house
development.  The software applications we use have the capability for accepting
and  verifying   orders,   managing  orders,   creating   customer   interaction
instructions,  automatically selecting fulfillment methods,  assigning inventory
to customer  orders,  managing  shipment of  products  to  customers,  recording
tracking  numbers,  and  authorizing  and  charging  customer  credit cards with
address verification.

The  hosting of our Web  servers is  subcontracted  to an  Internet  data center
specialist,  Exodus  Communications,  Inc.  Exodus  Communications,  Inc. has an
extensive  national  network  backbone with  redundant  Internet  connections to
multiple Internet access points, a secure physical environment,  climate control
and redundant power supply. Exodus provides us access to the facility 24 hours a
day,  seven days a week.  Exodus also  monitors  our Web servers 24 hours a day,
seven days a week.

We have acquired third party  technology to track customer  buying  patterns and
make additional purchase recommendations.  We are in the process of implementing
this technology.

Competition

Although  the  electronic  commerce  industry  is still in its  infancy,  it has
matured  substantially in recent years as witnessed by the  consolidation of its
major players.  Furthermore,  we have seen competition arise from  manufacturers
and  suppliers  who have not  traditionally  sold  their  products  through  the
Internet. This has resulted in Mcglen Internet Group being wedged in between the
large,   market-share  dominating,   razor-thin  profit  margin,   money-loosing
"e-giants" and the small, low cost, high profit margin, mom-and-pop "e-shops."

We  currently   compete  with  a  variety  of  companies   that  sell  computer,
electronics,  and communication  products to consumers and businesses  through a
variety of mediums. These companies are larger and have more financial resources
than we do and include:

o   Traditional  catalog-based  merchants  that  have  developed  a  significant
    electronic  commerce offering,  such as CDW Computers  Centers,  Inc., Micro
    Warehouse,  Inc., Insight  Enterprises,  Inc., Multiple Zones International,
    Inc., and Creative Computers, Inc.;


                                       8
<PAGE>

o    Companies with  electronic  commerce sites such as Beyond.com  Corporation,
     Buy.com Inc.,  Outpost.Com,  Dell Computer  Corporation and NECX Office and
     Personal  Technology  Center (in which  Gateway  2000,  Inc. has a minority
     stake), and electronic software distributors such as Digital River, Inc.;
o    Companies  offering Internet  auctions,  such as ONSALE,  Inc., uBid, Inc.,
     Amazon.com,  Inc., Yahoo!  Inc.,  Internet Shopping Network,  Inc. and eBay
     Inc.;
o    Companies  whose primary  business is not on-line  retailing but who derive
     significant  revenue from electronic  commerce,  including  America Online,
     Inc., Yahoo! Inc. and QVC, Inc.;
o    Traditional  retailers of personal computer products such as CompUSA,  Inc.
     and Computer City;
o    Manufacturers such as Dell Computer  Corporation and Gateway 2000, Inc. who
     sell directly to the consumer via the Internet;
o    Mass  merchandisers  such  as  Wal-Mart  Stores,   Inc.,  Costco  Wholesale
     Corporation and Best Buy Co., Inc. that primarily sell through  traditional
     retail channels but have also developed an Internet presence; and
o    Office product  retailers such as Office Depot Inc. and Staples,  Inc. that
     primarily sell through  traditional  retail channels but also sell over the
     Internet.

We  believe  our the  principal  competitive  factors  affecting  our market are
competitive pricing, quality of customer service,  accuracy of technical product
information,  quality and ease of use of websites, breadth of product offerings,
brand  recognition,  and cost of  customer  acquisition.  We  believe we compete
adequately  in all these areas with the  exception of brand  recognition,  where
companies  with much greater  financial  and marketing  resources  have made the
establishment of a strong brand name much more costly and difficult. To maintain
and improve our competitive  position, we must continue to be competitive in all
the  areas  mentioned  above,  while  boosting  our  brand  recognition  without
significantly increasing our cost of customer acquisition.

Sales Tax

We currently  collect  sales tax on sales of products  delivered to residents in
the state of  California  and dropped  shipped from Ingram Micro to residents of
Massachusetts.  Various states have tried to impose,  on direct  marketers,  the
burden  of  collecting  sales  taxes on the sale of  products  shipped  to state
residents.  The United  States  Supreme  Court  affirmed its position that it is
unlawful  for  a  state  to  impose  sales  tax  collection  obligations  on  an
out-of-state  mail  order  company  whose only  contacts  with the state are the
distribution of catalogs and other  advertising  materials  through the mail and
subsequent  delivery of  purchased  goods from out of state  locations by parcel
post and interstate  common  carriers.  It is possible that  legislation  may be
passed to supersede the United State Supreme  Court's  decision or the Court may
change its  position.  Additionally,  it is uncertain  whether any new rules and
regulations  may be spawn,  in terms of sales  tax  collection  obligations,  to
govern electronic  commerce companies as the industry continues on its explosive
pace of growth. The imposition of new sales tax collection  obligations on us in
states  to which we ship  products  would  result in  additional  administrative
expenses  to us.  More  importantly,  though,  we  may  lose  one  of  our  most
competitive  advantages  in terms of a higher  total price of  products  for our
customers.

Government Regulation

We are subject,  both directly and indirectly,  to various laws and governmental
regulations  relating  to  our  business.   There  are  currently  few  laws  or
regulations  directly applicable to commercial on-line services or the Internet.
However, due to the increasing popularity and use of commercial on-line services
and the Internet,  it is possible that a number of laws and  regulations  may be
adopted.  These laws and  regulations may cover issues  including,  for example,
user privacy,  pricing and characteristics and quality of products and services.
Moreover,  the applicability to commercial  on-line services and the Internet of
existing laws governing issues including, for example, property ownership, libel
and personal privacy is uncertain and could expose us to substantial  liability.
Any new  legislation  or  regulation  or the  application  of existing  laws and
regulations  to the  Internet  could have a material  and adverse  effect on our
business.

In addition,  because our services and products are available  over the Internet
anywhere in the world, multiple  jurisdictions may claim that we are required to
qualify to do business as a foreign corporation in each of those  jurisdictions.
Our failure to qualify as a foreign  corporation in a jurisdiction  where we are
required  to do so could  subject us to taxes and  penalties  for the failure to
qualify. It is possible that state and foreign governments might also attempt to
regulate  our  transmissions  of  content  on our Web site or  prosecute  us for
violations  of their laws.  There can be no assurance  that  violations of local


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<PAGE>

laws will not be alleged or  charged  by state or foreign  governments,  that we
might not  unintentionally  violate  these  laws or that  these laws will not be
modified, or new laws enacted, in the future.

For a period of three years,  the  Internet  Tax Freedom Act (ITFA)  effectively
bars state or local  governments  from imposing taxes that would subject on-line
commerce transactions to taxation in multiple states. The ITFA does not prohibit
state or local  taxation on on-line  commerce  products  or services  that would
otherwise be taxed,  such as in states where a company has a physical  presence.
The ITFA also  provides for the  establishment  of a commission to study on-line
commerce  and to  recommend a fair method of taxing  Internet  transactions.  We
cannot be certain that upon  expiration  of the ITFA,  we will not be subject to
further taxation by state or local governments on the sale of merchandise.

Employees

As of December 31, 1999, Mcglen employed 84 people as full-time employees and 19
persons as part-time employees.  The Company considers its employee relations to
be good. None of the Company's  employees are represented by a labor union,  and
the  Company  has  experienced  no work  stoppages.  Competition  for  qualified
personnel  in the  electronic  commerce  industry is intense;  particularly  for
software development and other technically orientated positions.

Research and Development

During the years  ended  December  31,  1999 and 1998,  $91,000  and $63,000 was
expensed,  respectively for research and development related to our websites. As
of December 31, 1999, there was $229,000 capitalized software development costs,
net of accumulated amortization of $21,000.

Backlog

At December,  31, 1999 and 1998, the Company did not have a significant  backlog
of customer orders.


ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS


In addition to other information contained in this report, the following factors
could  affect  our  actual  results  and  could  cause  such  results  to differ
materially  from those achieved in the past or expressed in our  forward-looking
statements.

Risk Factors

Loss in 1999

The Company incurred loss of approximately  $3.5 million in 1999. As of December
31,  1999,  the  Company had a working  capital  deficit of  approximately  $1.6
million and  stockholders'  deficit of  approximately  $864,000.  The  Company's
auditors  have  included an  explanatory  paragraph in their report for the year
ended December 31, 1999,  indicating  there is substantial  doubt  regarding the
Company's ability to continue as a going concern. There can be no assurance that
the Company will be profitable in the future.  Furthermore,  future profits,  if
any,  will be  dependant  on many  factors,  including,  but not limited to, the
Company's  ability to return its operations to profitability in a timely manner,
the need  for  additional  financing,  and  competition  from  other  electronic
commerce  retailers.  If the  Company is not able to  significantly  improve its
operating  results,  it may be  required to cease or  substantially  curtail its
operations.

Need for Additional Financing

The Company's capital requirements associated with the expanding operations have
been and will  continue to be  substantial.  The Company  anticipates  (based on
management's  internal forecasts and assumptions related to operations) that its
existing  capital  resources  may not be sufficient to permit it to maintain and
expand operations and marketing.  The Company is,  therefore,  likely to require
additional  financing to execute its  business  plan.  However,  no assurance is
given that the Company will be able to obtain additional  financing when needed,

                                       10
<PAGE>

or  that,  if  available,  such  financing  will be on terms  acceptable  to the
Company. In any such financing, the interests of the Company's existing security
holders could be substantially diluted.

We have a limited on-line  operating  history that provides  little  information
with which to evaluate our electronic commerce business

As a result,  there is little  information on which to evaluate our business and
prospects as an  electronic  commerce  company.  An investor in our common stock
must consider the risks and difficulties that early-stage  companies  frequently
encounter in the new and rapidly  evolving market of electronic  commerce.  Such
risks for us include:

o    our evolving and unpredictable business model;
o    our competitors that have more established  electronic commerce operations;
o    our need and ability to manage growth;  and
o    the rapid  evolution of technology in electronic commerce.


To address these risks and uncertainties, we must take several steps, including:

o    improving our customer service and providing outstanding order fulfillment;
o    continuing  to develop  and  upgrade  our  technology,  infrastructure  and
     systems that support our on-line stores;
o    expanding the number of products and categories of  merchandise  offered at
     our on-line stores;
o    increasing our customer base to achieve  economies of scale;
o    attracting, retaining and motivating qualified personnel; and
o    making our on-line stores more user-friendly and appealing to customers.


We may not be successful in implementing  any of our strategies or in addressing
these risks and uncertainties.  Even if we accomplish these objectives, we still
may not be profitable in the future.

We incurred substantial losses from operations in 1999. As of December 31, 1999,
we had an  accumulated  deficit  of  approximately  $3.4  million.  We expect to
continue  to incur  substantial  net losses  through at least  2000.  We plan to
continue to enhance our brand name through  competitive  pricing,  marketing and
advertising programs, offer additional categories of merchandise for sale at our
on-line  stores and  improve  and enhance  our  technology,  infrastructure  and
systems.  These  initiatives  will likely result in operating  expenses that are
higher than current  operating  expenses.  We will need to generate  significant
revenues  to  achieve  profitability  and  to  maintain  profitability  if it is
achieved.  Although our revenues from  electronic  commerce have grown in recent
quarters,  such  growth  rates  may not be  sustainable  and we may  not  become
profitable in the future.

Our future revenues are  unpredictable  and our operating  results may fluctuate
significantly

Because  electronic  commerce is a new,  emerging market,  we cannot  accurately
forecast our revenues. Although our revenues from electronic commerce have grown
in recent quarters, an investor should not use these past results to predict our
future  results.  We base our current and future  expenditures  on our plans and
estimates of future revenues. Our expenses are, to a large degree, fixed. We may
be unable to adjust  spending in a timely  manner if we experience an unexpected
shortfall in our revenues.

We  expect  that  our  future   quarterly   operating   results  will  fluctuate
significantly because of many factors,  several of which we do not control. Such
factors include:


Our ability to satisfy  customers,  retain  existing  customers  and attract new
customers at a steady rate;

o    pricing competition,  including,  but not limited to, pricing which results
     in no gross margin on certain products;
o    our ability to acquire, price and market merchandise inventory such that we
     maintain gross margins in our existing business and in future product lines
     and markets;
o    the level of traffic at our Websites;


                                       11
<PAGE>

o    our ability to fulfill customer orders;
o    the  development,  announcement or  introduction of new sites,  services or
     products by us or by our competitors;
o    the amount the Internet is used generally and, more  specifically,  for the
     purchase of products such as those that we offer;
o    our ability to upgrade and  develop  our  systems  and  infrastructure  and
     attract new employees;
o    the occurrence of technical or communications failures, system downtime and
     Internet disruptions;
o    the amount and timing of operating costs and capital  expenditures  that we
     incur to expand our business;
o    governmental regulation and taxation policies;
o    disruptions in service by common carriers such as United Parcel Service;
o    unanticipated increases in shipping and transaction-processing costs; and
o    general  economic  conditions  and  economic  conditions  specific  to  the
     Internet, electronic commerce and the computer industry.

Our  revenues  depend on the number of times  customers  make  purchases  at our
on-line stores

The  amount of sales at our  on-line  stores  depends  in part on the  number of
customers,  the  competitive  pricing of our  products and the  availability  of
merchandise  from our  suppliers.  We  cannot  forecast  the  number  of  future
customers,  the  future  pricing  strategies  of our  competitors  or the future
availability of merchandise with any degree of certainty.  It is clear, however,
that if the number of customers does not increase, if our gross margins decrease
or if the amount of  merchandise  available to us decreases  substantially,  our
business will suffer.

Because of these and other factors, we believe that period-to-period comparisons
of our  historical  results of  operations  are only partial  indicators  of our
future performance.

Our operating results may fluctuate depending on the season

We expect  to  experience  fluctuations  in our  operating  results  because  of
seasonal  fluctuations  in  traditional  retail  patterns.  Retail  sales in the
traditional  retail  industry  tend to be  significantly  higher  in the  fourth
calendar quarter of each year than in the preceding three quarters.  As a result
of such  factors,  our  operating  results in one or more  future  quarters  may
fluctuate and, therefore, period-to-period comparisons of our historical results
of operations may not be good indicators of our future performance.

We will require additional capital in 2000

We  anticipate we will need to raise  additional  funds in 2000 in order to fund
our current  operations,  pursue sales growth  opportunities,  to develop new or
enhance  our  existing  websites,  to respond to  competitive  pressures,  or to
acquire other businesses.

If we raise  additional funds through the issuance of equity or convertible debt
securities,  the  percentage  ownership  of our  stockholders  will be  reduced,
stockholders  may experience  additional  dilution and these securities may have
powers,  preferences  and  rights  that are senior to those of the rights of our
common stock. We cannot be certain that  additional  financing will be available
on terms  favorable to us, if at all. If adequate funds are not available or not
available on acceptable terms, we may be unable to fund our operations,  promote
our websites, take advantage of unanticipated acquisition opportunities, develop
or enhance services or respond to competitive pressures.  Any inability to do so
would have a negative effect on our business,  revenues, financial condition and
results of operations.

We may suffer systems failures and business interruptions

Our  success,  especially  our ability to receive and fulfill  customer  orders,
largely depends on the efficient and uninterrupted operation of our computer and
telephone  communications systems. Almost all of our computer and communications
systems are located at a single leased facility in Tustin,  California.  We have
experienced temporary power failures and  telecommunications  failures from time
to time at this  facility.  Our  systems  are  vulnerable  to damage  from fire,
earthquakes,  floods, power loss,  telecommunications  failures,  break-ins, and
other  events.  Although we have  implemented  network  security  measures,  our

                                       12
<PAGE>

servers are vulnerable to computer  viruses,  physical or electronic  break-ins,
attempts by third parties deliberately to exceed the capacity of our systems and
similar  disruptions.  Any of these events could lead to interruptions or delays
in service, loss of data or the inability to accept and confirm customer orders.
Generally,  we do not have redundant systems or a formal disaster recovery plan,
and our coverage limits on our property and business interruption  insurance may
not be adequate to compensate us for losses that may occur.

We face risks of capacity constraints

Our revenues  depend to a significant  degree on the number of customers who use
our  on-line  stores  to  buy   merchandise.   We  depend  on  the  satisfactory
performance,     reliability     and     availability     of    our    Websites,
transaction-processing systems, network infrastructure, customer support center,
and delivery and shipping systems. These factors are critical to our reputation,
our ability to attract and retain  customers and to maintain  adequate  customer
service levels, and our operating  results.  Our on-line stores have experienced
periodic  temporary  capacity  constraints from time to time, and we continue to
experience capacity constraints at our customer support center primarily related
to inbound customer  telephone  inquiries.  Capacity  constraints  could prevent
customers  from gaining  access to our on-line  stores or our  customer  support
center for extended periods of time and decrease our ability to fulfill customer
orders  or  decrease  our  level of  customer  acquisition  or  retention.  Such
constraints  would also  decrease the appeal of our on-line  stores and decrease
our  sales.  If the  amount of  traffic,  the  number of orders or the amount of
traffic to our Websites  increases  substantially,  we may  experience  capacity
constraints  and  may  need  to  further  expand  and  upgrade  our  technology,
transaction-processing  systems and network infrastructure.  We may be unable to
sufficiently  predict the rate or timing of  increases in the use of our on-line
stores to enable us to quickly  upgrade our  systems to handle  such  increases.
Also, we may be unable to increase our capacity at our customer  support  center
to handle the amount of current or future customer telephone inquiries.

We face risks relating to systems development

We are heavily  dependent on our technological  systems,  some of which were not
designed  for  electronic  commerce  but have been  modified by us for that use.
at our  on-line
stores. We will also need to upgrade our systems to improve its scalability.  We
also plan to upgrade and expand our systems to add automated  customer  service,
proactive e-mail and customer  feedback  features to provide  enhanced  customer
service,   more  complete   customer  data  and  better   management   reporting
information.  These efforts will require us to integrate newly developed  and/or
purchased  technologies  into our existing  systems and to hire more engineering
and information  technology  personnel in the near future. If we are unable in a
timely manner to hire required personnel,  to add new software and hardware,  or
to develop and upgrade our  existing  systems to handle  increased  traffic,  we
could  experience  unanticipated  system  disruptions,  slower  response  times,
degraded  customer  service and a decrease  in our  ability to fulfill  customer
orders.

We may be unable to manage our growth

Since our formation in 1996,  we have  experienced  rapid  growth.  We intend to
pursue  the  continuation  of this  growth  through  the  following:  -  further
developing  our  marketing  programs;  -  hiring  additional  technical  support
personnel and operations personnel; and - investing in additional facilities and
systems.  However,  we cannot be certain that our growth rate will continue at a
rapid pace even if we effectively implement these programs and initiatives.  Our
ability to successfully implement our business plan in a rapidly evolving market
requires an effective planning and  growth-management  process. If we are unable
to manage our growth, we may not be able to implement our business plan, and our
business  may  suffer as a result.  We  expect  that we will have to expand  our
business to address  potential growth in the number of customers,  to expand our
product and service  offerings  and to pursue  other  market  opportunities.  We
expect  that we will  need to expand  existing  operations,  particularly  those
relating to  information  technology,  customer  service and  merchandising.  We
expect that we will also need to continue to improve our operational,  financial
and inventory systems,  procedures and controls,  and will need to expand, train
and  manage  our  workforce,  particularly  our  information  technology  staff.
Furthermore,  we  expect  that  we will  need to  continue  to  manage  multiple
relationships with various suppliers,  freight companies,  warehouse  operators,
Websites,  Internet  service  providers  and other third parties to keep control
over our strategic direction as the electronic commerce business evolves.

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<PAGE>

The electronic commerce market is intensely competitive

The  electronic  commerce  industry  is  new,  rapidly  evolving  and  intensely
competitive.  We may not be  successful  in  competing  against  our current and
future competitors. It is not difficult to enter the electronic commerce market,
and current and new competitors can launch new electronic  commerce  Websites at
relatively low cost. We expect competition in electronic commerce to increase as
retailers,   suppliers,   manufacturers   and  direct  marketers  who  have  not
traditionally  sold computer  products and consumer  goods directly to consumers
through the Internet enter this market  segment.  Furthermore,  competition  may
increase  to the extent  that  mergers  and  acquisitions  result in  electronic
commerce   companies   with  greater   market  share  and  revenues.   Increased
competition,  or failure by us to compete  successfully,  is likely to result in
price  reductions,  fewer  customer  orders,  reduced gross  margins,  increased
marketing costs, loss of market share, or any combination of these problems.

We believe that the principal competitive factors affecting our market are brand
name recognition,  competitive pricing,  quality of customer service, quality of
product  information,   breadth  of  merchandise  offerings,  cost  of  customer
acquisition,  and ease of use of electronic commerce sites.  Although we believe
we compete adequately with respect to such factors, we cannot assure you that we
can maintain our competitive position against current and potential competitors,
especially those with greater financial,  marketing, customer support, technical
and other  resources.  Recently  some  competitors  have begun  selling  certain
products at or near the purchase price paid by them to acquire the products.  To
improve our  competitive  position,  we are focused on  increasing  our level of
customer service and maintaining competitive pricing.

Current and potential  competitors have established or may establish cooperative
relationships among themselves or directly with suppliers to obtain exclusive or
semi-exclusive  sources of  merchandise.  New  competitors  or  alliances  among
competitors,  or among competitors and suppliers, may emerge and rapidly acquire
market share. For example,  Dell Computer Corporation and Amazon.com,  Inc. have
agreed to  provide  links from their  Websites  to new Web pages that  advertise
their respective  products.  Many of our current and potential  competitors have
significantly  greater  financial,  marketing,  customer support,  technical and
other resources than we do. As a result,  they may be able to secure merchandise
from  suppliers  on more  favorable  terms than we can,  and they may be able to
respond  more  quickly to changes in customer  preference  or to devote  greater
resources to the  development,  promotion and sale of their  merchandise than we
can.

We rely heavily on certain third parties,  including  Internet service providers
and telecommunications companies

Our  operations  depend on a  variety  of third  parties  for  Internet  access,
telecommunications, operating software, order fulfillment, merchandise delivery,
and credit card transaction processing. We have limited control over these third
parties, and we cannot assure you that we will be able to maintain  satisfactory
relationships with any of them on acceptable  commercial terms. We cannot assure
you that the quality of products and  services  that they provide will remain at
the levels needed to enable us to conduct our business effectively.

We rely on Internet  service  providers to connect our Websites to the Internet.
From time to time, we have experienced temporary interruptions in our Web site's
connections  and also  our  telecommunications  access.  Frequent  or  prolonged
interruptions of these Web site connection  services could result in significant
losses of revenues. Our Web site software depends on operating systems, database
and server software that were produced by and licensed from third parties.  From
time to time,  we have  discovered  errors and defects in such  software and, in
part,  we rely on these  third  parties to  correct  these  errors  and  defects
promptly.

Third-party  distribution centers fulfill a significant portion of the sales for
which we are responsible.  Accordingly, any service interruptions experienced by
these  distribution  centers as a result of labor  problems or  otherwise  could
disrupt  or  prevent  the  fulfillment  of some  of our  customers'  orders.  In
addition,  we use United Parcel Service as the primary  delivery service for our
products.  Our business would suffer if labor problems or other causes prevented
this  carrier  from  delivering  our  products  for  significant  time  periods.
Furthermore,  American  Credit Card  Processing is our sole  processor of credit
card  transactions.  If  computer  systems  failures or other  problems  were to
prevent  American  Credit  Card  Processing  from  processing  our  credit  card
transactions,  we would  experience  delays and business  disruptions.  Any such
delays or disruptions in customer service may damage our reputation or result in
loss of customers.

                                       14
<PAGE>

We rely heavily on certain manufacturers, distributors and suppliers

We rely heavily on certain  manufacturers,  distributors and suppliers to supply
us with merchandise for sale at our on-line stores. We cannot assure you that we
will be able to  develop  and  maintain  satisfactory  relationships  with  such
parties  on  acceptable  commercial  terms,  or that  we will be able to  obtain
sufficient  quality and quantities of merchandise at competitive  prices.  Also,
the  quality of service  provided by such  parties  may fall below the  standard
needed to enable us to conduct our business effectively. We acquire products for
sale both directly from  manufacturers and indirectly  through  distributors and
suppliers.  Purchases  from Ingram Micro Inc., a  distributor  of computers  and
related products,  accounted for approximately 35% of our aggregate  merchandise
purchases  for  1999.  We have  no  long-term  contracts  or  arrangements  with
manufacturers,   distributors  or  suppliers  that  guarantee   availability  of
merchandise  for  our  on-line  stores.   We  cannot  assure  you  that  current
manufacturers,  distributors  and suppliers will continue to sell merchandise to
us or otherwise  provide  merchandise  for sale by us or that we will be able to
establish new manufacturer,  distributor or supplier  relationships  that ensure
merchandise  will  be  available  for  sale by us.  We also  rely on many of our
distributors  and suppliers to ship  merchandise  to customers.  We have limited
control over the shipping  procedures of these  distributors and suppliers,  and
such shipments have often been subject to delays.

Most  merchandise  sold by us carries a warranty  from the  manufacturer  or the
supplier, and we are not obligated to accept merchandise returns

Nevertheless,  we in fact have accepted  returns from customers for which we did
not receive  reimbursements from our manufacturers or suppliers,  and the levels
of returned merchandise in the future might exceed our expectations. We may also
find that we have to accept  more  returns  in the future to  maintain  customer
satisfaction.

We face the risks of expanding into new services and business areas

To increase our revenues,  we will need to expand,  over time, our operations by
promoting new or complementary products or by expanding the breadth and depth of
our product or service offerings. If we expand our operations in this manner, we
will require significant additional development resources and such expansion may
strain  our  management,   financial  and  operational  resources.  We  may  not
significantly  benefit in such  expansion from the Mcglen brand name or from the
early entry advantage that we have experienced in the on-line computer  products
market. Gross margins attributable to new business areas may be lower than those
associated with our existing business activities.  We cannot assure you that our
expansions  into new product  categories,  on-line  sales formats or products or
service offerings will be timely or will generate enough revenue to offset their
costs. Also, any new product category or product or service offering that is not
favorably received by consumers could damage our brand reputation.

Electronic commerce poses security risks to us

A significant  barrier to electronic  commerce and  communications is the secure
transmission  of confidential  information  over public  networks.  We rely upon
encryption and authentication  technology licensed from third parties to provide
secure transmission of confidential  information.  We cannot assure you that our
security measures will prevent security breaches, and such breaches could expose
us to operating losses, litigation and possible liability.  Advances in computer
capabilities,  new  discoveries in the field of  cryptography or other events or
developments  may result in a compromise or breach of the algorithms that we use
to protect  customer  transaction  data. A party who is able to  circumvent  our
security  measures  could  steal   proprietary   information  or  interrupt  our
operations.  We may need to spend a great deal of money and use other  resources
to protect against the threat of such security breaches or to alleviate problems
caused by such breaches.  Concerns over the security of on-line transactions and
the privacy of users may also inhibit the growth of the Internet generally,  and
the World Wide Web in particular, especially as a means of conducting commercial
transactions.

We face risks relating to our inventory

We directly purchase the majority of the merchandise that we sell at our on-line
stores. We assume the inventory risks,  inventory  obsolescence  risks and price
erosion risks for products that we purchase directly. These risks are especially
significant  because much of the  merchandise we sell at our on-line stores (for
example, computer hardware,  software and consumer electronics) is characterized

                                       15
<PAGE>

by rapid  technological  change,  obsolescence and price erosion.  In the recent
past we have  recorded  charges  for  obsolete  inventory  and  have had to sell
certain  merchandise  at a discount or loss. It is impossible to determine  with
certainty  whether  an item  will  sell for more  than the  price we pay for it.
Because we rely heavily on purchased  inventory,  our success will depend on our
ability to liquidate our inventory  rapidly,  the ability of our buying staff to
purchase  inventory at attractive  prices relative to its resale value,  and our
ability to manage customer returns and the shrinkage  resulting from theft, loss
and misrecording of inventory.  If we are unsuccessful in any of these areas, we
may be forced to sell our inventory at a discount or loss.

We are dependent on intellectual property

Our performance and ability to compete are dependent to a significant  degree on
our proprietary technology. We rely on a combination of trademark, copyright and
trade secret laws to establish and protect our proprietary  rights.  Although we
have applied for trademark  protection for the Mcglen.com name, this name is not
currently a registered trademark in the United States. We cannot assure you that
we will be able to secure  significant  protection  for this  trademark  and our
other trademarks or service marks. It is possible that our competitors or others
will adopt  product or service names  similar to  "Mcglen.com"  or other service
marks or  trademarks  of ours,  thereby  impeding  our  ability  to build  brand
identity and possibly confusing customers.

Copyright  laws  protect  our  proprietary  software.  The  source  code for our
proprietary  software also is protected under  applicable  trade secret laws. We
cannot  assure you that the steps we take to protect our  software  will prevent
misappropriation of our technology or that the agreements we enter into for that
purpose will be  enforceable.  It might be possible for a third party to copy or
otherwise obtain and use our software or other proprietary  information  without
authorization,   or  to  develop  similar   software   independently.   Policing
unauthorized use of our technology is difficult, particularly because the global
nature of the Internet makes it difficult to control the ultimate destination or
security of software or other data transmitted.  The laws of other countries may
not adequately protect our intellectual property.

We  may,  in  the  future,   receive  notices  from  third  parties  that  claim
infringement  by  our  software  or  other  intellectual  property  used  in our
business.  While we are not  currently  subject  to any such  claim,  any future
claim, with or without merit,  could result in significant  litigation costs and
distraction  of  management  and require us to enter into costly and  burdensome
royalty and  licensing  agreements.  Such royalty and licensing  agreements,  if
required,  may  not be  available  on  terms  acceptable  to us,  or may  not be
available at all. In the future, we may also need to file lawsuits to defend the
validity of our intellectual  property rights and trade secrets, or to determine
the validity and scope of the  proprietary  rights of others.  Such  litigation,
whether  successful  or  unsuccessful,  could  result in  substantial  costs and
diversion of resources.

We also rely on a variety of  technologies  that we license from third  parties,
such as the database and Internet commerce server  applications that we license.
We cannot assure you that these third- party  technology  licenses will continue
to be  available to us on  commercially  reasonable  terms.  If we lose any such
licenses,  or if we are unable to  maintain  or obtain  upgrades to any of these
licenses,  it could delay  completion of our proprietary  software  enhancements
until  equivalent   technology  is  identified,   licensed  or  developed,   and
integrated.

We are  vulnerable  to the rapid  evolution of  electronic  commerce and related
technology

The Internet and the electronic  commerce  industry are  characterized  by rapid
technological change,  changes in user and customer  requirements,  frequent new
service or product introductions  embodying new technologies,  and the emergence
of new industry  standards and  practices.  Changes in the Internet,  electronic
commerce and the related  technology  could  render our Web site and  technology
obsolete.  To remain  competitive,  we must  continue to enhance and improve the
customer service features, responsiveness and functionality of our Web site. Our
success in  achieving  these goals  depends on our ability to develop or license
new  technologies  and respond  promptly and  cost-effectively  to technological
advances and emerging  industry  standards and practices.  The  development  and
licensing  of  technologies  relating to the Internet  and  electronic  commerce
involve  significant  technical,  financial  and business  risks.  We may not be
successful in developing,  licensing or integrating new technologies or promptly
adapting our Websites, proprietary technology and transaction-processing systems
to customer needs or emerging industry standards.

                                       16
<PAGE>

We are dependent on the continued development of the Internet infrastructure

We depend  almost  entirely on the Internet for revenue and the increased use of
the Internet for  commerce is essential  for our business to grow.  Accordingly,
our  success  depends  in  large  part  on  the  continued  development  of  the
infrastructure  for providing  Internet access and services.  The Internet could
lose its viability or its usage could decline due to many factors, including:

o        delays in the development of the Internet infrastructure;
o        power outages;
o        the adoption of new standards or protocols for the Internet; or
o        changes or increases in governmental regulation.

We cannot be certain that the infrastructure or complementary services necessary
to  maintain  the  Internet  as a useful and easy means of buying  goods will be
developed or that,  if they are  developed,  the  Internet  will remain a viable
marketing and sales channel for the types of products and services that we offer
at our on-line stores.

We face risks associated with maintaining the value of our domain names

We currently hold various Web domain names relating to our brand,  including the
Mcglen.com, Accessmicro.com and Techsumer.com domain names. We cannot assure you
that we will  be able to  acquire  or  maintain  relevant  domain  names  in all
jurisdictions  in which we conduct  business.  Governmental  agencies  and their
designees  generally  regulate the  acquisition and maintenance of domain names.
The regulation of domain names in the United States and in foreign  countries is
subject to change.  Governing bodies may establish additional top-level domains,
appoint additional domain name registrars or modify the requirements for holding
domain names. The relationship  between  regulations  governing domain names and
laws protecting trademarks and similar proprietary rights is unclear. Therefore,
we may be unable to prevent third parties from  acquiring  domain names that are
similar to,  infringe on or  otherwise  decrease  the value of our brand and our
trademarks and other proprietary rights.

Volatility in the United States stock market,  NASDAQ Small Cap market,  and the
technology sector may affect the market price of the common stock

The  technology  sector of the  United  States  stock  markets  has  experienced
substantial  volatility in recent periods.  Numerous conditions which impact the
technology  sector or the stock  market in general  could  adversely  affect the
market price of the Common Stock,  regardless of whether or not such  conditions
relate to or reflect upon our operating performance.

The Company's stock has a small amount of public float and low trading volume

George Lee, Mike Chen and Alex Chen influence all fundamental  matters affecting
Mcglen.  Currently,  Mr. Lee, Mr. Mike Chen, and Mr. Alex Chen control more than
70% of  the  total  combined  voting  power  of the  outstanding  Common  Stock.
Accordingly,  these  individuals  are  able to:  determine  the  outcome  of all
corporate  decisions,  effect all  corporate  transactions  (including  mergers,
consolidations  and the  sale of all or  substantially  all of our  assets),  or
prevent or cause a change in control in the  Company  without the consent of the
other holders of the Common Stock.

Shipping and postage could increase our operating expenses

We ship our products to customers generally by United Parcel Service,  and other
overnight  delivery and surface  services.  We generally  invoice  customers for
shipping  and  handling  charges.  If we are unable to pass on to our  customers
future  increases in the cost of  commercial  delivery  services,  our operating
results  will be  adversely  affected.  Additionally,  strikes or other  service
interruptions  by such shippers could adversely  affect our ability to market or
deliver product on a timely basis.  However, any increases in postal costs could
have an adverse effect on our operating results.

We are exposed to the risks of a global marketplace

A portion of our  products  are  either  produced  in, or have major  components
produced  in,  the  Asia  Pacific   region.   While  we  do  not  have  business
relationships  with companies  located in the region  directly,  we do engage in

                                       17
<PAGE>

U.S. Dollar  denominated  transactions  with U.S.  divisions and subsidiaries of
these companies.  As a result, we may be indirectly affected by risks associated
with international  events,  including economic and labor conditions,  political
instability,   tariffs  and  taxes,   availability   of  products  and  currency
fluctuations in the U.S. Dollar versus the regional currencies. Countries in the
Asia Pacific  region,  including  Japan,  have  experienced  weaknesses in their
currency,  banking and equity markets from time to time.  These weaknesses could
adversely affect the supply and price of products and components and ultimately,
our results of operations.


ITEM 2.  DESCRIPTION OF PROPERTY

Mcglen  leases  approximately  8,000 square feet of office  space and  warehouse
space in Tustin,  California  pursuant to two non-cancelable  leases expiring in
2003 and 2004. This facility  serves as Mcglen's  primary  distribution  center,
call center, and administrative offices.

Mcglen  also leases  approximately  13,140  square  feet of office  space in Los
Angeles,  California pursuant to a non-cancelable  lease expiring on January 31,
2002.  Approximately 50% of such office space is currently subleased to a former
Vice president of Western under a sub-lease  expiring in September 2000, with an
option for an  extension  for an  additional  six  months.  Mcglen is  currently
pursuing  subleasing the remaining office space due to the discontinuance of the
operations of Western.

The Company  believes that its present  facilities  are adequate for its current
needs.

ITEM 3.  LEGAL PROCEEDINGS

The Company is not presently a party to any pending litigation.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On November 11, 1999,  the Company's  shareholders  approved the merger  between
Adrenalin  Interactive,  Inc. and Mcglen  Micro,  Inc.  (the  "Merger")  and the
issuance  of shares to the  shareholders  of Mcglen  Micro,  Inc.  necessary  to
consummate the previously  announced  merger between  Adrenalin and Mcglen.  The
Meeting was noticed as an annual meeting of the Company's shareholders.

In addition,  the  shareholders  approved:  1) the election of George Lee,  Mike
Chen, Peter Janssens, and Calbert Lai to serve as Directors of the Company until
the merger was  consummated or until the next annual meting;  2) an amendment to
the  Company's  Articles of  Incorporation  increasing  the number of authorized
shares  from 20 million to 50 million  and  changing  the name of the Company to
the" Mcglen  Internet  Group,"  3)ratification  of past and future  issuances of
common stock to Escaldade under terms of an agreement entered into in July 1999;
4) approve the Company's  1999 Long-Term  Incentive Plan and the  reservation of
2.5 million shares for issuance thereunder.  All such information is included in
the  Company's  Proxy  Statement  for the annual meting which was field with the
Commission on October 6, 1999.

The items  before the  shareholders  at the annual  meeting were  approved  with
1,992,842  votes in favor and  2,491  against.  A quorum  was  established  with
approximately 57% of the total outstanding shares voting.


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Mcglen's  Common Stock is traded on the NASDAQ  SmallCap Market under the symbol
"MIGS".  In December  1999,  the Company  changed its ticker symbol from ADRN to
MIGS  as a  result  of the  consummation  of  the  reverse  acquisition  between
Adrenalin  Interactive,  Inc. and Mcglen Micro,  Inc. The  following  table sets
forth the  range of the high and low  closing  sales  prices  for the  Company's
Common  Stock,  for the periods  indicated,  as reported by the NASDAQ  SmallCap
Market:


                                       18
<PAGE>

<TABLE>
<CAPTION>
                                                                   Price Range of Common Stock*
                                                                   High                     Low
<S>                                                                <C>                     <C>
               Year Ended December 31, 1998
                                                                   $0.88                   $0.38
               First Quarter
                                                                    3.81                    0.63
               Second Quarter
                                                                    4.60                    1.85
               Third Quarter
                                                                    1.85                    1.50
               Fourth Quarter

               Year Ended December 31, 1999
                                                                   $3.70                   $0.75
               First Quarter
                                                                    8.50                    3.38
               Second Quarter
                                                                    4.63                    2.25
               Third Quarter
                                                                   15.00                    2.50
               Fourth Quarter
</TABLE>



* Figures  through  December 31, 1998 have been adjusted to reflect  Adrenalin's
3-for-1 reverse stock split effected on December 29, 1998.

On April 13, 2000,  the closing price of the Company's  Common Stock as reported
on the NASDAQ SmallCap Market was $2.50 per share. On April 13, 2000, there were
272 holders of record of our Common Stock.

The  Company has never paid cash  dividends  on our Common  Stock,  and does not
anticipate  paying cash  dividends on our Common Stock.  The Company  intends to
retain its earnings to finance the growth and development of its business.

During the fourth  quarter of 1999,  Mcglen sold 698,090  shares of Common Stock
for $1,935,000, net of costs associated with the sale of such securities.  These
shares were not registered under the Securities Act of 1934

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following  discussion and analysis of the Company's  financial condition and
results  of  operations  should  be  read  in  conjunction  with  the  Company's
consolidated financial statements and notes thereto included elsewhere herein.

Overview

Mcglen Internet Group (Mcglen or the Company),  formerly Adrenalin  Interactive,
Inc. (Adrenalin),  was acquired by Mcglen Micro, Inc. in December 1999 through a
transaction in which the stockholders of Mcglen Micro,  Inc. acquired control of
the Company through a reverse acquisition. As a result of the acquisition,  each
share of Mcglen Micro,  Inc. was converted into 0.9889611 shares of the Company,
with 25,485,527 shares being issued.

In  connection  with the  acquisition,  the Board of  Directors  of the  Company
adopted a formal plan to  discontinue  the  operations of Western  Technologies,
Inc.  (Western),  the operating  subsidiary of Adrenalin  that  developed  video
games. As such, the accounting  treatment for the reverse acquisition is that of
a  recapitalization.  The net  liabilities of Western have been  reclassified as
discontinued  operations on the balance  sheets for all periods  presented.  The
operations of Adrenalin  and Western are not included in the tables  below.  See
Note 12 to the consolidated financial statements included in this 10-KSB.

                                       19
<PAGE>

Mcglen  Micro,  Inc. was formed in May 1996 to sell  computer  products over the
Internet.  Mcglen has since  grown into a global  Internet  retailer of computer
hardware and  peripheral  products  servicing  individuals,  small  offices/home
offices,  and the corporate market. As a leading aggregator of hi-tech products,
Mcglen offers over 150,000  stockkeeping units (SKUs) at its virtual superstore,
www.Mcglen.com.  The  Mcglen.com  superstore has been in operation for more than
three years and already has brand recognition across 120,000 current customers.

Mcglen  purchased AMT Component,  Inc., in March 1999  (operating  under the dba
AccessMicro.com)  selling similar  products at typically lower price points.  In
November  1999,  Mcglen  opened  the   Techsumer.com   website  which  focus  on
"technologically minded consumers."

Mcglen  has a  marketing  and  promotion  program  in place  that  includes  web
advertising,  hyperlink  allegiances,  portal  alliances,  and direct one-to-one
marketing.  For  website  development,  Mcglen  plans  to  enhance  its  virtual
superstore to provide a community-like  experience  while shopping  online.  The
objectives  behind  the  website   enhancement  will  be  to  increase  customer
interaction and to offer a more comprehensive array of value-added services.

Net  sales of the  Company  are  primarily  derived  from  the sale of  personal
computer   hardware,   software,   peripherals  and  accessories  to  individual
consumers, small office- home offices (SOHO), small and large corporations,  and
the  government  through the Internet.  Gross profit  consists of net sales less
product and shipping costs.

The Company  derived a substantial  percentage  of its  inventory  from a single
provider,  Ingram Micro.  Mcglen has no long-term contracts or arrangements with
its vendors that guarantee the availability of merchandise.  Management believes
that other  suppliers  could provide  similar  inventory on comparable  terms. A
change in suppliers,  however,  could cause a delay in  fulfillment  of customer
orders  and a possible  loss of sales,  which  would  affect  operating  results
adversely.

Results of Operations

The following  table sets forth for the years  indicated  the  percentage of net
sales  represented  by certain  items  reflected in the  Company's  consolidated
statements  of  operations.  There can be no assurance  that the trends in sales
growth or operating  results will continue in the future.  The discussion of the
"Results of Operations"  includes  Mcglen Micro,  Inc. for twelve months and AMT
Components, Inc. since the date of acquisition, March 31, 1999.

                                       20
<PAGE>


                                                    Percentage of Net Sales
                                                    -----------------------
                                                    Year Ended December 31,
                                                       1999        1998
                                                       ----        ----

Net sales                                            100.00%      100.00%
Cost of sales                                         92.47        84.23
                                                     ------        -----
Gross profit                                           7.53        15.77
Operating expenses                                    17.50        15.26
Deferred compensation expenses                         2.80          --
                                                     ------        ------

(Loss) income before income taxes                    (12.77)        0.52
                                                     ------        ------
Provision for income taxes                             0.00         0.01
                                                     ------        ------
Net (loss) income                                   (12.77%)        0.51%
                                                     ======        ======

Net sales increased by $16.0 million,  or 138.6%,  to $27.5 million for the year
ended  December 31, 1999,  compared to $11.5 million for the year ended December
31, 1998. The increase in net sales was primarily a result of the acquisition of
AMT  Components,  Inc.  by  Mcglen  in  March  1999,  as  well  as  the  Company
aggressively seeking to increase its customer base through increased advertising
expenditures.  Proforma  net  sales,  including  AMT for all of 1998  and  1999,
increased  by $13.2  million  or  81.8%,  to $29.4  million  for the year  ended
December 31,  1999,  compared to $16.2  million for the year ended  December 31,
1998; (see Notes to the consolidated financial statements included herein).

Gross  profit  increased by $251,000 or 13.8% to  $2,069,000  for the year ended
December 31, 1999,  compared to $1,818,000 for the year ended December 31, 1998.
The  increase in gross  profit was due  primarily  to the AMT  Components,  Inc.
acquisition in March 1999, which resulted in increased sales.  Gross profit, and
proforma  gross profit,  as a percentage of net sales declined to 7.5% and 7.8%,
respectively for 1999 from 15.8% and 14.1%, respectively,  in 1998. The decrease
in gross  profit  margin  was the result of  increased  margin  pressure  in the
overall marketplace, particularly in the fourth quarter of 1999, combined with a
shift in the Company's  product mix to a higher  proportion of complete  systems
and CPU's which  traditionally  have a lower  gross  profit as a  percentage  of
sales.  Many of the Company's larger  competitors were selling their products at
or below cost for most of the year, e.g.  Buy.com,  eCost.com.  Mcglen responded
with price  decreases  of its own,  especially  in the  fourth  quarter of 1999,
combined with an aggressive  customer  acquisition plan, see advertising  below.
Open account sales, which typically have a lower gross margin, also increased in
1999.

Operating expenses increased by $3,822,000 or 217.4%, to $5,580,000 for the year
ended  December 31, 1999,  from  $1,758,000  for the prior year. The increase in
operating expenses was attributable to an increase in personnel costs associated
with the increased sales volume, an increase in advertising costs resulting from
increased spending on the AccessMicro.com website acquired in March 1999 and the
launch of the Techsumer.com  website in November 1999.  Advertising increased by
approximately  $557,000  on a proforma  basis as Mcglen  increased  spending  to
promote its brand name awareness. Mcglen conducted almost all of its advertising
on the Internet,  primarily  through price  comparison  websites.  Additionally,
Mcglen added additional facilities,  staff and capital infrastructure to support
growth  in 1999 and the  future.  Depreciation  and  amortization  increased  by
approximately  $120,000  due to the  infrastructure  development.  On a proforma
basis,  payroll and related costs  increased by  approximately  $924,000 in 1999
compared  to  1998,  as  Mcglen  began to hire  mid-level  managers  and  senior
management  to  help  build  the  Company.   Deferred  compensation  charges  of
approximately  $769,079,  or 2.8% of sales,  was recorded in 1999 resulting from
options granted to key management and  consultants;  no such charges occurred in
1998. Finally,  as a result of the Company's growth,  credit card processing and
phone charges increased by approximately $464,000 and $94,000,  respectively, in
1999 compared to 1998.

Liquidity and Capital Resources

The  Company's  primary  capital  need has been the  funding of  operations  and
working  capital  requirements  created by its rapid growth.  Historically,  the
Company's primary sources of financing have been private placements of stock and
borrowings from its stockholders, private investors, and financial institutions.

                                       21
<PAGE>

Cash used by operations  was $1.8 million in 1999 primarily due to the Company's
loss from  operations and costs incurred to fuel the Company's  growth in sales,
establish brand name awareness of its websites,  expenses related to the reverse
merger   completed  in  December   1999,  and  the  building  of  the  Company's
infrastructure to support Mcglen's operations.

The Company  incurred a loss from  operations  as of December 31, 1999 and had a
working capital  deficit and a  shareholders'  deficit at December 31, 1999. The
Company's  independent certified public accountants have included a modification
to their opinion, which indicates there is substantial doubt about the Company's
ability to continue as a going  concern.  See Note 1 to  Consolidated  Financial
Statements  for  additional  information.  The  Company is  attempting  to raise
additional capital to meet future working capital  requirements,  but may not be
able to do so. Should the Company not be able to raise  additional  capital,  it
may have to severely curtail operations.

During the year ended December 31, 1999, the Company's capital expenditures were
approximately  $208,000 as compared to $40,000 in 1998,  primarily  for computer
software and hardware,  and distribution  equipment.  An additional  $376,000 in
infrastructure additions and improvements were acquired through capital leases.

The Company  has two credit  facilities  of up to $1.5  million  with  financial
institutions.  The credit facilities  function in lieu of a vendor trade payable
for inventory purchases and are included in accounts payable. The facilities are
cancelable  upon 30 days or less advance notice and do not bear interest if paid
within 30 days of the date the inventory is purchased. The credit facilities are
secured  by  substantially  all of  the  Company's  assets  and  are  personally
guaranteed by the Company's majority shareholders.  One of the credit facilities
required  the  Company to  maintain a minimum  level of  subordinated  debt plus
tangible net worth. At December 31, 1999, the Company was not in compliance with
this covenant and the finance  company can initiate a default on the facility at
any time.  Management is attempting to  re-negotiate  the covenants at March 27,
2000.

Since computer  retailers  typically  have low product gross  margins,  Mcglen's
ability to regain  profitability  is dependent  upon its ability to increase net
sales.  To  the  extent  that  Mcglen's  marketing  efforts  do  not  result  in
significantly  higher net sales,  Mcglen will be materially  adversely affected.
There can be no assurance  that  sufficient  revenues will be generated from the
sale of its products to enable Mcglen to regain  profitability on a quarterly or
annual basis. In view of the rapidly  evolving  nature of Mcglen's  business and
its limited operating history, Mcglen believes that period-to-period comparisons
of its  operating  results,  including  gross profit and  operating  expenses as
percentage of net sales, or similar results  concerning AMT, are not necessarily
meaningful and should not be relied upon as an indication of future performance.

Mcglen believes that the key factor affecting its long-term financial success is
its  ability  to  attract  and  retain  customers  in a cost  effective  manner.
Currently,  Mcglen seeks to expand its customer base and encourage repeat buying
through internal and other sales and marketing programs.  Such programs include:
(i) brand  development,  (ii)  online  and  offline  marketing  and  promotional
campaigns,  (iii) linking programs with targeted Mcglen sites, (iv) personalized
direct  marketing  programs  designed to  generate  repeat  sales from  existing
customers,  (v) strategic  alliances with Internet content  providers and portal
sites, and (vi) the development of a one-stop online marketplace.

Mcglen expects to experience  significant  fluctuations in its future  operating
results  due to a variety of factors,  many of which are  outside  its  control.
Factors  that may affect its  operating  results  include the  frequency  of new
product  releases,  success of  strategic  alliances,  mix of product  sales and
seasonality of sales typically  experienced by retailers.  Sales in the computer
retail industry are significantly affected by the release of new products.

Infrequent  or delayed new product  releases can  negatively  impact the overall
growth  in retail  sales.  Gross  profit  margins  for  hardware,  software  and
peripheral  products vary widely,  with computer  hardware  generally having the
lowest gross profit margins. While Mcglen has some ability to affect its product
mix through effective upselling of high margin products, its sales mix will vary
from period to period and Mcglen's gross margins will fluctuate accordingly.

The Company  incurred a net loss from operations for the year ended December 31,
1999 and had a working capital  deficit and a shareholders'  deficit at December
31,  1999.  The Company will require  additional  equity  and/or debt capital in
order to meet  future  working  capital  needs and to  accomplish  its  combined
short-term and long-term business objectives. The Company has identified several
corporate  finance  consultants who have signed agreements to assist the Company
in raising additional capital. However, the Company presently has no preliminary
or definitive agreement to complete any such additional financing with any other

                                       22
<PAGE>

person or persons.  Accordingly,  it cannot make any assurances  that it will be
able to raise any such required additional capital. In addition,  its ability to
complete any such future equity and/or debt  financing will depend upon our then
financial condition, results of operations and future business prospects as well
as market conditions at the time such additional equity and/or debt financing is
consummated.  Many of the factors that will  influence the Company's  ability to
conduct  any such future  financing  will be outside of its  control.  For these
reasons,  it cannot make any assurances that it will  successfully  complete any
such  required  equity  and/or debt  financing.  Should the Company be unable to
raise additional capital, it may have to severely curtail operations.

If Mcglen is successful in securing additional capital,  the Company anticipates
expenditures of up to $2.5 million for improvements in software,  hardware,  and
other infrastructure investments.

As part of its growth  strategy,  the Company may, in the future,  acquire other
companies or websites, in the same or complementary lines of business.  Any such
acquisition  and the  ensuing  integration  of the  operations  of the  acquired
company  with  those of  Mcglen  would  place  additional  demands  on  Mcglen's
management and operating and financial resources.  Additionally,  the Company is
engaged in an ongoing  evaluation of potential new websites which may be created
internally.  Any such development and the ensuing  integration of the operations
of the new  website  with  those of Mcglen  would  place  additional  demands on
Mcglen's management and operating and financial resources.

Income Taxes

Prior to  March  1999,  Mcglen  elected  to be taxed  under  the  provisions  of
Subchapter S of the Internal Revenue Code and California Franchise tax reporting
purposes.  Accordingly,  results  of  operations  of Mcglen  for the year  ended
December  31, 1998 and the period  ended March 15, 1999 are reported on Mcglen's
stockholders'  federal  income tax returns.  No federal  income tax is therefore
reported in the Statement of Operations for 1998.  Income taxes in 1998 and 1999
represent the California  franchise tax applied to S  Corporations  at a rate of
1.5% and minimum taxes due.

For the period March 16, 1999 to December 31, 1999, the  difference  between the
amount of income tax  benefit  recorded  and the  amount of income  tax  benefit
calculated  using  the  federal  statutory  rate of 34% is due to net  operating
losses having a valuation  allowance,  due to uncertainties  regarding  Mcglen's
realization of these benefits in future years.  Accordingly,  no tax benefit has
been provided for the period ended December 31, 1999

As of  December  31,  1999,  Mcglen had  federal  and state net  operating  loss
carryforwards of approximately $8,759,000 and $3,803,000,  respectively. The net
operating  loss  carryforwards  will expire at various  dates  beginning in 2012
through 2014 for federal  purposes and 2002 through 2004 for state purposes,  if
not utilized. Utilization of the net operating loss carryforwards may be subject
to a  substantial  annual  limitation  due to the ownership  change  limitations
provided by the Internal  Revenue Code of 1986,  as amended,  and similar  state
provisions.  The annual limitation may result in the expiration of net operating
loss carryforwards prior to utilization.

Year 2000

Computer systems,  software packages, and microprocessor dependent equipment may
cease to function or generate erroneous data during the year 2000 or thereafter.
The problem  affects those  systems or products that are  programmed to accept a
two-digit code in date code fields.  To correctly  identify dates after December
31, 1999,  a  four-digit  date code field must be created to be what is commonly
termed "year 2000 compliant."

In prior reports, the Company has discussed the nature and progress of its plans
to become year 2000 ready. The Company experienced no significant disruptions in
mission critical information technology and non-information  technology systems,
and the Company believes those systems  successfully  responded to the year 2000
date change.  The Company is not aware of any material  problems  resulting from
year 2000  issues,  either  with its  products,  its  internal  systems,  or the
products and services of third parties. Although the Company has not experienced
any material year 2000 problems or disruptions  since January 1, 2000, there can
be no assurance that such problems or disruptions  will not occur in the future.
The Company will continue to monitor its mission critical computer  applications
and those of its suppliers and vendors  throughout  the year 2000 to ensure that
any latent year 2000 matters that may arise are addressed promptly.

                                       23
<PAGE>

Inflation

Inflation has not had a material impact upon operating results,  and the Company
does not  expect  it to have  such an  impact  in the  future.  There  can be no
assurances;  however,  that  the  Company's  business  will not be  affected  by
inflation.

New accounting pronouncements

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities,  which the Company
is  required  to adopt  effective  in its fiscal  year  2000.  SFAS No. 133 will
require  the  Company to record all  derivatives  on the  balance  sheet at fair
value. The Company does not currently engage in hedging activities.  The Company
will adopt SFAS No. 133 for the year ending  December  31, 2000 and the adoption
is expected to have no effect.

Additional Factors Affecting Future Results

The reader should  review  "Additional  Factors That May Affect Future  Results"
included  herein in Part I, Item 1,  "Business" as the factors  listed there may
affect the Company's future results.

ITEM 7. FINANCIAL STATEMENTS

The  Company's  financial  statements  listed  below are  included  on pages F-1
through F-18 following the signature page to this report:

<TABLE>
<CAPTION>
     Title of Document                                                                                    Page
<S>                                                                                                        <C>
     Reports of Independent Auditors.                                                                      F-1

     Consolidated Financial Statements:
     Balance Sheets as of December 31, 1999 and 1998                                                       F-3

     Statements of Operations for the Years Ended December 31, 1999 and 1998                               F-4

     Statements of Cash Flows for the Years Ended December 31, 1999 and 1998                               F-5

     Statements of Changes in Stockholders' (Deficit) Equity for the Years Ended
     December 31, 1999 and 1998                                                                            F-6

     Notes to Financial Statements                                                                         F-7
</TABLE>


ITEM 8. CHANGES  IN  AND  DISAGREEMENTS   WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
        FINANCIAL DISCLOSURE

In connection  with the reverse  acquisition  of Adrenalin in December 1999, the
Board of Directors of Mcglen  changed  accountants  to BDO Seidman LLP replacing
Adrenalin's prior accountants, Drucker, Math & Whitman, and Mcglen Micro's prior
accountants,   Singer,  Lewak,  Greenbaum  and  Goldstein  LLP.  There  were  no
disagreements with the Company's current or prior accountants.


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT.

(a) Information Relating to Executive Officers and Directors

The  following  table sets forth  certain  information  relating  to our current
executive officers and directors*:

<TABLE>
<CAPTION>
Name                        Age              Position with the Company
                            ---              -------------------------
<S>                          <C>    <C>
George Lee                   29     Chief Executive Officer and Director
Mike Chen                    26     President, Chief Technology Officer, Secretary, and Director
Peter Janssen                57     Chairman and Director
Calbert Lai                  43     Director
Grant Trexler                38     Chief Financial Officer
Alex Chen                    26     Executive Vice President Business Development
David Chou                   28     Chief Information Officer
</TABLE>

The  following is a  biographical  summary of the  experience  of the  executive
officers.

         George Lee
Mr. Lee is responsible for capital growth, organizational growth, development of
sales,  marketing,  and internal operations,  for the Company. Prior to founding
the Company in 1996, he held  positions in sales at Eva Airways,  and in freight
forwarding at Immortal Service.  Mr. Lee received his Bachelor of Arts degree in
Economics in 1993 from the University of California at Irvine.

         Mike Chen
Mr.  Chen  is  responsible  for  the  capital  growth,   organizational  growth,
coordination   of  corporate   activities,   and   development   of  proprietary
technologies.  Prior to  founding  the  Company in 1996,  he was an  independent
software  programmer.  Mr.  Chen  received  his  Bachelor  of Science  degree in
Electrical  Engineering  and  Computer  Science in 1995 from the  University  of
California at Berkeley.

         Peter Janssen
Mr. Janssen is the founder of Peter Janssen & Associates  ("PJA"),  a technology
consulting  firm   specializing   in  sales  marketing  and  channel   marketing
strategies.  Prior to founding PJA, Mr.  Janssen was head of  Merchandising  and
Marketing  at  Egghead  Software,  where he  helped  implement  one of the first
Internet retail sites,  Egghead.com.  Before joining Egghead, Mr. Janssen headed
sales and marketing for several technology start-ups including Mindset, Amdek (a
division of Wyse),  Nexgen  Microsystems  and Acer.  At Acer,  he developed  the
company's  consumer channel into a $500 million  business.  Early in his career,
Mr. Janssen spent 18 years at Sears,  where he helped develop the Sears Business
System Center. He received his Bachelor of Arts degree in Economics from UCLA.

         Calbert Lai
A 15-year  veteran of Silicon Valley,  Mr. Lai is the President,  Co-Founder and
senior business  strategist at I-Storm, a publicly traded e-commerce  consulting
firm.  Prior to  joining  I-Storm  and its  subsidiary,  Mr.  Lai was a founding
partner and Chief Executive Officer of Lai, Venuti and Lai Advertising  ("LVL"),
where he provided  strategic  marketing and  consulting  services for technology
clients  such as IBM,  HP, Sun  Microsystems,  Cisco and NEC.  LVL  underwent  a
pre-packaged Chapter 11 bankruptcy reorganization while Mr. Lai was an executive
officer,  prior to merging  with  I-Storm in 1999.  He has also helped to launch
many successful hi-tech products such as the Palm Pilot. Mr. Lai previously held
executive  positions in business affairs and community  relations  department at
Stanford University, where he also received a Bachelor of Arts degree in English
and Creative Writing.

         Grant Trexler
Prior to joining the Company in January 2000, Mr. Trexler served as the Director
of Finance and Administration for El Monte RV, the nation's second largest motor
home rental  dealer from July 1996,  leading  the company to  profitability  and
through the development of its Licensee  program.  Before joining El Monte,  Mr.
Trexler was the CFO of Creative Computers from August 1994 through May 1996. Mr.
Trexler  was CFO during  Creative's  IPO and  secondary  offerings  in 1995.  At
Creative Computers,  he was responsible for implementing internal accounting and
budgeting systems,  financial reporting,  and financial due diligence.  Prior to
joining Creative, Mr. Trexler spent nine years at  PricewaterhouseCoopers,  most
recently as a Senior Manager in its Mergers and Acquisitions  group. Mr. Trexler
holds  Masters of Business  Administration  and  Bachelor of Arts  degrees  from
California  Polytechnic  State  University  - San Luis Obispo and is a Certified
Public Accountant.

                                       24
<PAGE>

         Alex Chen
Mr.  Chen  joined  the  Company in March  1999 to take  charge of the  Company's
business development and alliance program activities,  oversee general operation
of the  company.  Prior to  joining  the  Company,  Mr.  Chen  was the  founder,
President and CEO of AMT Components, Inc., where he was selected by Entrepreneur
Magazine  as one of the  "Top 100  Entrepreneurs"  in 1998.  Under  Mr.  Chen 's
direction,  AMT  Components,  Inc. grew to an annual revenue base of nearly $4.5
million just two years after its inception in 1996.  Mr. Chen graduated from the
University of California at Berkeley in 1996.

         David Chou
Mr. Chou joined the Company in October 1999, to design and develop the technical
infrastructure  for the Company,  set the technical  architectural  direction in
which  the  Company  is  to  evolve  into,  and  build/manage  an  efficient  IT
organization.  From  1994  until  joining  the  Company,  Mr.  Chou  was a  Java
Consultant for Sun Microsystems,  where he helped major corporations  design and
develop enterprise  applications and system architectures,  as well as providing
consultation on the latest Internet technologies. Mr. Chou received his Bachelor
of Science in Industrial  Engineering  and Operations  Research in 1994 from the
University of California at Berkeley.

* There are no family  relationships  among any of our  directors  or  executive
officers.

(b) Section 16(a) Reporting Delinquencies

No  executive  officer or director  failed to file on a timely  basis any report
required to be filed by them under  Section  16(a) of the Exchange Act since the
Company's last 10-KSB filing for the year ended June 30, 1999.

As of the date hereof,  we are not aware of the continued  failure of any of our
current officers or directors to file such required reports.

ITEM 10. EXECUTIVE COMPENSATION

(a)  The following Summary  Compensation  Table sets forth the names,  positions
     and annual  compensation  paid by us for the years ended December 31, 1999,
     1998, and 1997 to George Lee, our Chief Executive Officer. No other current
     executive officer or key employee had compensation  which exceeded $100,000
     in these years.
<TABLE>
<CAPTION>
                                                  SUMMARY COMPENSATION TABLE
                                                Annual Compensation              Long Term Compensation Awards
                                                                               Securities
                                         Fiscal                              Underlying Options         All Other
Name and Position                         Year    Salary ($)    Bonus ($)            (#)             Compensation ($)
-----------------                         ----    ----------    ---------            ---             ----------------

<S>                                       <C>        <C>                             <C>                     <C>
George Lee, Chief Executive Officer       1999       49,000            -             500,000(1)              1,800(2)
                                          1998       48,000            -                      -                     -
                                          1997       12,000            -                      -                     -
</TABLE>



(1)      In connection  with the Company's  reverse  acquisition of Adrenalin in
         December 1999, all unvested options were canceled.  Mr. Lee had 400,000
         options canceled as a result thereof.

(2)      Reflects health insurance costs paid by the Company on Mr.Lee's behalf.

(b) The following table sets forth certain information with respect to all stock
    options granted by us during 1999 to Mr. Lee:

                                       25
<PAGE>

<TABLE>
<CAPTION>
                                              OPTION GRANTS IN LAST FISCAL YEAR
                                                 Individual Grants
                                     Number of Securities   % of Total Options
                                      Underlying Options     Granted to Employees   Exercise Price
               Name                      Granted (#)            in Fiscal Year          ($/Sh)       Expiration Date
               ----                      -----------            --------------          ------       ---------------

<S>                                       <C>                      <C>                  <C>            <C>
            George Lee                    500,000                  17.5%                $0.10          2/28/05(1)
</TABLE>

     (1) In connection  with the Company's  reverse  acquisition of Adrenalin in
         December 1999, all unvested options were canceled.  Mr. Lee had 400,000
         options canceled as a result thereof.

(c)  The  following  table sets forth  certain  information  with respect to the
     exercise of stock options  during 1999 and the value of  unexercised  stock
     options held by Mr. Lee at December 31, 1999:

<TABLE>
<CAPTION>
                                             AGGREGATED OPTION EXERCISES IN LAST
                                             YEAR AND YEAR-END (YE) OPTION VALUES
                       Value of Unexercised          Shares                         Number of Securities Underlying
                   In-the-Money Options YE ($)    Acquired On                          Unexercised Options at YE
      Name          Exercisable/Unexercisable     Exercise (#)    Value Realized      Exercisable/ Unexercisable
      ----          -------------------------     ------------    --------------      --------------------------
<S>                         <C>                       <C>             <C>     <C>
George Lee                  $400,000/0                None             N/A                     100,000/0
</TABLE>


(d)  Executive Officer Employment Contracts

George Lee Employment Agreement
Upon  completion of the reverse merger on December 2, 1999, the Company  entered
into  a  3  year  employment   agreement  with  Mr.  Lee  (the  "Lee  Employment
Agreement").  The Lee  Employment  Agreement  provides  that  Mr.  Lee  serve as
Company's Chief Executive  Officer and receive a base salary of $80,000 per year
for his services.  Mr. Lee is also entitled to receive bonuses and stock options
as determined  by our Board of  Directors.  The Lee  Employment  Agreement  also
provides that Mr. Lee devotes all of his business time,  attention and energy to
our business and provides for Mr. Lee to paid by the full value of the agreement
if he is terminated  without  cause.  Mr. Lee is also entitled to participate in
all group health and insurance programs,  paid by the Company,  and other fringe
benefits or retirement plans available to other of our employees.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of December 31, 1999, the number of shares of
our Common Stock held of record or beneficially:  (i) by each person who held of
record, or was known by us to own beneficially,  more than 5% of the outstanding
shares of the our Common Stock; (ii) by each of our current  executive  officers
and directors;  and (iii) by all of our current executive officers and directors
as a group:

<TABLE>
<CAPTION>

          Name and Address of                                                     Percent of Outstanding Shares of
           Beneficial Owner                  Number of Shares Owned (1)(2)                  Common Stock
           ----------------                  -----------------------------                  ------------
<S>                                                    <C>                                      <C>
George Lee                                             9,691,819                                30.5%
3002 Dow Avenue Ste 114
Tustin, CA 92780
Mike Chen                                              9,335,793                                29.4%
3002 Dow Avenue Ste 114
Tustin, CA 92780
Mackenzie Shea, Inc.                                   2,010,932 (3)                             6.3%
657 Third Street
San Francisco, CA 94107
ACST Computers, Inc.                                   4,520,325 (4)                            14.2%
3002 Dow Avenue Ste 114
Tustin, CA 92780
Peter Janssen                                            100,000                                 0.3%
3002 Dow Avenue Ste 114
Tustin, CA 92780
Calbert Lai                                              100,000                                 0.3%
3002 Dow Avenue Ste 114
Tustin, CA 92780
All current executive officers and                    23,747,397                                75.0%
directors as a group (5 persons)
</TABLE>

                                       26
<PAGE>


(1)       Except as  otherwise  indicated  and subject to  applicable  community
          property and similar statutes, the persons listed as beneficial owners
          of the shares of our Common  Stock  have sole  voting and  dispositive
          power with respect of such shares.

(2)       For purposes of  computing  the  percentages,  the number of shares of
          Common Stock outstanding  includes shares  purchasable  within 60 days
          upon  exercise of  outstanding  stock  options,  as  follows:  Mr. Lee
          (100,000 shares), Mr. M. Chen (120,000 shares), Mr. A. Chen (principal
          shareholder of ACST Computers, Inc.), Mr. Janssen and Mr. Lai (100,000
          shares),  and all executive officers and directors as a group (490,000
          shares).

(3)       Includes shares  beneficially  owned by Mackenzie Shea  distributed to
          various companies under its control in January 2000.

(4)       Includes  70,000  shares  purchasable  within 60 days upon exercise of
          outstanding  options by Mr. A. Chen and 4,450,325 shares owned by ACST
          Computers,  Inc. At December 31, 1999, Mr. A. Chen owned approximately
          50% of the  outstanding  shares of ACST  Computers,  Inc. and had sole
          voting  power over the shares  owned by such  company.  In March 2000,
          ACST  Computers,  Inc. was dissolved.  Mr. A. Chen's  ownership of the
          Company's  shares was reduced to  2,150,526,  including  70,000 shares
          purchasable within 60 days upon exercise of outstanding options.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Acquisition of AMT

On March 15, 1999, Mcglen Micro, Inc. (Mcglen)  completed the acquisition of AMT
Components,   Inc.  (AMT).  Alex  Chen,  Mcglen's  Vice  President  of  Business
Development  was a  principal  shareholder  of  AMT.  Under  the  terms  of  the
acquisition,   Mcglen   exchanged   450,000  shares  of  Mcglen's  common  stock
(calculated  prior  to  Mcglen's  10  for  1  stock  split),  which  constituted
approximately  17.5% of Mcglen's common stock at the time of the acquisition for
all of AMT's assets.

Reverse Acquisition (Merger) with Mcglen Micro, Inc.

On December 3, 1999,  Adrenalin  consummated a reverse  acquisition  with Mcglen
Micro,  Inc. The resulting  reorganization  was to form this Company.  Under the
terms of the  Agreement and Plan of Merger (the "Merger  Agreement"),  Adrenalin
agreed to exchange  approximately  87.5% of the shares of Adrenalin common stock
for all of the outstanding  shares of Mcglen. One share of Mcglen's common stock
will be converted into  approximately one share of Adrenalin's common stock. The
Merger  Agreement is set forth in full in Adrenalin's  Form 8-K, dated April 30,
1999.

Mackenzie Shea, Inc.

Mcglen was introduced to Adrenalin by Mackenzie Shea, Inc. ("MSI").  Pursuant to
its engagement  letter,  MSI received 2,010,932 of the outstanding shares of the
Company,  for coordinating  the Merger and advising and assisting  Adrenalin and
Mcglen in raising a minimum of  $3,000,000.  Mcglen was also required to pay MSI
$7,500 per month during the term of MSI's engagement with Mcglen.

Convertible Notes

On June 16, 1999,  Mcglen borrowed  $200,000 from two investors.  As a result of
this transaction, Mcglen executed two Convertible Promissory Notes (the "Notes")
with  identical  terms and  conditions  whereby  Mcglen  promised  to repay each
investor  the loan  amount 18 months from the  execution  of the Notes (the "Due
Date"), plus 10% interest per annum payable quarterly in arrears.  The investors
have the right to convert the loan amount into Mcglen  common stock at $2.00 per
share any time prior to the Due Date. The common stock issued upon conversion of


                                       27
<PAGE>

the Notes will provide the investors with "piggyback"  registration rights. As a
commission for arranging the loans, Mcglen paid Pacific Rim Access, a commission
of $20,000  and issued a warrant to Keiji  Miyagawa,  President  of Pacific  Rim
Access to purchase  10,000  shares of Mcglen's  common stock for $2.00 per Share
(pre  reverse  merger  split),  which shares also had  "piggyback"  registration
rights,  subject to underwriter  approval,  limitation and lockups.  Each of the
rights to  receive  shares of Mcglen  common  stock  related  to the Notes is an
obligation of the Company following the Merger.

Finance Transaction with Synnex Information Technologies, Inc.

On May 11,  1999,  Mcglen  entered  into an  alliance  with  Synnex  Information
Technologies,  Inc.  ("Synnex"),  which is the wholly-owned  U.S.  subsidiary of
Synnex,  one of the largest computer  manufacturers  in Taiwan.  Pursuant to the
terms of the Synnex agreement,  Synnex will provide payment terms of net 30 days
on up to $1,000,000  in trade  payables and will provide  Mcglen with  favorable
pricing  terms on products  Synnex  distributes  in the United  States and other
markets  serviced  by Mcglen.  In  exchange,  Mcglen has  provided to Synnex the
following: (i) the option to elect a member of Mcglen's Board of Directors; (ii)
the ability to convert the entire  $1,000,000  into common stock at the price of
$4,.125 any time for 3 years; (iii) demand and "piggyback"  registration rights;
(iv)  information  rights;  (v)  antidilution  rights;  and (vi)  certain  other
favorable  rights.  Mcglen  promised to pay a commission  consisting of cash and
warrants  to  Triangle  Associates,  LLC,  as  described  below.  There  are  no
assurances that Synnex will not cancel the credit terms in the future.

Brokers Fees for the Synnex Transaction

Mcglen paid a commission to Triangle Associates, LLC, in the form of warrants to
purchase  Mcglen's  common stock at various  prices between $4.125 and $5.50 per
share up to a maximum  aggregate  exercise price of $337,500,  at any time for 3
years. Mcglen has also agreed to pay Triangle Associates, LLC, a cash commission
equal to 5% of the amount of a trade credit line extended or investment  made by
Synnex over an 18 month  period.  The cash  commission  was paid in 1999.  Steve
Chang is the principal owner and manager of Triangle Associates, LLC.

Pre-Merger Mcglen Financings

In September 1999, Mcglen entered into an agreement with Pacific Rim Access (the
"PacRim Agreement") to raise $800,000.  Pursuant to the PacRim Agreement, Mcglen
sold 320,000  shares of common stock to a group of Japanese  investors for $2.50
per share, which shares will have "piggyback"  registration  rights,  subject to
underwriter  approval,  limitations and lockups. As commission for arranging the
loans,  Mcglen  paid  Pacific  Rim Access a  commission  of  $80,000  and issued
warrants to Keiji  Miyagawa,  President of Pacific Rim Access to purchase 42,000
shares of  Mcglen's  common  stock,  (10,000  shares at $2.00 per share with the
remainder for $2.50 per share, both pre reverse acquisition split), which shares
also have  "piggyback"  registration  rights,  subject to underwriter  approval,
limitations and lockup.  The placement was made in accordance with the provision
of Rule 506 promulgated under Regulation D of the Act.

Immediately prior to the Merger,  Mcglen sold 600,000 shares of common stock for
$2.50  per  share  in  a  private  placement  pursuant  to  Rule  506.  Redstone
Securities,  Inc.,  acted as placement  agent in the Offering for which Redstone
received a commission equal to 10% of the gross proceeds of the offering.

Pre-Merger Adrenalin Financing by Escaldade

Prior to the Merger,  Adrenalin  consummated a financing  pursuant to a purchase
agreement to sell 293,255  shares of common  stock to Escaldade  Investors,  LLC
("Escaldade")  for gross  proceeds of $1,250,000  ($4.2625 per share,  which was
110% of the  closing  price of  Adrenalin's  common  stock on July 9,  1999) and
received an  irrevocable  commitment  from  Escaldade to purchase an  additional
$750,000 of  Adrenalin's  common stock upon the  completion  of the Merger.  The
$750,000  was placed  into escrow  until the SEC  approved  the proxy  statement
soliciting  the  consent of the  Company's  shareholders  for the Merger and was
released  upon the  closing of the Merger.  The price per share of common  stock
paid by Escaldade  for the $750,000 in escrow,  $5.43,  was equal to 110% of the
closing  price for the common  stock on the trading  day prior to such  funding.
138,090 shares were issued to Escaldade in the $750,000 financing.

                                       28
<PAGE>

Escaldade  received a three year warrant to purchase 29,325 additional shares of
common  stock at an  exercise  price of $4.843 per share  (which was 125% of the
closing  price of the common  stock on July 9,  1999).  Upon the  funding of the
$750,000,  Escaldade also received an additional  three year warrant to purchase
13,809 additional shares of common stock at an exercise price of $6.79 per share
(which was 125% of the closing price of the common stock for the common stock on
the trading day prior to such funding).

The warrants  issued by the Company to Escaldade may be exercised on a "cashless
exercise"  basis to the extent  that the average  market  value of the shares of
common stock  issuable  upon exercise of such warrants for the five trading days
prior to exercise  exceeds  the  aggregate  exercise  price for the shares as to
which the warrants are being exercised.

The agreement  with  Escaldade  allowed for rerpicing  rights if Mcglen's  stock
price  dropped  below  certain  prices as  defined in the  agreement.  Escaldade
exercised its repricing  rights relating to two-thirds of the shares it obtained
in the  financing in January 2000 and received  103,775  shares of the Company's
common stock.  Escaldade  exercised its repricing  rights  relating to the final
one-third of the shares it obtained in the  financing in April 2000 and received
39,352 shares of the Company's common stock.

Pursuant  to the  purchase  agreement,  the  Company  filed an S-3  Registration
Statement  to  register  all  shares  of common  stock  issued  or  issuable  to
Escaldade, including shares of common stock issued upon exercise of the warrants
described  above.  The Company is required  to keep the  Registration  Statement
effective until July 12, 2001,  until Escaldade no longer holds or has the right
to acquire  shares or until all of its shares may be sold  pursuant  to Rule 144
under the Act, whichever comes first.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.
<TABLE>
<CAPTION>

Exhibit
   No.      Description                                                                   Page No.
   ---      -----------------------------------------------------------------------       --------
<S>                                                                                         <C>
            Agreement and Plan of Merger, dated as of April 28, 1999, among Adrenalin,
            Adrenalin's subsidiary, Mcglen and Mcglen's principal shareholders,
            incorporated by reference from Exhibit 2.1 to our Current Report on Form
2.1         8-K, dated April 30, 1999 ("April 30 Form 8-K").                                N/A
2.2         First Amendment to Agreement and Plan of Merger, dated July 23, 1999,           N/A
            among  Adrenalin,   Adrenalin's  subsidiary,   Mcglen  and  Mcglen's
            principal  shareholders,  incorporated by reference from Exhibit 2.1
            to our  Current  Report on Form 8-K,  dated July 23, 1999 ("July 23,
            1999 Form 8-K").
2.3         Second Amendment to Agreement and Plan of Merger, dated October 4, 1999,         *
            by and among Adrenalin Interactive, Inc., Adrenalin Acquisition
            Corporation, Mcglen Micro, Inc. an the shareholders of Mcglen Micro, Inc.
2.4         Third Amendment to Agreement and Plan of Merger, dated December 2, 1992,         *
            by and among Adrenalin Interactive, Inc., Adrenalin Acquisition
            Corporation, Mcglen Micro, Inc. an the shareholders of Mcglen Micro, Inc.
3.1         Amended Certificate of Incorporation of Adrenalin Interactive, Inc., filed      N/A
            as Exhibit 3.1 to our Current Report on Form 8-K, dated December 8, 1999
            ("December 8, 1999 Form 8-K).
3.2         Bylaws of Mcglen Internet Group                                                  *
3.3         Certificate of Amendment of Certificate of Incorporation of Adrenalin,          N/A
            filed with the  Delaware  Secretary  of State on  December  6, 1999,
            incorporated  by reference from Exhibit 3.1 to our Current Report on
            Form 8-K, dated February 1, 2000.
4.1         Common  Stock  Purchase  Agreement,  dated  July 12,  1999,  between
            Adrenalin N/A and Escaldade,  incorporated by reference from Exhibit
            4.1 to our  Current  Report on Form 8-K,  dated July 12, 1999 ("July
            12, 1999 Form 8-K").
4.2         Registration   Rights  Agreement,   dated  July  12,  1999,  between
            Adrenalin and N/A Escaldade,  incorporated by reference from Exhibit
            4.2 to our July 12, 1999 Form 8-K.
</TABLE>

                                       29
<PAGE>

<TABLE>
<CAPTION>
Exhibit
   No.      Description                                                                   Page No.
   ---      -----------------------------------------------------------------------       --------
<S>                                                                                         <C>

4.3         Form of Warrant  issued and to be issued by Adrenalin to  Escaldade,
            N/A  incorporated by reference from Exhibit 4.3 to our July 12, 1999
            Form 8-K.
4.4         Form of Escrow Instructions to be entered into between Adrenalin and            N/A
            Escaldade, incorporated by reference from Exhibit 4.4 to our July 12, 1999
            Form 8-K.
4.5         Form of Warrant  issued to affiliates  and  transferees of Mackenzie
            Shea, N/A Inc.  ("MSI"),  incorporated by reference from Exhibit 4.1
            to our  Quarterly  Report on Form  10-QSB for our  quarterly  period
            ended March 31, 1998 ("March 1998 Form 10-QSB").
4.6         Warrant to Purchase Common Stock issued Redstone Securities, Inc.                *
            (Redstone), dated August 12, 1999.
4.7         Private  Placement  Memorandum,  dated  September 30, 1999,  between
            Mcglen and N/A Redstone,  incorporated by reference from Exhibit 3.1
            to our Current Report on Form 8-K, dated February 1, 2000.
10.1        1999 Stock Option Plan, of Mcglen Micro, Inc., as amended, as adapted by         *
            the Company after the merger with Adrenalin Interactive, Inc.
10.2        Consulting  Agreement,  dated October 1, 1997,  as amended,  between
            Adrenalin N/A Interactive,  Inc., and MSI, incorporated by reference
            from  Exhibit  10.1 to our Form  10-KSB  for the year ended June 30,
            1998.
10.3        Letter  Agreement,  dated November 18, 1997, as amended on April 21,
            1998 N/A and August 31, 1998,  between  Adrenalin and Kayne relating
            to management  consulting  services  provided to Adrenalin by Kayne,
            incorporated  by reference  from Exhibit 10.2 to our Form 10-KSB for
            the year ended June 30, 1998.
10.4        Employment Agreement, dated December 16, 1997, between Adrenalin and
            Jay N/A Smith,  III,  incorporated by reference from Exhibit 10.1 to
            our March 1998 Form 10-QSB.
10.5        Consulting  Agreement,  dated April 10, 1998,  between Adrenalin and
            Robert  N/A A.D.  Wilson  relating  to general  consulting  services
            provided to Adrenalin by Mr. Wilson,  incorporated by reference from
            Exhibit 10.5 to our Form 10-KSB for the year ended June 30, 1998.
10.6        Optional Advance Note ("Variable  Note") for $400,000 Plus Interest,
            dated N/A June 30, 1998,  issued by Adrenalin to Bay Area  Financial
            Corporation, incorporated by reference from Exhibit 10.8 to our Form
            10-KSB for the year ended June 30, 1998.
10.7        Secured Promissory Note, dated July 23, 1999, by Mcglen to Adrenalin
            in N/A the  principal  amount of  $500,000  and  payable on July 23,
            2000,  incorporated  by  reference  from Exhibit 10.1 to our Current
            Report on Form 8-K, dated July 23, 1999.
10.8        Adrenalin's 1995 Stock Option Plan, as amended, incorporated by reference       N/A
            from Exhibit 10.4 to our Registration Statement on Form SB-2, No.
            333-00178 ("1996 Registration Statement").
10.9        Amendment No. 2 to Adrenalin's 1995 Stock Option Plan, dated December 1,        N/A
            1997, incorporated by reference from Exhibit 10.13 to our Form 10-KSB for
            the year ended June 30, 1998.
10.10       Adrenalin's  1996 Stock Option  Plan,  as amended,  incorporated  by
            reference  N/A  from  Exhibit  A  to  Adrenalin's  definitive  proxy
            materials  in  respect  of   Adrenalin's   1996  Annual  Meeting  of
            Shareholders.
10.11       Amendment No. 2 to Adrenalin's 1996 Stock Option Plan, dated December 1,        N/A
            1997, incorporated by reference from Exhibit 10.15 to our Form 10-KSB for
            the year ended June 30, 1998.
10.12       Acquisition  Agreement  among  Adrenalin,  Western and Jay Smith III
            d/b/a  N/A  Smith  Engineering,  dated  as  of  December  30,  1996,
            incorporated by reference from Exhibit 7(c)(1) to our Current Report
            on Form 8-K, dated February 4, 1997 ("1997 Form 8-K").
</TABLE>

                                       30
<PAGE>

<TABLE>
<CAPTION>
Exhibit
   No.      Description                                                                   Page No.
   ---      -----------------------------------------------------------------------       --------
<S>                                                                                         <C>
10.13       License  Agreement,  dated February 4, 1997, between Western and Jay
            Smith,  N/A III,  incorporated  by reference from Exhibit 7(c)(2) to
            our 1997 Form 8-K.
10.14       Convertible Promissory Note, dated March 20, 2000, by and between Mcglen         *
            Internet Group, Inc. and various Lenders introduced by Institutional
            Equity Holdings Corporation.
10.15       Employment Agreement, dated January 1, 2000, between Mcglen Internet             *
            Group, Inc. and Grant Trexler.
10.16       Employment Agreement, dated December 2, 1999, between Adrenalin                  *
            Interactive, Inc. and George Lee.
10.17       Employment Agreement, dated December 2, 1999, between Adrenalin                  *
            Interactive, Inc. and Mike Chen.
10.18       Employment Agreement, dated December 2, 1999, between Adrenalin                  *
            Interactive, Inc. and Alex Chen.
10.19       Employment Agreement, dated October 1, 1999, between Mcglen Micro, Inc.          *
            and David Chou.
10.20       Employment Agreement, dated September 1, 1999, between Mcglen Micro, Inc.        *
            and Robert Brown.
21          Subsidiaries of Mcglen Internet Group, Inc.                                      *

22          Definitive Proxy submitted for shareholder vote on November 11, 1999.           N/A
            Filed on October 6, 1999 and incorporated by reference.

27          Financial Data Schedules.                                                        *
</TABLE>



(b) Reports on Form 8-K.


1.            On  November  16,  1999,  we filed a  Current  Report  on Form 8-K
              announcing  the issuance of shares to the  shareholders  of Mcglen
              Micro,  Inc.("Mcglen")  necessary  to  consummate  the  previously
              announced merger between  Adrenalin  Interactive,  Inc. and Mcglen
              which was approved by the  shareholders of Adrenalin at its annual
              meeting held on November 11, 1999.

2.            On  December  8,  1999,  we  filed a  Current  Report  on Form 8-K
              announcing the consummation of the merger by Mcglen into Adrenalin
              Interactive, Inc.

3.            On  February  1,  2000,  we  filed a  Current  Report  on Form 8-K
              announcing the change of control of the Company,  acquisition  and
              disposition  of  assets,  change  in  certified  accountants,  the
              closing  of  an  offering  of  Common  Stock  for  $750,000   with
              Escaldade, the closing of an private placement of common stock for
              $1.5 million with Redstone  Securities,  Inc., the  resignation of
              former directors,  Jay Smith, Edward Mackay,  Robert Wilson, and a
              change in our fiscal year end to December 31.

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, this report has been
signed on its behalf by the undersigned,  thereunto duly authorized, in the City
of Tustin, Sate of California, on April 13, 2000.

                                       MCGLEN INTERENET GROUP, INC.

                                       By: /s/ George Lee
                                           --------------
                                           George Lee, Chief Executive Officer

                                       31
<PAGE>

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>

Signatures                     Title                                                          Date
----------                     -----                                                          ----
<S>                                                                                           <C>
/S/ George Lee                                                                                April 13, 2000
-------------------
George Lee                     Chief Executive Officer and Director

/S/ Mike Chen                                                                                 April 13, 2000
-------------------
Mike Chen                      President, Chief Technology Officer, Secretary, and Director

/S/ Grant Trexler                                                                             April 13, 2000
-------------------
Grant Trexler                  Chief Financial Officer

/S/ Peter Janssen                                                                             April 13, 2000
-------------------
Peter Janssen                  Chairman and Director

/S/ Calbert Lai                                                                               April 13, 2000
------------------
Calbert Lai                    Director
</TABLE>


                                       32
<PAGE>


The  Company's  financial  statements  listed  below are  included  on pages F-1
through F-18 following the signature page to this report:

<TABLE>
<CAPTION>
     Title of Document                                                                                    Page
     -----------------                                                                                    ----
<S>                                                                                                         <C>
     Reports of Independent Certified Public Accountants.                                                 F-1

     Consolidated Financial Statements:
     Balance Sheets as of December 31, 1999 and 1998                                                      F-3

     Statements of Operations for the Years Ended December 31, 1999 and 1998                              F-4

     Statements of Cash Flows for the Years Ended December 31, 1999 and 1998                              F-5

     Statements of Changes in Stockholders' (Deficit) Equity for the Years Ended
     December 31, 1999 and 1998                                                                           F-6

     Notes to Financial Statements                                                                        F-7
</TABLE>


<PAGE>


             REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors  and  Stockholders  of the Mcglen  Internet  Group,  Inc.
Tustin, CA

We have  audited  the  accompanying  consolidated  balance  sheet of the  Mcglen
Internet  Group,  Inc.,  as of December  31,  1999 and the related  consolidated
statements  of  operations,  cash flows and changes in  stockholders'  (deficit)
equity for the year ended December 31, 1999. 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of the Mcglen Internet
Group, Inc., at December 31, 1999, and the results of their operations and their
cash flows for the year ended  December 31, 1999, in conformity  with  generally
accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated  financial  statements,  the  Company  has  suffered  a  loss  from
operations, has negative working capital, is in violation of debt covenants, and
needs to raise  additional  funds to accomplish  its  objectives.  These matters
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  The consolidated  financial  statements do not include any adjustments
that might result from the outcome of this uncertainty.


/s/BDO Seidman, LLP
-------------------
   BDO Seidman, LLP
   Los Angeles, CA
   March 11, 2000

                                      F-1
<PAGE>


             REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors  and  Stockholders  of the Mcglen  Internet  Group,  Inc.
Tustin, CA

We have audited the  accompanying  balance sheet of the Mcglen  Internet  Group,
Inc.,  as of December 31, 1998 and the related  statements of  operations,  cash
flows and changes in stockholders'  (deficit) equity for the year ended December
31, 1998.  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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides 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 the Mcglen  Internet  Group,
Inc., at December 31, 1998, and the results of its operations and its cash flows
for the year ended  December 31, 1998, in  conformity  with  generally  accepted
accounting principles.



/s/Singer Lewak Greenbaum & Goldstein LLP
-----------------------------------------
   Singer Lewak Greenbaum & Goldstein LLP
   Santa Ana, CA
   April 14, 1999

                                       F-2
<PAGE>

<TABLE>
<CAPTION>
                           MCGLEN INTERNET GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                                                                                                December 31,
                            ASSETS (Note 4)                                              1999                1998
                                                                                      ----------           ---------
<S>                                                                                     <C>                 <C>
Current Assets:
Cash and cash equivalents                                                               $961,666            $436,692
Accounts receivable, net of allowance for doubtful accounts and
 estimated  returns of $70,000 and $0 at December 31, 1999 and 1998                      558,356             350,048
Inventories (Note 1)                                                                     436,017             115,184
Prepaid expenses and other current assets                                                 52,776               8,112
Deposits (Note 1)                                                                       386,074             148,189
                                                                                      ----------           ---------

              Total current assets                                                     2,394,889           1,058,225
                                                                                      ----------           ---------
Equipment, net (Note 3)                                                                  519,576              41,750
Intangible assets (Note 1)                                                               337,584                --
Other assets (Note 1)                                                                    52,314                 700
                                                                                         -------                ---
                                                                                      $3,304,363          $1,100,675

                 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current Liabilities:
Accounts payable (Note 4)                                                             $1,933,122            $610,429
Accrued expenses                                                                         379,768              79,736
Capital lease obligations - current portion (Note 3)                                      96,989                   -
Convertible notes payable - related parties (Note 5)                                        --              200,000
Convertible notes payable (Note 5)                                                       200,000                   -
Net current liabilities of discontinued operations (Note 1 and 12)                     1,342,620                    -
                                                                                      ----------           ---------
              Total current                                                            3,952,499             890,165
                                                                                      ----------           ---------
              liabilities
Capital lease obligations (Note 3)                                                       216,172                    -
                                                                                      ----------           ---------

              Total liabilities                                                        4,168,671             890,165
                                                                                      ==========           =========

Commitments and contingencies (Note 9)

Stockholders'  (deficit) equity (Notes 1, 5, 7, and 12) Preferred  stock,  $0.01
par value; 5,000,000 shares authorized,
  none issued or outstanding                                                                --                   -
Common stock, $0.03 par value; authorized 50,000,000 shares,
31,733,893 in 1999 and 20,750,000 in 1998 shares issued and outstanding                  952,017              62,250
Additional paid in capital                                                             2,204,143              72,250
Deferred compensation                                                                   (575,971)                   -
Accumulated (deficit) earnings                                                        (3,444,497)             75,510
                                                                                      ----------           ---------

              Total Stockholders' (Deficit) Equity                                      (864,308)            210,510
                                                                                      ----------           ---------

                                                                                      $3,304,363          $1,100,675
                                                                                      ==========           =========
</TABLE>

         See accompanying notes to the consolidated financial statements

                                      F-3
<PAGE>


<TABLE>
<CAPTION>
                           MCGLEN INTERNET GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                  December 31, 1999      December 31, 1998
                                                                                  -----------------      -----------------

<S>                                                                                 <C>                    <C>
Net sales                                                                           $27,493,774            $11,525,307

Cost of sales                                                                        25,424,325              9,707,247
                                                                                    ------------            ----------

Gross profit                                                                          2,069,449              1,818,060
                                                                                    ------------            ----------

Operating expenses
              Selling, general and administrative (including $769,079
                 amortization of deferred compensation in 1999)                       5,548,993              1,778,646
              Interest expense (income)                                                  31,463                (20,305)
                                                                                    ------------            ----------
              Total operating expenses                                                5,580,456              1,758,341
                                                                                    ------------            ----------

(Loss) income before income taxes                                                    (3,511,007)                59,719
                                                                                      ==========             ==========

Provision for income taxes                                                                1,000                  1,300
                                                                                     ----------             ----------

Net (loss) income                                                                   ($3,512,007)            $   58,419
                                                                                    ------------            ----------


Basic and diluted net (loss) income per share                                            ($0.11)            $     --
                                                                                     ==========             ==========

Weighted average shares of common stock outstanding:
              Basic and diluted                                                      31,733,893             20,750,000
                                                                                     ==========             ==========
</TABLE>

         See accompanying notes to the consolidated financial statements

                                      F-4

<PAGE>


<TABLE>
<CAPTION>

                           MCGLEN INTERNET GROUP, INC.
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY


                                                                      Additional                     Accumulated      Total
                                              Common Stock            Paid -in        Deferred        Earnings     Stockholders'
                                           Shares       Amount         Capital      Compensation     (Deficit)    Equity (Deficit)
                                                                       -------      ------------     ---------    ----------------
<S>                                      <C>             <C>         <C>            <C>              <C>             <C>
Balance at January 1, 1998               20,000,000      $60,000          --             --          $101,091        $ 161,091

Distributions to stockholders                                                                         (84,000)         (84,000)
Common stock issued in
 exchange for accounts payable              750,000        2,250        72,750                                          75,000
Net income                                                                                             58,419           58,419
                                                                                         --
                                         ----------    ---------   -----------       ----------    ------------       ----------
Balance at December 31, 1998             20,750,000       62,250        72,750           --            75,510          210,510

Distributions to stockholders                                                                          (8,000)          (8,000)
Conversion of notes payable                 200,000          600        19,400                                          20,000
Shares issued in acquisition
  of AMT Components, Inc.                 4,500,000       13,500       388,594                                         402,094
Private placements prior
 to reverse acquisition                     320,000          960       719,040                                         720,000
Deferred compensation
 relating to stock options                                           1,345,050      $(1,345,050)                         -
Amortization of
 deferred compensation
 relating to stock options                                                              769,079                        769,079
Stock split in connection
 with reverse acquisition                  (284,472)     687,256      (687,256)                                            --
Shares issued in recapitalization         3,539,343      106,179     7,384,287                                       7,490,466
Costs related to reverse
 acquisition transaction (Note 1)         2,010,932       60,328    (8,962,248)                                     (8,901,920)
Private placements of stock                 698,090       20,943     1,924,057                                       1,945,470
Net loss                                                                                           (3,512,007)      (3,512,007)

Balance at December 31, 1999             31,733,893  $   952,017    $2,204,143        ($575,971)  $(3,444,497)       $(864,308)
                                        ===========    =========   ===========       ==========    ============       ==========
</TABLE>

         See accompanying notes to the consolidated financial statements

                                      F-5
<PAGE>

<TABLE>
<CAPTION>
                                       MCGLEN INTERNET GROUP, INC.
                                   CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                      December 31,
                                                                                 1999          1998
                                                                             -----------    -----------
<S>                                                                          <C>            <C>
Cash flows from operating activities:
              Net (loss) income                                              ($3,512,007)   $    58,419
              Adjustments to reconcile net (loss) income to net cash
              (used in) provided by operating activities:
              Depreciation and amortization                                      171,888          6,614
              Amortization of deferred compensation                              769,079           --
              Increase in allowance for doubtful accounts                         70,000           --
              Increase in inventory reserves                                      92,949          7,608
              Common stock issued for services                                      --           75,000
              Changes in operating assets and liabilities:
              Accounts receivable                                               (278,308)       (92,575)
              Inventories                                                       (413,782)       (56,654)
              Prepaid expenses and other current assets                          (44,664)        (8,112)
              Deposits                                                          (237,885)      (145,624)
              Other assets                                                       (17,821)          --
              Accounts payable                                                 1,322,692        277,029
              Accrued expenses                                                   300,032         49,889
                                                                             -----------    -----------
              Total adjustments                                                1,734,180        113,175
                                                                             -----------    -----------
Net cash (used in) provided by operating activities                           (1,777,827)       171,594
                                                                             -----------    -----------

Cash flows from investing activities:
              Purchases of equipment                                            (208,772)       (39,949)
              Acquisition of Adrenalin                                           (68,834)          --
              Notes receivable - related parties                                 (33,793)          --
                                                                             -----------    -----------

Net cash used in investing activities                                           (311,399)       (39,949)
                                                                             -----------    -----------

Cash flows from financial activities:
              Borrowings under convertible notes payable                         200,000           --
              Payments on convertible notes payable - related parties           (180,000)       (24,061)
              Borrowings under convertible notes payable - related parties          --          200,000
              Distributions to stockholders'                                      (8,000)       (84,000)
              Payments on capital lease obligations                              (63,270)          --
              Net proceeds from sale of common stock                           2,665,470           --
                                                                             -----------    -----------
              Net cash provided by financing activities                        2,614,200         91,939
                                                                             -----------    -----------
              Net increase in cash and cash equivalents                          524,974        223,584
              Beginning of period                                                436,692        213,108
                                                                             -----------    -----------
              End of period                                                  $   961,666    $   436,692
                                                                             ===========    ===========
</TABLE>

         See accompanying notes to the consolidated financial statements
                                      F-6

<PAGE>


1. Description of Company and Summary of Significant Accounting Policies

Description of Company

Mcglen Internet Group (Mcglen or the Company),  formerly Adrenalin  Interactive,
Inc. (Adrenalin),  was acquired by Mcglen Micro, Inc. in December 1999 through a
transaction in which the stockholders of Mcglen Micro,  Inc. acquired control of
the Company through a reverse acquisition. As a result of the acquisition,  each
share of Mcglen Micro,  Inc. was converted into 0.9889611 shares of the Company,
with  25,485,527  shares  being  issued.  In  addition,  under  the terms of the
acquisition agreement between the Company,  Mcglen Micro, Inc., and a consulting
firm,  who arranged the  acquisition,  the  consulting  firm received  2,010,932
shares of common stock upon  completion of the  acquisition.  The value of these
shares  has been  accounted  for as a cost of the  recapitalization.  The equity
section  of the  balance  sheet and  earnings  per share  information  have been
retroactively  restated  to  reflect  the  exchange  ratio  established  in  the
acquisition agreement and the issuance of shares to the consulting firm.

In  connection  with the  acquisition,  the Board of  Directors  of the  Company
adopted a formal plan to  discontinue  the  operations of Western  Technologies,
Inc.  (Western),  the operating  subsidiary of Adrenalin  that  developed  video
games. As such, the accounting  treatment for the reverse acquisition is that of
a  recapitalization.  The net  liabilities of Western have been  reclassified as
discontinued  operations on the balance  sheets for all periods  presented.  See
Note 12.

In  March  1999,  the  Company  acquired  all  of the  assets  and  assumed  the
liabilities of AMT Components, Inc., (AMT) dba AccessMicro.com,  in exchange for
4,500,000 shares of stock (pre recapitalization).  The purchase price of the AMT
acquisition  was allocated to the acquired  assets based on the  estimated  fair
values at the date of acquisition.  This resulted in an excess of purchase price
over net assets acquired of  approximately  $400,000 which has been allocated to
goodwill and customer lists acquired and is being  amortized on a  straight-line
basis over 3 to 7 years. The operating results for AMT have been included in the
consolidated financial statements from the date of acquisition.  At December 31,
1999,  included in Other Assets is a $33,793 loan,  due in 2002,  from Mcglen to
the former  President of AMT, and currently an officer of Mcglen,  with interest
at 5%.

Mcglen Internet Group, Inc. is an Internet operating company focused on creating
multiple on-line business divisions targeting specific  business-to-business and
business-to-consumer markets. The Company offers over 150,000 computer hardware,
software,  and peripheral  products  servicing  individuals,  small offices/home
offices,  and the  corporate  market  through  its three web sites;  Mcglen.com,
AccessMicro.com, and Techsumer.com.

Going Concern

The accompanying  consolidated  financial statements have been prepared assuming
that the  Company  will  continue as a going  concern,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business.  The Company had a loss of approximately  $3.5 million for the year
ended December 31, 1999 and had a negative working capital of approximately $1.6
million as of December  31, 1999.  Additionally,  the Company is in violation of
certain  covenants  related  to a line of  credit.  As a result,  the  Company's
independent  certified public accountants have expressed substantial doubt about
the Company's ability to continue as a going concern.

During  1999,  the Company  relied on the  proceeds  from  short-term  loans and
private  placement of its common  stock,  which  aggregated  approximately  $2.9
million,  to fund its operating  requirements.  The Company is exploring various
options to raise additional operating capital during 2000.

The  Company  is  currently  in  discussions  with an  investor  and has  signed
agreements  which  provide  for a $1.5  million  bridge  loan and a $24  million
private placement of stock. The interest rate on the bridge loan is 10%, payable
quarterly, or in full upon redemption or conversion, and matures eighteen months
from the closing date. The bridge loan maybe  converted by the investor 150 days
after the closing date at 90% of the daily volume weighted  average price (VWAP)
of the Company's common stock for the 22 days prior to notice of conversion.

The investor will also receive  warrants to purchase between 495,000 and 750,000
of the  Company's  common stock at 115% of the  Company's  closing  common stock
price the day prior to the closing date.

                                       F-7
<PAGE>

The $24 million equity  private  placement will be funded through twelve (12) $2
million  draws on an equity  line of credit  with the same  investor as the $1.5
million  bridge loan  commencing  twelve  months after the  effective  date of a
registration  statement  which the  Company is  required to file for the private
placement. The private placement will be at a price equal to 87% of the VWAP for
the  Company's  common  stock for 22 days  prior to the draw down,  The  private
placement   agreement   contains  certain   conditions  whereby  the  investor's
obligation to fund the draw down is reduced if the  Company's  stock price drops
below a threshold price, as defined.

The Company is dependent on the proceeds fro the above financing  effort and any
other such financing efforts for the continuation and expansion of the Company's
operations.  The Company expects that its cash on hand,  combined with the funds
that the Company expects to raise from new debt and/or equity  financings during
2000,  will be sufficient to fund  operating and capital  expenditures  at least
through December 2000. However, there can be no assurances that the Company will
be able to complete such  financings  on a timely basis and/or under  acceptable
terms and  conditions.  To the  extend  that  adequate  working  capital  is not
available to fund the Company's  operations,  management will consider a variety
of alternatives,  including  delaying the introduction of new marketing  efforts
and reducing or suspending operations.

The consolidated  financial statements do not include any adjustments that might
result from the outcome of these uncertainties.

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its wholly owned subsidiaries, Mcglen Micro, Inc. and Western Technologies, Inc.
All significant  inter-company balances and transactions have been eliminated in
consolidation.

Cash Equivalents

All highly liquid debt instruments  purchased with an original maturity of three
months or less are considered cash equivalents.

Revenue Recognition

For sales of merchandise owned and warehoused by the Company,  Mcglen recognizes
the sales amount as revenue  upon  verification  of the credit card  transaction
authorization   and  shipment  of  the  merchandise.   The  Company  also  sells
merchandise  from suppliers on a "drop-ship"  basis.  The Company takes title to
this  merchandise  from  the  time it is  shipped  by the  supplier  until it is
received by the customer.  Mcglen  recognizes the sale upon  verification of the
credit card  transaction  authorization  and shipment of the  merchandise to the
customer by the supplier.  In instances where the credit card  authorization has
been received but the merchandise  has not yet been shipped,  the Company defers
revenue recognition until the merchandise is shipped.

Inventories

The  Company  accounts  for  inventory  under  the  first-in  first-out  method.
Inventory  is carried at lower of cost or market  realization.  The  Company had
reserves  of  $101,000  and $8,000 for lower of cost or  market,  and  potential
excess and obsolete inventory at December 31, 1999 and 1998, respectively.

Merchandise Return Policy

Merchandise sold by the Company carries the return policy of the manufacturer of
the  merchandise.  The Company  provides for  allowances  for  estimated  future
returns at the time of shipment to the customer based on historical experience.

Deposits

Deposits  represent funds held by credit card  processing  companies as security
for potential  credit card charge backs  against the Company.  Such funds can be
held up to 180 days  subsequent  to the  termination  of  activity  between  the
Company and the processor.

                                       F-8
<PAGE>

Equipment

Equipment is stated at cost.  Depreciation  is computed using the  straight-line
method based on the estimated useful lives of the assets, which range from three
to five years.  Leasehold  improvements  are stated at cost and  depreciation is
computed using the  straight-line  method over the shorter of the useful life of
the asset or the term of the lease.

Software Development Costs

In accordance  with SOP 98-1,  internal and external  costs  incurred to develop
internal-use computer software are expensed during the preliminary project stage
and  capitalized  during the  application  development  stage and amortized over
three  years.  During the years ended  December  31, 1999 and 1998,  $91,000 and
$63,000 was expensed,  respectively. As of December 31, 1999, there was $229,000
capitalized  software  development  costs,  net of accumulated  amortization  of
$21,000.

Accounting for the Impairment of Long-Lived Assets

The Company reviews  long-lived  assets for impairment when events or changes in
circumstances  indicate the carrying  amount of an asset may not be recoverable.
In the event the sum of the expected  undiscounted  future cash flows  resulting
from the use of the asset is less than the  carrying  amount  of the  asset,  an
impairment loss equal to the excess of the asset's  carrying value over its fair
value is recorded.

Advertising Costs

Advertising  costs are charged to expense as incurred.  Advertising  expense was
$905,000  and  $221,000  for  the  years  ended  December  31,  1999  and  1998,
respectively.

Income Taxes

The  Company  follows  the  provisions  of  Statement  of  Financial  Accounting
Standards No. 109,  "Accounting for Income Taxes," which requires recognition of
deferred tax assets and liabilities for the expected future tax  consequences of
events that have been  included in the  financial  statements  and tax  returns.
Deferred tax assets and  liabilities  are  determined  based upon the difference
between the financial  statement and tax bases of assets and liabilities,  using
the  enacted  tax rates in  effect  for the year in which  the  differences  are
expected to reverse.  A valuation  allowance is provided  when it is more likely
than not that deferred tax assets will not be realized.

Fair value of Financial Instruments

The carrying value of the Company's financial instruments,  consisting primarily
of stock  subscriptions  receivable,  receivables,  accounts  payable  and notes
payable,  approximates  fair  value  due  to the  maturity  of  these  financial
instruments and the borrowing costs to the Company.

Stock-based compensation

The Company has adopted SFAS No. 123, "Accounting for Stock-Based Compensation."
SFAS No. 123 which requires  disclosure of the compensation cost for stock-based
incentives  granted  after January 1, 1995 based on the fair value at grant date
for awards.  The Company accounts for stock-based  awards to employees using the
intrinsic  value method in accordance  with  Accounting  Principles  Board (APB)
Opinion No. 25, "Accounting for Stock Issued to Employees."

Net (Loss) Income per Share

Basic net (loss) income per share excludes  dilution and is computed by dividing
net loss by the weighted average number of common shares  outstanding during the
reported  periods.  Diluted net loss per share  reflects the potential  dilution
that could occur if stock  options and other  commitments  to issue common stock
were exercised.  During the year ended December 31, 1999,  2,938,275 options and
493,264  warrants to purchase  common  shares were  anti-dilutive  and have been
excluded  from the weighted  average share  computation.  No options or warrants
were outstanding on December 31, 1998.

                                       F-9
<PAGE>

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of
credit risk consist of accounts  receivable from individuals and merchants,  and
deposits held by credit card processing companies, located in the United States.
Sales are generally made through credit cards and are pre-approved.  The Company
maintains an allowance for doubtful accounts  receivable based upon the expected
collectibility of accounts  receivable and potential credit losses.  Such losses
have been immaterial.

Concentration of Suppliers

The Company is dependent upon key distributors  for  merchandise.  For the years
ended December 31, 1999 and 1998, one  distributor  accounted for  approximately
34.9% and 75.0%,  respectively,  of total purchases.  Management  believes other
suppliers  could provide  similar  merchandise on comparable  terms. A change in
suppliers,  however, could cause a delay in fulfillment of customer orders and a
possible loss of sales, which would affect operating results adversely.

New accounting pronouncements

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities,  which the Company
is  required  to adopt  effective  in its fiscal  year  2000.  SFAS No. 133 will
require  the  Company to record all  derivatives  on the  balance  sheet at fair
value. The Company does not currently engage in hedging activities.  The Company
will adopt SFAS No. 133 for the year ending  December  31, 2000 and the adoption
is expected to have no effect.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported  amounts of revenues and expenses  during the respective  reporting
periods. Actual results could differ from those estimates.

Reclassifications

Certain  reclassifications  have been made to the  December  31, 1998  financial
statements to conform to the December 31, 1999 presentation.

2.       Business Combinations

As discussed in Note 1, the Company  acquired all the assets of AMT  Components,
Inc. in March 1999 (see Note 1).

The following unaudited pro forma combined results of operations for the Company
assumes that the AMT acquisition was completed on January 1, 1998:

                                                      December 31,
                                                 1999             1998
                                             ------------      ------------

 Net sales                                    $29,379,243      $16,160,050
 Gross profit                                  $2,291,545       $2,281,557
 (Loss) income before taxes                  ($3,541,672)         $191,129
 Net (loss) income                           ($3,541,672)         $188,366
Net (loss) income per share                       ($0.11)           $0.01

                                       F-10
<PAGE>


3.       Equipment

     Equipment consists of the following at December 31:

                                                      1999           1998
                                                ------------     ------------
Computer hardware and equipment                   $337,849         $55,533
Computer software                                  291,328               -
Other                                              11,560               -
                                                ------------     ------------
                                                   640,737          55,533
             Less accumulated depreciation       (121,161)        (13,783)
                                                ------------     ------------
                                                 $519,576         $41,750

Mcglen leases certain  equipment,  computer  hardware and software under capital
leases. The following is a summary of this equipment at December 31:

                                                                         1999
                                                                       --------

Computer hardware and equipment                                         244,232
Computer software                                                      132,200
                                                                       --------
                                                                        376,432
             Less accumulated depreciation                             (68,170)
                                                                       --------
                                                                       308,263

The following is a schedule of future  minimum  payments  required under capital
leases, together with their estimated present values as of December 31, 1999:


2000                                                 $124,775
2001                                                  100,874
2002                                                   76,905
2003                                                   54,314
2004                                                   17,849
                                                     --------
Total minimum lease payments                          374,717
Less amount representing interest                    (61,556)
                                                     --------
Present value of minimum lease                        313,161
payments
Current portion                                      (96,989)
                                                     --------
                                                    $216,172
                                                     ========

Certain of these leases are personally  guaranteed by the majority  stockholders
of the Company.

4.       Accounts Payable Lines of Credit

At December 31, 1999, Mcglen had a $500,000 and a $1 million line of credit with
two finance  companies to finance  purchases  from two of the Company's  primary
suppliers.  The lines of credit provide for borrowings  secured by substantially
all of the Company's  assets.  The $500,000 line of credit is cancelable upon 30
days or  less  advance  notice  and is  personally  guaranteed  by the  majority
shareholders of the Company.  The $1 million line contains an automatic  renewal
feature  unless  canceled by either  party upon thirty  days  written  notice by
either party.  Amounts owed under these lines are included in accounts  payable.
Advances  under the $1 million line do not bear  interest,  where advances under
the $500,000  line do not bear  interest if paid within 30 days of the inventory
purchase  date.  Interest on the  advances not paid within 30 days is charged at
the finance  company's  prime rate plus 3.25% (11% at December  31,  1999).  The
$500,000  line  contains  certain  covenants  that require  Mcglen to maintain a
minimum  level of tangible net worth (as  defined).  At December  31, 1999,  the
Company was not in compliance with this covenant,  and,  therefore,  the finance
company  can  initiate  a default on the  facility  at any time.  Management  is
attempting to re-negotiate the covenants.

                                       F-11
<PAGE>

<TABLE>
<CAPTION>

5.       Convertible Subordinated Debt and Related Party Convertible Notes Payable

     Mcglen is obligated under the following at December 31:                                 1999          1998
                                                                                           --------      --------
<S>                                                                                        <C>           <C>
     Convertible notes payable to two individuals, dated June 18, 1999.   Interest         $200,000         --
     payable at 10% per annum. Notes and accrued interest due December 18, 2000.
     Notes are convertible at $2.00 per share.
     Convertible notes payable to two individuals related to the Company's majority            --        $200,000
                                                                                           --------      --------
     shareholders, dated December 15, 1998.  Interest payable at 5% per annum.  In

     1999 $20,000 of the notes were converted to common stock, with the remaining
     balance being repaid.

                                                                                           $200,000      $200,000
                                                                                           ========      ========
</TABLE>

6.       Income Taxes

Prior to  March  1999,  Mcglen  elected  to be taxed  under  the  provisions  of
Subchapter S of the Internal Revenue Code and California Franchise tax reporting
purposes.  Accordingly,  results  of  operations  of Mcglen  for the year  ended
December  31, 1998 and the period  ended March 15, 1999 are reported on Mcglen's
stockholders'  federal  income tax returns.  No federal  income tax is therefore
reported in the Statement of Operations for 1998.  Income taxes in 1998 and 1999
represent the California  franchise tax applied to S  Corporations  at a rate of
1.5% and minimum taxes due.

For the period March 16, 1999 to December 31, 1999, the  difference  between the
amount of income tax  benefit  recorded  and the  amount of income  tax  benefit
calculated  using  the  federal  statutory  rate of 34% is due to net  operating
losses having a valuation  allowance,  due to uncertainties  regarding  Mcglen's
realization of these benefits in future years.  Accordingly,  no tax benefit has
been provided for the period ended December 31, 1999

As of  December  31,  1999,  Mcglen had  federal  and state net  operating  loss
carryforwards of approximately $8,759,000 and $3,803,000,  respectively. The net
operating  loss  carryforwards  will expire at various  dates  beginning in 2012
through 2014 for federal  purposes and 2002 through 2004 for state purposes,  if
not utilized. Utilization of the net operating loss carryforwards may be subject
to a  substantial  annual  limitation  due to the ownership  change  limitations
provided by the Internal  Revenue Code of 1986,  as amended,  and similar  state
provisions.  The annual limitation may result in the expiration of net operating
loss carryforwards prior to utilization.

Under FAS 109, Accounting for Income Taxes,  deferred tax assets and liabilities
are determined based on differences between financial reporting and tax bases of
assets and  liabilities  and are  measured  using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. At December
31, 1999, Mcglen had a deferred tax asset of approximately  $2,978,000 resulting
from  the  operating  loss  carryforward.   However,  based  upon  uncertainties
regarding  Mcglen's  realization  of this  asset in future  years,  a  valuation
allowance has been provided for the full amount of the deferred tax asset.

7.       Stockholders' Equity

Pre-Merger Mcglen Financings

In September  1999,  Mcglen  entered  into an agreement  with a company to raise
$720,000, net of commission. Pursuant to the this agreement, Mcglen sold 320,000
shares of common stock for $2.50 per share,

Immediately prior to the Merger,  Mcglen sold 600,000 shares of common stock for
$2.50 per share in a private placement pursuant to Rule 506. The placement agent
in the Offering  received a commission equal to 10% of the gross proceeds of the
offering; the net proceeds to the Company were $1,350,000.

Pre-Reverse Acquisition (Merger) Adrenalin Financing

Prior to the  Merger,  Adrenalin  received  an  irrevocable  commitment  from an
investor to purchase $750,000 of Adrenalin's common stock upon the completion of


                                       F-12
<PAGE>

the Merger. The $750,000 was placed into escrow until the SEC approved the proxy
statement  soliciting the consent of the Company's  shareholders  for the Merger
and was released upon the closing of the Merger.  138,090  shares were issued in
the $750,000 financing at $5.43 per share.

The investor  received a three year warrant to purchase 29,325 additional shares
of common  stock at an exercise  price of $4.843 per share.  Upon the funding of
the $750,000,  they also  received an additional  three year warrant to purchase
13,809  additional  shares of  common  stock at an  exercise  price of $6.79 per
share.

This financing  agreement  allowed for rerpicing  rights if Mcglen's stock price
dropped below certain  prices as defined in the agreement.  The buyer  exercised
its  repricing  rights  relating to  two-thirds of the shares it obtained in the
financing in January 2000 and received  103,775  shares of the Company's  common
stock.  The buyer exercised its repricing rights relating to the final one-third
of the shares it obtained in the  financing  in April 2000 and  received  39,352
shares of the Company's common stock, see Note 13.

Pursuant  to the  purchase  agreement,  the  Company  filed an S-3  Registration
Statement to register  all shares of common stock issued or issuable,  including
shares of common stock issued upon exercise of the warrants described above. The
Company is required to keep the Registration  Statement effective until July 12,
2001,  or until the buyer no longer holds or has the right to acquire  shares or
until  all of its  shares  may be sold  pursuant  to Rule  144  under  the  Act,
whichever comes first.

Warrants

Warrant activity for the year ended December 31, 1999 is as follows:

<TABLE>
<CAPTION>
                                                               Number      Warrant price      Weighted Average
                                                             of shares       per share         Price per Share
                                                             ---------       ---------         ---------------
<S>                                                         <C>           <C>                  <C>
Issued in connection with private placements                  70,829      $1.98 to $6.17         $3.65
Issued in connection with development agreements             379,102      $4.08 to $5.44         $4.37
Assumed in connection with acquisition                        43,333              $18.00        $18.00
Exercised                                                          0
                                                                --
Outstanding at December 31, 1999                             493,264     $1.98 to $18.00         $5.46
                                                             ========     ===============         =====
</TABLE>

                                       F-13
<PAGE>

In 1996,  the Company  closed an initial  public  offering  of common  stock and
redeemable  warrants.  In connection  with the offering,  the investment  banker
received,  for nominal  consideration,  five year  warrants  to purchase  43,333
shares of common  stock  (which are  included  in the table above as "assumed in
connection with acquisition").

Conversion of notes payable

In December 1998, two individuals related to the majority stockholders of Mcglen
loaned the Company  $200,000 as evidenced by convertible  promissory  notes. The
two notes bore  interest  at 5%,  matured  in  January  2000,  and  contained  a
conversion  option to convert  $10,000 of each note into  100,000  shares of the
Company's stock (prior to applying the reverse acquisition conversion ratio). In
1999,  $10,000 of each note was  converted  into 100,000  shares of common stock
(200,000 shares in total) and the remaining balances were repaid.

Employee Stock Option Plans

The Company has several stock option plans under which options to acquire shares
may be granted to consultants,  directors, officers and certain employees of the
Company including the stock option plans acquired through various  acquisitions.
The Company  accounts  for these plans using the  intrinsic  value  method under
Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to
Employees.  Terms  and  conditions  of the  Company's  option  plans,  including
exercise price and the period in which options are exercisable, generally are at
the discretion of the Board of Directors;  however,  no options are  exercisable
for more than 10 years after date of grant.

Beginning  in 1999,  Mcglen  granted  stock  options to  attract  and retain key
employees.  In connection with the grant of options to employees Mcglen recorded
deferred  compensation of $1,3045,050 for the aggregate  differences between the
exercise  price of the options at their date of grant and the fair market  value

for  accounting  purposes of the common shares  subject to these  options.  Such
amount is included as a reduction of stockholders' equity and is being amortized
on a straight line vesting method over the option vesting  periods,  which range
from one to three  years.  The  Company  recognized  approximately  $769,000  in
compensation  expense for the year ended  December  31,  1999  relating to these
options.

                                       F-14
<PAGE>

The following table summarizes employee stock option plan activity:

<TABLE>
<CAPTION>
                                                                       Options Outstanding
                                                   ----------------------------------------------
                                                                                    Weighted
                                                      Number       Price per     Average Price
                                                     of shares       share         Per Share
                                                     ---------       -----         ---------
Outstanding January 1, 1999                                 --                               --
<S>                                                    <C>        <C>                      <C>
Options granted                                        3,193,790  $0.10 - $3.63            $0.54
Assumed in connection with acquisition                    92,156  $0.66 - $3.28             1.77
Options exercised                                           --                               --
Options forfeited                                    (1,179,336)                            0.10
                                                     -----------                            ----
Outstanding December 31, 1999                          2,106,610                           $0.91
                                                       =========                           =====
</TABLE>

In February  2000,  the Board of  Directors  of Mcglen  approved  the 1999 Stock
Option  Plan  (the  1999  Plan)  for   issuance  of  common  stock  to  eligible
participants.  The Plan provides for the granting of incentive stock options and
non-qualified  stock  options.  Options  generally  expire  after 10 years.  The
Company has granted  non-qualified options to certain employees and directors of
the  Company to purchase  common  stock.  The terms of the  options  provide for
vesting,  over a 1 to 3-year  period,  except for  options to  purchase  183,247
shares of common stock at December 31, 1999 which vested upon  completion of the
Company's reverse acquisition.

Non -plan options

Non-plan option activity for the year ended December 31, 1999 is as follows:
<TABLE>
<CAPTION>
                                                                      Options Outstanding
                                                 -------------------------------------------------
                                                                                     Weighted
                                                    Number         Price per      Average Price
                                                   of shares         share          Per Share
                                                   ---------         -----          ---------
<S>                                                    <C>        <C>                      <C>
Outstanding January 1, 1999                               --                                 --
Options granted                                           --                                 --
Assumed in connection with acquisition                 831,665    $0.75 - $15.00           $3.05
Options exercised                                         --                                 --
Options forfeited                                         --                                 --
Outstanding December 31, 1999                          831,665    $0.75 - $15.00           $3.05
                                                       =======                             =====
</TABLE>

The  Company  entered  into an  agreement  with a  consultant  in August 1999 to
perform  certain  market   consultation  and  corporate  finance  services.   In
consideration  for the services to be performed by the  consultant,  the Company
granted  500,000 stock options with various  exercise  prices  between $2.50 and
$5.00 per share, included in the table above.



                                      F-15
<PAGE>


The  following  table  summarizes   information  about  Mcglen's  stock  options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>

                                     Options Outstanding               Options Exercisable
                  ----------------------------------------------------------------------------------
                       Number              Weighted          Weighted      Number        Weighted
                   Outstanding at          Average           Average   Exercisable at    Average
    Range of        December 31,          Remaining          Exercise   December 31,     Exercise
 Exercise Price         1999        Contractual Life (Yrs)    Price         1999          Price
 --------------         ----        ----------------------    -----         ----          -----
    <S>               <C>                    <C>            <C>            <C>           <C>
         $   0.10       637,385              1.9            $ 0.10         408,936       $ 0.10
      0.75 - 1.20        53,333                0              0.82          53,333         0.82
             0.99     1,255,981              2.7              0.99         182,958         0.99
             1.00         8,328              4.0              1.00           5,496         1.00
             1.50        25,000              1.2              1.50          25,000         1.50
             1.88        82,162              2.7              1.88          66,227         1.88
             1.88       239,999                0              1.88         239,999         1.88
             2.47         1,088              1.8              2.50             494         2.50
      2.50 - 5.00       500,000                0              3.45         500,000         3.45
             3.28         1,666              3.4              3.28           1,100         3.28
             3.63       120,000              3.0              3.63               0         3.63
            15.00        13,333              2.0             15.00          13,333        15.00
                         ------                                             ------
   $0.10 - $15.00     2,938,275              1.8             $1.42       1,496,876        $1.88
   ==============     =========              ===            ======       =========        =====
</TABLE>

Pro forma  information  regarding net loss and net loss per share is required by
SFAS 123,  and has been  determined  as if the  Company  had  accounted  for its
employee stock  purchase plan and employee stock options  granted under the fair
value method of SFAS 123. The fair value for these  options was estimated at the
date of grant using a  Black-Scholes  option pricing model for the single option
approach  with  the  following  assumptions:  risk-free  interest  rate of 5.8%,
volatility  factor of the expected market price of the Company's common stock of
30%,  an  expected  life of the  options of 3 years from the grant  date,  a 20%
forfeiture rate, and a dividend yield of zero. The average fair value of options
at the date of grant was $1.69 per share during 1999.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is  amortized  to pro forma  net loss  over the  options'  vesting  period.  The
Company's historical and pro forma information follows:

                                                     December 31, 1999
                                                     -----------------
Net loss                    As reported                 $3,512,007
                            Pro forma                   $4,293,106
Basic EPS                   As reported                 $0.11
                            Pro forma                   $0.14
Diluted EPS                 As reported                 $0.11
                            Pro forma                   $0.14

Stock Splits

On May 1, 1998, the Company effected a 33.33 for 1 split of its Common Stock. On
April 30, 1999, the Board of Directors of the Company  approved a 10 for 1 stock
split. All common shares and per share data have been retroactively  adjusted to
reflect the stock splits.

8. Segment Information

In 1998, the Company adopted Statement of Financial Accounting Standards No. 131
"Disclosure about Segments of an Enterprise and Related  Information"  (SFAS No.
131).  SFAS No. 131  requires  companies  to report  financial  and  descriptive
information about its reportable operating segments, including segment profit or
loss, certain specific revenue and expense items, and segment assets, as well as
information about the revenues derived from the Company's  products or services,
the  countries in which the company earns  revenues and holds assets,  and major
customers.  SFAS No. 131 also requires  companies that have a single  reportable
segment to disclose  information about products and services,  information about




                                       F-16
<PAGE>

geographic areas, and information  about major customers.  SFAS No. 131 requires
the use of the management  approach to determine the information to be reported.
The management approach is based on the way management  organizes the enterprise
to assess performance and make operating  decisions  regarding the allocation of
resources.  It is management's  opinion that the Company has only one reportable
segment,  has no  concentration  of customers in one  specific  geographic  area
within the United States and does not have any major customers, as defined.

9. Commitments

The Company  leases its office  facilities  and equipment  under  non-cancelable
operating leases which provide for minimum annual rentals and escalations  based
on increases in real estate taxes and other operating  expenses.  Minimum annual
operating lease commitments at December 31, 1999 were as follows:

Year Ending December 31,
------------------------
2000                                                  $124,630
2001                                                   110,994
2002                                                    98,238
2003                                                    66,026
2004                                                    53,522
Thereafter                                               4,471
                                                         -----
Total minimum payments                                $346,887
                                                      ========

Rent  expense was $90,284 and $42,462 for the years ended  December 31, 1999 and
1998,  respectively.  In January 2000,  the Company  agreed to lease  additional
warehouse and office space. The amounts due under this lease are included in the
commitments listed above. In March 2000, the Company agreed to sub-lease certain
a portion of the  facility  previously  occupied  by Western to its former  Vice
President.  The sub lease is $7,026 per month for six months at which time there
is an option to extend the sub-lease for an additional six months.

The Company has entered into  employment  agreements  with various  officers for
periods of three to five  years.  These  agreements  require  the Company to pay
annual  salaries of  approximately  $465,000 and are generally  terminable  with
three to twelve months severance pay.

10.  Supplemental Disclosures of Cash Flow Information

<TABLE>
<CAPTION>

                                                                                         1999          1998
                                                                                        ------        ------
<S>                                                                                     <C>             <C>
Cash paid during the year ended December 31:
         Interest                                                                       $20,614         $285
         Income Taxes                                                                    $1,863       $2,201
Non-cash investing and financing activities:
         Equipment acquired under capital lease obligations                            $376,432            -
         Conversion of convertible notes payable - related parties to equity            $20,000            -
         Conversion of accounts payable to equity                                             -      $75,000
         Acquisition of Adrenalin Interactive, Inc.                                  $1,105,286
         Acquisition of AMT Components, Inc.                                           $402,164
         Net current liabilities of discontinued operations assumed in               $1,342,620            -
                     connection with acquisition of Adrenalin
</TABLE>


11.      Fourth Quarter Adjustments

In the  fourth  quarter of 1999,  the  Company  recorded  net  adjustments  that
increased its net loss by approximately  $981,000.  These adjustments  primarily
consist of $250,000 write-off of various accounts receivable, $167,000 write-off
of  inventory,  recording  $101,000 of  inventory  reserves,  recording  $43,000
amortization  of  goodwill  for  the  AMT  acquisition,   $344,000  of  deferred
compensation expense, and other accruals of $76,000.

12.  Discontinued Operations

Upon consummation of the reverse  acquisition,  the Board of Directors of Mcglen
adopted a formal plan to  discontinue  the  operations of Western  Technologies,

                                       F-17
<PAGE>

Inc.  (Western).  Western is a wholly  owned  subsidiary  of the Company and was
acquired as part of the reverse acquisition between Adrenalin Interactive,  Inc.
and Mcglen Micro,  Inc. The Company  anticipates  fulfilling two of the software
development  contract  obligations  currently  being conducted by Western during
April 2000.  Western has requested for two other contracts to be terminated.  An
additional  contract  has been  assigned to Western's  former Vice  President of
Operations  for  completion,  releasing  Mcglen  from  any  further  contractual
liability.  However, Mcglen would still be responsible for any product liability
issues that may arise from the two completed contracts.

As a result,  Mcglen  recorded an adjustment  of  $2,214,000  to write-down  the
assets of  Western to their  estimated  net  realizable  value and an accrual of
$650,000  for  operating  losses  during  the  phase-out  period.  No income tax
benefits  have been  allocated  to the write  down or the losses as there are no
realizable   taxable   benefits   available  to  allocate  to  the  discontinued
operations.

The  operations  of  Western  have  been  reclassified  as  net  liabilities  of
discontinued operations on the balance sheet at December 31, 1999.

Information  relating to the  operations of Western for the years ended December
31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
                                                                        1999                1998
                                                                        ----                ----
<S>                                                                  <C>                 <C>
Net revenue                                                          $3,234,315          $2,524,920
Expenses                                                              6,271,714          4,660,223
                                                                      ---------          ---------
Loss from discontinued operations                                   (3,037,399)
                                                                                        (2,135,303)
Loss from disposal of Western Technologies, Inc.                   (2,864,048)                    -
                                                                   ------------                   -
Net loss                                                           ($5,901,447)        ($2,135,303)
                                                                   ============        ============
</TABLE>

Included in the 1999 net loss are write-offs of patents,  goodwill, and property
and equipment of $2,020,000, $1,579,000, and $217,000, respectively.

The  assets  and  liabilities  of  Western  are  included  in  the  accompanying
consolidated balance sheet as of December 31, 1999 as follows:

                                                                     1999
                                                                   ---------
Current assets:
         Cash                                                        $17,491
         Accounts and other receivables
                                                                       6,170
         Prepaid expenses and other assets                            69,010
         Costs in excess of billings                                 394,134
                                                                   ---------
Total current assets                                                 486,805
                                                                   ---------

Current liabilities:
         Accounts payable and accrued liabilities                    556,601
         Billings in excess of costs on contracts                    453,156
         Accrued losses on development contracts
                                                                     143,430
         Notes payable                                               479,394
         Loss on disposal                                            650,000
                                                                     -------
Total current liabilities                                          1,829,425
                                                                   ---------

Net current liabilities                                          $(1,342,620)
                                                                   =========

Included in notes  payable for Western at December 31, 1999,  is a $396,000 note
to a finance  company,  interest only, at prime plus 3.5% (11.5% at December 31,
1999).  The Note is personally  guaranteed  by the Company's  former CEO and his
wife and is secured by a Second Trust Deed on their residence. In December 1999,
the note was  extended  until  December  30,  2000.  Two other  notes to finance
companies in the amount of approximately $79,000 were repaid in January 2000.

                                       F-18
<PAGE>

13.  Subsequent events (unaudited)

In January 2000,  Mcglen was notified by a stockholder  of his desire to reprice
certain stock issued to the  stockholder in July and December 1999 per the terms
of a private placement  agreement.  As a result, an additional 103,775 shares of
stock were issued to this stockholder. In April 2000, this stockholder exercised
its repricing  rights  relating to the final one-third of the shares it obtained
in the private  placement  agreement and received an additional 39,352 shares of
the Company's common stock.

In  March  2000,  Mcglen  entered  into  $109,000  convertible  promissory  note
agreements with certain individuals  (Lender). If Mcglen does not have a capital
infusion  or any other  type of  financing  within six months of the date of the
loan, the Lender's have an option to convert the debt into Mcglen's stock at 90%
of the low five day VWAP of Mcglen's  common stock for 22 the  consecutive  days
prior to the trading date on which notice of  conversion is given by the Lender.
In  connection  with the  agreement,  Mcglen also gave the Lender's  warrants to
purchase Mcglen stock equal to 33% of the number of shares converted by the debt
holder,  at 115% of the average  closing  price of Mcglen's  common stock for 10
days  prior to the date of the loan.  If the loan is not repaid by the due date,
the Lender's receive an additional warrant to purchase Mcglen stock equal to 17%
of the number of shares  converted  by the debt  holder,  at 115% of the average
closing  price of  Mcglen's  common  stock for 10 days  prior to the date of the
loan.  The debt and  accrued  interest  thereon is due  September  30, 2000 with
interest payable at 10%.

                                      F-19