SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

                                    FORM 10-Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934.

     For the quarterly period ended June 30, 2001

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934.

     For the transition period from __________ to __________

                        Commission file number 000-25277


                       PACIFIC MAGTRON INTERNATIONAL CORP.
             (Exact Name of Registrant as Specified in Its Charter)


            Nevada                                                88-0353141
(State or Other Jurisdiction of                               (I.R.S. Employer
 Incorporation or Organization)                              Identification No.)


               1600 California Circle, Milpitas, California 95035
                    (Address of Principal Executive Offices)


                                 (408) 956-8888
              (Registrant's Telephone Number, Including Area Code)


     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

                      Applicable Only to Corporate Issuers

                    Common Stock, $0.001 par value per share:
           10,428,300 shares issued and outstanding at August 14, 2001
<PAGE>
Part I. - Financial Information

     Item 1. - Consolidated Financial Statements

               Consolidated balance sheets as of June 30, 2001
               (Unaudited) and December 31, 2000                             1-2

               Consolidated statements of operations for the three months
               and six months ended June 30, 2001 and 2000 (Unaudited)         3

               Consolidated statements of cash flows for the six months
               ended June 30, 2001 and 2000 (Unaudited)                        4

               Notes to consolidated financial statements                   5-11

     Item 2. - Management's Discussion and Analysis of Financial
               Condition and Results of Operations                         12-18

     Item 3. - Quantitative and Qualitative Disclosures About Market Risk     18

Part II - Other Information

     Item 2. - Changes in Securities and Use of Proceeds                      19

     Item 4. - Submission of Matters to a Vote of Security Holders            19

     Item 6. - Exhibits and Reports on Form 8-K                            19-20

Signature
<PAGE>
                       PACIFIC MAGTRON INTERNATIONAL CORP.

                           CONSOLIDATED BALANCE SHEETS


                                                       June 30,     December 31,
                                                         2001           2000
                                                     -----------    -----------
                                                     (Unaudited)
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                          $ 2,531,000    $ 4,874,200
  Accounts receivable, net of allowance for
    doubtful accounts of $225,000 in 2001
    and $175,000 in 2000                               4,236,600      5,629,200
  Inventories                                          4,192,200      3,917,900
  Prepaid expenses and other current assets              532,700        446,500
  Income taxes receivable                                450,300        215,700
  Notes receivable from shareholders                     128,600        171,400
  Deferred income taxes                                   80,300         80,300
                                                     -----------    -----------

TOTAL CURRENT ASSETS                                  12,151,700     15,335,200

PROPERTY, PLANT AND EQUIPMENT, NET                     4,677,700      4,752,300

INVESTMENT IN RISING EDGE                                458,100        468,000

INVESTMENT IN TARGETFIRST                                     --        250,000

DEPOSITS AND OTHER ASSETS                                 78,100         55,600
                                                     -----------    -----------

                                                     $17,365,600    $20,861,100
                                                     ===========    ===========

          See accompanying notes to consolidated financial statements.

                                        1
<PAGE>
                       PACIFIC MAGTRON INTERNATIONAL CORP.

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                         June 30,      December 31,
                                                           2001            2000
                                                       ------------    ------------
                                                       (Unaudited)
<S>                                                    <C>             <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of notes payable                     $     53,100    $     51,400
  Floor plan inventory loans                                  3,500       1,329,500
  Accounts payable                                        5,345,100       5,788,600
  Accrued expenses                                          326,800         541,300
                                                       ------------    ------------

TOTAL CURRENT LIABILITIES                                 5,728,500       7,710,800

NOTES PAYABLE, LESS CURRENT PORTION                       3,259,400       3,286,200

DEFERRED INCOME TAXES                                         6,300           6,300
                                                       ------------    ------------

TOTAL LIABILITIES                                         8,994,200      11,003,300
                                                       ------------    ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
  Preferred stock, $0.001 par value; 5,000,000
    shares authorized; no shares issued and
    outstanding                                                  --              --

  Common stock, $0.001 par value;  25,000,000 shares
    authorized; 10,431,500 and 10,100,000 shares
    issued and outstanding at June 30, 2001 and
    December 31, 2000 respectively                           10,400          10,100
  Additional paid-in capital                              1,662,800       1,463,100
  Retained earnings                                       6,699,300       8,384,600
                                                       ------------    ------------
                                                          8,372,500       9,857,800
  Less: Treasury stock, at cost, 1,800 and
          0 shares at June 30, 2001 and
          December 31, 2000 respectively                     (1,100)             --
                                                       ------------    ------------
TOTAL SHAREHOLDERS' EQUITY                                8,371,400       9,857,800
                                                       ------------    ------------

                                                       $ 17,365,600    $ 20,861,100
                                                       ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        2
<PAGE>
                       PACIFIC MAGTRON INTERNATIONAL CORP.

                        CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                          Three Months Ended              Six Months Ended
                                                               June 30,                       June 30,
                                                     ----------------------------    ----------------------------
                                                         2001            2000            2001            2000
                                                     ------------    ------------    ------------    ------------
                                                      (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
<S>                                                  <C>             <C>             <C>             <C>
SALES                                                $ 14,961,400    $ 21,984,300    $ 34,917,900    $ 44,799,500

COST OF SALES                                          13,981,700      20,213,300      32,558,200      41,246,700
                                                     ------------    ------------    ------------    ------------

GROSS MARGIN                                              979,700       1,771,000       2,359,700       3,552,800

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES            2,051,100       1,557,100       4,141,200       3,218,600
                                                     ------------    ------------    ------------    ------------

(LOSS) INCOME FROM OPERATIONS                          (1,071,400)        213,900      (1,781,500)        334,200
                                                     ------------    ------------    ------------    ------------

OTHER (EXPENSE) INCOME:
  Interest income on shareholder notes                         --           2,200              --           4,500
  Interest income                                          34,300          59,700          88,000         110,600
  Interest expense                                        (67,800)        (72,500)       (141,700)       (144,600)
  Equity loss on investment                                (3,900)             --          (9,900)             --
  Impairment loss on investment                          (250,000)             --        (250,000)             --
  Other income                                              7,000              --          14,200              --
                                                     ------------    ------------    ------------    ------------

TOTAL OTHER (EXPENSE)                                    (280,400)        (10,600)       (299,400)        (29,500)
                                                     ------------    ------------    ------------    ------------

(LOSS) INCOME BEFORE INCOME TAXES
  AND MINORITY INTEREST                                (1,351,800)        203,300      (2,080,900)        304,700

INCOME TAX BENEFIT (EXPENSE)                              140,000         (81,300)        365,500        (121,900)
                                                     ------------    ------------    ------------    ------------

(LOSS) INCOME BEFORE MINORITY INTEREST                 (1,211,800)        122,000      (1,715,400)        182,800

MINORITY INTEREST IN FRONTLINE LOSS                            --              --          30,000              --
                                                     ------------    ------------    ------------    ------------
NET (LOSS) INCOME                                    $ (1,211,800)   $    122,000    $ (1,685,400)   $    182,800
                                                     ============    ============    ============    ============

Basic and diluted (loss) earnings per share          $      (0.12)   $       0.01    $      (0.17)   $       0.02
                                                     ============    ============    ============    ============

Basic weighted average common shares outstanding       10,162,200      10,100,000      10,131,300      10,100,000

Stock options                                                  --          49,800              --          67,300
                                                     ------------    ------------    ------------    ------------

Diluted weighted average common shares outstanding     10,162,200      10,149,800      10,131,300      10,167,300
                                                     ============    ============    ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        3
<PAGE>
                       PACIFIC MAGTRON INTERNATIONAL CORP.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,                                     2001           2000
                                                          -----------    -----------
                                                          (Unaudited)    (Unaudited)
<S>                                                       <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss) income                                       $(1,685,400)   $   182,800
  Adjustments to reconcile net (loss) income to
    net cash used in operating activities:
      Equity in loss in investment                              9,900             --
      Impairment loss on investment - TargetFirst             250,000             --
      Depreciation and amortization                           135,100        102,300
      Provision for doubtful accounts                          50,000             --
      Loss on disposal of fixed assets                          1,400             --
      Changes in operating assets and liabilities:
           Accounts receivable                              1,342,600       (346,100)
           Inventories                                       (274,300)      (390,600)
           Prepaid expenses and other current assets          113,800         28,600
           Income tax receivable                             (234,600)      (215,700)
           Accounts payable                                  (443,500)      (201,100)
           Accrued expenses                                  (214,500)      (100,000)
                                                          -----------    -----------

NET CASH USED IN OPERATING ACTIVITIES                        (949,500)      (939,800)
                                                          -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Notes and interest receivable from shareholders              42,800         (4,500)
  Investments in Rising Edge and TargetFirst                       --       (750,000)
  Deposits and other assets                                   (22,500)       501,400
  Acquisition of property and equipment                       (61,800)       (22,800)
                                                          -----------    -----------

NET CASH USED IN INVESTING ACTIVITIES                         (41,500)      (275,900)
                                                          -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (decrease) increase in floor plan inventory loans    (1,326,000)     1,090,200
  Principal payments on notes payable                         (25,100)       (23,200)
  Treasury stock purchases                                     (1,100)            --
                                                          -----------    -----------

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES        (1,352,200)     1,067,000
                                                          -----------    -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                  (2,343,200)      (148,700)

CASH AND CASH EQUIVALENTS, beginning of period              4,874,200      4,416,300
                                                          -----------    -----------

CASH AND CASH EQUIVALENTS, end of period                  $ 2,531,000    $ 4,267,600
                                                          ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        4
<PAGE>
                       PACIFIC MAGTRON INTERNATIONAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. ORGANIZATION

Pacific Magtron  International Corp. (formerly Wildfire Capital  Corporation,  a
publicly traded shell corporation) (the Company or PMIC), a Nevada  corporation,
was incorporated on January 8, 1996.

On  July  17,  1998  the  Company  completed  the  acquisition  of  100%  of the
outstanding  common  stock of Pacific  Magtron,  Inc.  (PMI),  in  exchange  for
9,000,000  shares of the Company's $.001 par value common stock.  For accounting
purposes,  the acquisition has been treated as the acquisition of the Company by
PMI with PMI as the acquirer (reverse acquisition).

PMI, a  California  corporation,  was  incorporated  on August 11,  1989.  PMI's
principal  activity  consists of the importation  and wholesale  distribution of
electronics  products,  computer  components,  and computer peripheral equipment
throughout the United States.

In May 1998, the Company  formed its Frontline  Network  Consulting  (Frontline)
division,  a corporate  information systems group that serves the networking and
personal computer requirements of corporate customers. In July 2000, the Company
formed  Frontline  Network  Consulting,  Inc.  (FNC), a California  corporation.
Effective  October 1, 2000, PMI  transferred  the assets and  liabilities of the
Frontline  division to FNC.  Concurrently,  FNC issued  20,000,000 shares to the
Company and became a  wholly-owned  subsidiary.  On January 1, 2001,  FNC issued
3,000,000  shares  of its  common  stock to  three  key FNC  employees  for past
services rendered pursuant to certain Employee Stock Purchase  Agreements.  As a
result of this transaction,  the Company's ownership interest in FNC was reduced
to 87%.

In May 1999, the Company  entered into a Management  Operating  Agreement  which
provided  for a 50%  ownership  interest in Lea  Publishing,  LLC, a  California
limited  liability  company ("Lea") formed in January 1999 to develop,  sell and
license  software  designed to provide  Internet users,  resellers and providers
advanced solutions and applications. On June 13, 2000, the Company increased its
direct and indirect interest in Lea to 62.5% by completing its investment in 25%
of the outstanding common stock of Rising Edge Technologies, the other 50% owner
of Lea. Lea is a development stage company.

In August 2000, PMI formed  Pacific  Magtron (GA),  Inc., a Georgia  corporation
whose principal activity is the wholesale  distribution of PMI's products in the
eastern United States market.

2. CONSOLIDATION AND UNCONSOLIDATED INVESTEES

The accompany  consolidated financial statements include the accounts of Pacific
Magtron International Corp. and its wholly-owned  subsidiaries,  PMI and Pacific
Magtron  (GA),  Inc.,  and  majority-owned   subsidiaries,   FNC  and  Lea.  All
intercompany  accounts and transactions have been eliminated in the consolidated
financial  statements.  Investments in companies in which financial ownership is
at least 20%, but less than a majority of the voting  stock,  are  accounted for
using  the  equity  method.  Investments  with  ownership  of less  than 20% are
accounted for on the cost method.

3. FINANCIAL STATEMENT PRESENTATION

The accompanying  consolidated financial statements at June 30, 2001 and for the
three and six month periods ended June 30, 2001 and 2000 are unaudited. However,
they have been  prepared  on the same basis as the annual  financial  statements
and, in the opinion of management,  reflect all adjustments,  which include only

                                        5
<PAGE>
normal recurring adjustments,  necessary for a fair presentation of consolidated
financial position and results of operations for the periods presented.  Certain
information  and  footnote   disclosures  normally  included  in  the  financial
statements prepared in accordance with generally accepted accounting  principles
have been omitted.  These  consolidated  financial  statements should be read in
conjunction with the audited consolidated  financial statements and accompanying
notes for the year ended December 31, 2000 presented in the Company's Form 10-K.

4. NEW ACCOUNTING PRONOUNCEMENTS

In July 2000,  the Emerging  Issues Task Force  ("EITF")  reached a consensus on
Issue 00-10,  "Accounting  for Shipping and Handling Fees and Costs." This issue
addresses the income statement classification for shipping and handling fees and
costs by companies.  The Company believes that its current  accounting  policies
are in  conformity  with this issue and does not  believe  that Issue 00-10 will
have a material effect on the Company's financial statements.

In May 2000,  the EITF  reached a  consensus  on Issue  00-14,  "Accounting  for
Certain Sales  Incentives."  This issue addresses the recognition,  measurement,
and income statement  classification for sales incentives offered voluntarily by
a vendor without charge to customers that can be used in, or are  exercisable by
a  customer  as a result  of, a single  exchange  transaction.  The  Company  is
currently  analyzing  Issue  00-14.  However,   based  on  management's  current
understanding and interpretation, Issue 00-14 is not expected to have a material
impact on the Company's financial position or results of operations, except that
certain reclassifications may occur.

In April 2001,  the EITF  reached a consensus  on Issue  00-25,  "Vendor  Income
Statement  Characterization  of  Consideration  to a Purchaser  of the  Vendor's
Products or Services."  This issue  addresses the  recognition,  measurement and
income  statement  classification  of  consideration,  other than that  directly
addressed by Issue 00-14, from a vendor to a retailer or wholesaler. The Company
is currently  analyzing  Issue 00-25.  However,  based on  management's  current
understanding and interpretation, Issue 00-25 is not expected to have a material
impact on the Company's financial position or results of operations, except that
certain  reclassifications may occur. The consensus's reached in Issue 00-25 and
Issue 00-14 (amended by Issue 00-25) are effective for fiscal quarters beginning
after December 15, 2001.

In June 2001, the Financial Accounting Standards Board finalized FASB Statements
No. 141,  BUSINESS  COMBINATIONS  (SFAS 141),  and No. 142,  GOODWILL  AND OTHER
INTANGIBLE  ASSETS (SFAS 142).  SFAS 141 requires the use of the purchase method
of  accounting  and  prohibits  the use of the  pooling-of-interests  method  of
accounting for business  combinations  initiated  after June 30, 2001.  SFAS 141
also requires that the Company recognize  acquired  intangible assets apart from
goodwill if the  acquired  intangible  assets meet  certain  criteria.  SFAS 141
applies to all  business  combinations  initiated  after  June 30,  2001 and for
purchase  business  combinations  completed  on or after July 1,  2001.  It also
requires,  upon adoption of SFAS 142, that the Company  reclassify  the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

SFAS 142  requires,  among  other  things,  that  companies  no longer  amortize
goodwill,  but instead  test  goodwill  for  impairment  at least  annually.  In
addition,  SFAS 142 requires that the Company  identify  reporting units for the
purposes of assessing  potential  future  impairments of goodwill,  reassess the
useful  lives  of  other  existing  recognized   intangible  assets,  and  cease
amortization of intangible  assets with an indefinite useful life. An intangible
asset  with an  indefinite  useful  life  should be  tested  for  impairment  in
accordance  with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal  years  beginning  after  December  15,  2001 to all  goodwill  and other
intangible assets recognized at that date,  regardless of when those assets were
initially  recognized.  SFAS 142 requires the Company to complete a transitional
goodwill  impairment  test six months from the date of adoption.  The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142.

                                        6
<PAGE>
5. STOCK OPTIONS AND EQUITY AWARDS

During the six months  ended June 30,  2001,  570,000  options to  purchase  the
Company's  common  stock at $0.88 to $0.97 per share  were  granted  to  certain
officer  shareholders  and  directors  of the  Company.  No issued  options were
exercised during the six months ended June 30, 2001.

On January  1,  2001,  under the terms of the 2000 FNC Stock  Option  Plan,  FNC
granted  3,905,000 options to purchase its common stock at $0.01 per share (fair
market value based upon an independent appraisal) to employees. Also in order to
preserve FNC's election to file consolidated tax returns, which require at least
an 80% ownership interest by the Company,  FNC granted to the Company 20,000,000
options to purchase  its common  stock at $0.01 per share.  No FNC options  were
exercised and 655,000 FNC options were  cancelled  due to employee  terminations
during the six months ended June 30, 2001.

During the three and six month periods ended June 30, 2001,  options to purchase
843,222 shares of the Company's  common stock were excluded from the calculation
of diluted weighted average common shares outstanding because their effect would
be antidilutive.

6. STATEMENTS OF CASH FLOWS

Cash was paid during the six months ended June 30, 2001 and 2000 for:

SIX MONTHS ENDING JUNE 30,           2001           2000
                                   --------       --------
Income taxes                         $1,500       $157,000
                                   ========       ========
Interest                           $141,700       $144,600
                                   ========       ========

As further discussed in Note 12, the Company issued 333,333 shares of its common
stock  (valued at  $200,000)  in June 2001 in exchange  for prepaid  advertising
services.

7. INVESTMENTS

In May 1999, the Company and Rising Edge Technologies, Ltd., a corporation based
in  Taiwan  (Rising  Edge),   entered  into  an  Operating  Agreement  with  Lea
Publishing,  LLC, a California limited liability company (Lea) formed in January
1999. The objective of Lea is to provide internet users, resellers and providers
advanced  solutions  and  applications.   Lea  is  developing  various  software
products.  Prior to June 13, 2000,  the Company and Rising Edge each owned a 50%
interest in Lea. The brother of a director, officer and principal shareholder of
the Company is also a director,  officer and the majority  shareholder of Rising
Edge (Rising Edge Majority  Shareholder).  The Company has no commitment to fund
future  losses of Lea beyond its  investment  or guarantee any debt that Lea may
incur.  On June 13,  2000,  the Company  purchased a 25%  ownership  interest in
Rising Edge common stock for $500,000 from the Rising Edge Majority Shareholder.
As such, the Company has a 62.5% combined direct and indirect ownership interest
in Lea, which requires the consolidation of Lea with the Company. The Company is
accounting for its investment in Rising Edge by the equity method whereby 25% of
the equity interest in the net income or loss of Rising Edge  (excluding  Rising
Edge's portion of the results of Lea and all inter-company  transactions)  flows
through to the Company.  During the six months ended June 30, 2001, Lea incurred
$21,800 of software  consulting  expenses.  The Company's share of Rising Edge's
loss during the six months ended June 30, 2001 was $9,900.

In November 1999, Lea entered into a software  development  contract with Rising
Edge which calls for the development of certain internet software by Rising Edge
for a $940,000 fee. Of this amount,  the contract  specifies that $440,000 shall
be  applied  to  services  performed  in 1999 and  $500,000  shall be applied to
services  to be  performed  in 2000,  and the  Company  and Rising Edge are each

                                       7
<PAGE>
responsible  for $470,000 of the fee. During 1999, the Company paid $470,000 for
its portion of the total fee payable  under the  contract.  During 2000,  Rising
Edge performed  $100,000 worth of services as specified  under the contract.  In
January 2001, the contract was terminated by mutual agreement of the parties and
the Company's remaining portion of the software  development fees paid under the
contract, totaling $200,000, was refunded.

In January 2000, the Company acquired, in a private placement, 485,900 shares of
convertible preferred stock of an unrelated nonpublic company, TargetFirst, Inc.
(formerly  ClickRebates.com),  for  approximately  $250,000 under the terms of a
Series A  Preferred  Stock  Purchase  Agreement.  The  Company's  investment  in
TargetFirst Inc., which represents  approximately 8% of the $3 million preferred
stock  offering,  was being  accounted for using the cost method.  In connection
with  the  Company's  ongoing  evaluation  of the net  realizable  value of this
investment, the Company elected to reserve the investment 100% during the second
quarter of 2001.

8. SEGMENT INFORMATION

The Company has four reportable  segments:  PMI,  PMIGA,  Frontline and Lea. PMI
imports and distributes electronic products,  computer components,  and computer
peripheral  equipment to various  customers  throughout the United States,  with
PMIGA  focusing  on the east coast area.  Frontline  serves the  networking  and
personal  computer  requirements  of  corporate  customers.  Lea  is  developing
advanced solutions and applications for internet users, resellers and providers.
The accounting  policies of the segments are the same as those  described in the
summary of significant accounting policies presented in the Company's Form 10-K.
The Company  evaluates  performance based on income or loss before income taxes,
not including  nonrecurring  gains or losses.  Inter-segment  transfers  between
reportable segments have been insignificant.  The Company's  reportable segments
are strategic  business units that offer different  products and services.  They
are managed separately  because each business requires different  technology and
marketing strategies.

The following table presents  information  about reported segment profit or loss
for the six months ended June 30, 2001:

<TABLE>
<CAPTION>
                                         PMI            Frontline          PMI-GA           LEA            Totals
                                     ------------    --------------     ------------    ------------    ------------
<S>                                  <C>             <C>                <C>             <C>             <C>
Revenues from
external customers                   $ 28,000,100    $  1,545,900(1)    $  5,371,900    $         --    $ 34,917,900

Segment (loss) before income
taxes and minority interest              (870,100)       (508,700)          (422,800)        (30,100)     (1,831,700)
</TABLE>

The following table presents  information  about reported segment profit or loss
for the six months ended June 30, 2000:

                          PMI         Frontline          LEA          Totals
                      -----------   -------------    -----------   -----------
Revenues from
external customers    $40,991,600   $ 3,807,900(1)   $        --   $44,799,500

Segment income
before income taxes       274,500        30,200               --       304,700

                                        8
<PAGE>
The following table presents  information  about reported segment profit or loss
for the three months ended June 30, 2001:

<TABLE>
<CAPTION>
                                   PMI            Frontline          PMI-GA           LEA            Totals
                               ------------    --------------     ------------    ------------    ------------
<S>                            <C>             <C>                <C>             <C>             <C>
Revenues from
external customers             $ 11,788,400    $    802,100(2)    $  2,370,900    $         --    $ 14,961,400

Segment (loss) before income
taxes and minority interest        (650,900)       (232,400)          (193,900)        (30,100)     (1,107,300)
</TABLE>

The following table presents  information  about reported segment profit or loss
for the three months ended June 30, 2000:

                            PMI         Frontline          LEA          Totals
                        -----------   -------------    -----------   -----------
Revenues from
external customers      $19,390,800   $ 2,593,500(2)   $        --   $21,984,300

Segment income before
income taxes                154,900        48,400               --       203,300

----------
(1)  Includes  service  revenues  of  $78,500  and  $105,700  in 2001 and  2000,
     respectively.
(2)  Includes  service  revenues  of  $29,200  and  $72,800  in 2001  and  2000,
     respectively.

The following is a reconciliation of reportable segment loss before income taxes
to the Company's consolidated total:

                                                  Three months      Six months
                                                     Ended            Ended
                                                 June 30, 2001     June 30,2001
                                                 -------------     ------------
Total loss before income taxes and minority
  interest for reportable segments                $(1,107,300)     $(1,831,700)
Inter-company transactions                              9,400           10,700
Equity in loss in investment in Rising Edge            (3,900)          (9,900)
Impairment loss on investment                        (250,000)        (250,000)
                                                  -----------      -----------
Consolidated loss before income taxes
  and minority interest                           $(1,351,800)     $(2,080,900)
                                                  -----------      -----------

The total of  reportable  segment  revenues  equals the  Company's  consolidated
revenues for the three and six-month periods ended June 30, 2001.

9. FLOOR PLAN INVENTORY LOANS AND LINE OF CREDIT

As of December  31,  2000,  the Company had $7 million  (including  a $1 million
letter of credit  sub-limit)  automatically  renewing  floor plan inventory loan
available from a financial institution which was collateralized by the purchased
inventory and any proceeds from its sale or  disposition.  The $1 million letter
of credit was being maintained as security for inventory purchased on terms from
vendors in Taiwan and required an annual commitment fee of $15,000. Borrowings

                                        9
<PAGE>
under the floor plan inventory  loan totaled  $1,329,500 as of December 31, 2000
and were subject to 30 to 60 days repayment  terms, at which time interest began
to accrue at the prime  rate.  In March 2001,  the  financial  institution  that
provided this floor plan inventory loan filed bankruptcy.

On July 13,  2001,  Pacific  Magtron  Inc.  (PMI) and Pacific  Magtron (GA) Inc.
(PMI-GA)  obtained  a new $4  million  (subject  to credit  and  borrowing  base
limitations)   accounts   receivable  and  inventory   financing  facility  from
Transamerica  Commercial  Finance  Corporation  (the  "Bank").  This new  credit
facility has a term of two years and subject to  automatic  renewal from year to
year  thereafter.  The credit facility can be terminated by either party upon 60
days' prior written  notice and  immediately  if the Companies lose the right to
sell or deal in any product line of  inventory.  The Companies are subject to an
early termination fee equal to 1% of their then established credit limit.

The facility includes a $2.4 million inventory line (subject to a borrowing base
of up to 85% of eligible  accounts  receivable plus up to $1,500,000 of eligible
inventories),  a $600,000 working capital line and a $1 million letter of credit
facility  used as  security  for  inventory  purchased  on term from  vendors in
Taiwan.  Borrowing  under  the  inventory  loans  are  subject  to 30 to 60 days
repayment,  at which time interest begins to accrue at the prime rate, which was
6.75% at June 30, 2001.  Draws on the working  capital line also accrue interest
at the prime rate.

Under the agreement,  PMI and PMI-GA granted  security  interest in all of their
accounts,   chattel  paper,  cash,  documents,   equipment,   fixtures,  general
intangibles, instruments, inventories, leases, supplier benefits and proceeds of
the  foregoing.  The Companies are also required to maintain  certain  financial
covenants.  As of June 30, 2001,  the Companies  were in  compliance  with these
covenants.

The  credit  facility  provided  by the  Bank is  guaranteed  by both  PMIC  and
Frontline. As of June 30, 2001, there were no draws on the credit line.

In March, 2001,  Frontline obtained a $2 million  discretionary  credit facility
from Deutsche Financial Services Corporation ("Deutsche") to purchase inventory.
To secure payment,  Deutsche  obtained a security interest in all of Frontline's
inventory,   equipment,   fixtures,  accounts,   reserves,   documents,  general
intangible assets and all judgements,  claims,  insurance policies, and payments
owed or made to  Frontline.  Under the loan  agreement,  all draws  mature in 30
days.  Thereafter,  interest  accrues  at the  lesser of 16% per annum or at the
maximum lawful contract rate of interest  permitted under  applicable law. As of
June 30, 2001,  Frontline had an outstanding balance of $3,500 under this credit
facility.

Frontline is required to maintain certain financial covenants to qualify for the
credit line, and the company was in compliance with the  requirements as of June
30, 2001. The credit facility provided to Frontline by the financial institution
is guaranteed by PMIC. The credit facility can be terminated by Deutsche with 30
days prior notice or immediately upon a default.

10. NOTES RECEIVABLES FROM SHAREHOLDERS

As of June 30, 2001 and  December 31, 2000,  notes  receivable  from two officer
shareholders aggregated $128,600 and $171,400,  respectively.  In December 2000,
the  repayment  terms  of these  notes  were  renegotiated  to  require  monthly
principal payments,  without interest, to pay off the loan by December 31, 2001.
Also,  based  upon the  renegotiated  terms,  periodic  bonuses  are paid to the
officer shareholders, and the proceeds are used to repay the notes.

11. TREASURY STOCK

On May 7, 2001, the Company's Board of Directors  authorized a share  repurchase
program  whereby,  up to $100,000  worth of the  Company's  common  stock may be

                                       10
<PAGE>
repurchased  at a maximum  price of $1.25 per share and held in treasury.  As of
June 30, 2001,  the Company  acquired 1,800 shares of its common stock at a cost
of $1,100. Subsequent to June 30, 2001, an additional 3,200 shares were acquired
for treasury at a cost of $2,000.

12. BARTER AGREEMENT

On June 14, 2001,  the Company  issued  333,333 shares of its common stock to an
unrelated party in exchange for radio advertising services to be received over a
three-year  period.  All  of  the  shares  vested  upon  issuance  and  are  non
forfeitable, resulting in a measurement date and final valuation of these shares
of $200,000  based upon the market  price of the  Company's  common stock on the
date of  issuance.  Included in prepaid  expenses  and other  current  assets is
$200,000  which will be recorded as an expense in the statement of operations as
the services are provided over the three year period.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

FORWARD-LOOKING STATEMENTS

The accompanying  discussion and analysis of financial  condition and results of
operations is based on the consolidated financial statements, which are included
elsewhere in this Quarterly Report. The following discussion and analysis should
be read in conjunction  with the accompanying  financial  statements and related
notes thereto.  This discussion contains  forward-looking  statements within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the Securities Exchange Act of 1934, as amended. Our actual results could
differ  materially  from  those  set  forth in the  forward-looking  statements.
Forward-looking   statements,   by  their  very   nature,   include   risks  and
uncertainties.  Accordingly,  our actual  results could differ  materially  from
those discussed in this Report. A wide variety of factors could adversely impact
revenues,  profitability,  cash flows and capital needs.  Such factors,  many of
which are beyond our control,  include, but are not limited to, those identified
in the Company's Form 10-K for the fiscal year ended December 31, 2000 under the
heading   "Cautionary   Factors  That  May  Affect  Future  Results",   such  as
technological  changes,   diminished   marketability  of  inventory,   need  for
additional  capital,  increased  warranty  costs,  competition,  recruitment and
retention  of  technical   personnel,   dependence  on  continued   manufacturer
certification,  dependence  on  certain  suppliers,  risks  associated  with the
projects in which we are engaged to complete,  the risks associated with our LEA
venture,  risks  associated with our investments in Rising Edge and TargetFirst,
and dependence on key personnel.

GENERAL

We provide  solutions  to customers in several  synergetic  and rapidly  growing
segments  of the  computer  industry.  To capture  the  expanding  corporate  IT
infrastructure   market,  we  established  Frontline  Network  Consulting  (FNC)
division  in 1998 to  provide  professional  services  to  mid-market  companies
focused  on  consulting,   implementation   and  support  services  of  Internet
technology  solutions.  This division was incorporated as a separate  subsidiary
during 2000. In January 2001,  Frontline issued 3,000,000 of its shares to three
of its key employees resulting in a decrease in our ownership interest of FNC to
87%. We also invested in a 50%-owned joint software venture, Lea Publishing, LLC
(Lea), in 1999 to focus on Internet-based  software application  technologies to
enhance corporate IT services. Lea is a development stage company. In June 2000,
we increased our direct and indirect  interest in LEA to 62.5% by completing our
purchase of 25% of the outstanding common stock of Rising Edge Technologies, the
other 50% owner of LEA. Finally, our other subsidiaries,  Pacific Magtron,  Inc.
(PMI)  and  Pacific   Magtron  (GA),  Inc.   (PMI-GA),   provide  the  wholesale
distribution of computer  multimedia and storage peripheral products and provide
value-added packaged solutions to a wide range of resellers,  vendors, OEM's and
systems integrators. PMI-GA commenced operations in October 2000 and distributes
PMI's products in the eastern  United States  market.  As used herein and unless
otherwise  indicated,  the  terms  "Company",  "we" and "our"  refer to  Pacific
Magtron International Corp. and our subsidiaries.

Our stock is  currently  traded  on The  Nasdaq  SmallCap  Market.  However,  we
received  notice in July 2001 from  Nasdaq  that we failed to maintain a minimum
market value of public float of $1 million and a minimum bid price of $1.00 over
30 consecutive trading days as required by Nasdaq's rules. We have until October
1,  2001 to  regain  compliance  with  these  rules.  If we fail to  demonstrate
compliance with these rules by October 1, 2001, our stock will be delisted.

                                       12
<PAGE>
RESULTS OF OPERATIONS

The following  table sets forth,  for the periods  indicated,  certain  selected
financial data as a percentage of sales:

                                  Three Months Ended       Six Months Ended
                                        June 30,               June 30,
                                  ------------------       ----------------
                                   2001         2000        2001       2000
                                  -----        -----       -----      -----
Sales                             100.0%       100.0%      100.0%     100.0%
Cost of sales                      93.5         91.9        93.2       92.1
                                  -----        -----       -----      -----
Gross margin                        6.5          8.1         6.8        7.9
Operating expenses                 13.7          7.1        11.8        7.2
                                  -----        -----       -----      -----
(Loss) income from operations      (7.2)         1.0        (5.0)       0.7
Other (expense)                    (1.9)         0.0        (1.0)       0.0
Income tax benefit (expense)        1.0         (0.4)        1.1       (0.3)
Minority interest in FNC            0.0          0.0         0.1        0.0
                                  -----        -----       -----      -----
Net (loss) income                  (8.1)%        0.6%       (4.8)%      0.4%
                                  =====        =====       =====      =====

THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000

Sales for the three months ended June 30, 2001 were  $14,961,400,  a decrease of
$7,022,900,  or approximately  32%, compared to $21,984,300 for the three months
ended June 30, 2000. There was a decrease in sales  attributable to our computer
products  subsidiaries (PMI and PMI-GA) for the three months ended June 30, 2001
of $5,225,600 or  approximately  27%,  compared to the  corresponding  period in
2000. Sales recognized by PMI-GA were approximately  $2,370,900 during the three
months ended June 30, 2001.  The decrease was due to the  continuous  decline in
the computer component market and the lack of any new and innovative high-demand
products  in the  multimedia  arena  during a period of  economic  slowdown.  In
addition,  we believe that the uncertainty regarding the economy depressed sales
during  the  first  half of 2001  as  customers  were  postponing  their  buying
decisions.  Approximately $802,100 of the sales recognized by the Company during
the second quarter of 2001 was attributable to FNC, a decrease of $1,791,400, or
approximately  69%,  compared to $2,593,500  for the three months ended June 30,
2000 as FNC has  experienced  an overall  slowdown in the IT market,  as well as
pricing pressures and increased competition.

Gross margin for the three months ended June 30, 2001 was  $979,700,  a decrease
of $791,300 or 44.7%, compared to $1,771,000 for the three months ended June 30,
2000.  The gross margin as a  percentage  of sales  decreased  from 8.1% for the
three  months  ended June 30, 2000 to 6.6% for the three  months  ended June 30,
2001.  This  decrease in gross margin is a result of reduction of vendor  rebate
and advertising funding programs.  Additionally,  our computer products division
experienced  pricing  pressures  in selling  its  products  due to the  economic
slowdown, and because there was an excess supply of computer products during the
first half of 2001 which reduced demand and increased  pressure on gross margin.
The gross  margin  generated  by our  computer  products  subsidiaries  (PMI and
PMI-GA)  for the three  months  ended June 30,  2001 was  $879,700.  In the same
period of last year, the gross margin was $1,435,900,  a decrease of $556,200 or
approximately  38.7%. Gross margin relating to PMI-GA for the three months ended
June 30,  2001 was  $115,400.  Gross  margin  relating  to the FNC for the three
months ended June 30, 2001 was $100,000, or 12.5% of FNC's sales during the same
period.  Gross  margin  relating to the FNC  division for the three months ended
June 30,  2000 was  $335,200,  or 12.9% of FNC's sales  during the same  period.
However,  since FNC's sales levels were relatively  insignificant in relation to
that  of  the  Company's  computer  products  group,  the  higher  gross  margin
percentage  earned by FNC had only a minor  effect on the overall  gross  margin
during the three months ended June 30, 2001.

                                       13
<PAGE>
Selling,  general,  and  administrative for the three months ended June 30, 2001
were $2,051,100, an increase of $494,000, or 32%, compared to $1,557,100 for the
three months ended June 30, 2000. Although we implemented cost cutting measures,
such as reducing our head count from 103 people in the first  quarter of 2001 to
98 people in second quarter of 2001, in anticipation  of the economic  slowdown,
expenses  increased  primarily  due to the addition of PMI-GA  operations.  As a
percentage of sales, selling,  general and administrative  expenses increased to
13.7% for the three  months  ended June 30, 2001  compared to 7.1% for the three
months ended June 30, 2000 resulting from an increase in our operating  expenses
during a period of decreased sales.

For the three months ended June 30, 2001, we incurred a loss from  operations of
$1,071,400  compared to income from  operations of $213,900 for the three months
ended June 30, 2000. As a percentage of sales,  loss from  operations was (7.2)%
for three months ended June 30, 2001 compared to income from  operations of 1.0%
for the three months ended June 30, 2000.

Interest  expense  for the three  months  ended  June 30,  2001 was  $67,800,  a
decrease of $4,700, or 6.5%, compared to $72,500 for the three months ended June
30, 2000.  This  decrease was due to a reduction in the floating  interest  rate
charged on one of the mortgages on our office building facility. Interest income
decreased  from  $61,900 for the three months ended June 30, 2000 to $34,300 for
the three months ended June 30,  2001, a reduction of $27,600,  or 44.6%,  which
was  principally  due to lower market  interest  rates  available for short-term
investments of cash and cash equivalents and a reduction in cash balances.

During the three months ended June 30, 2001,  we  established  a 100% reserve on
our TargetFirst Inc. investment as a result of our ongoing evaluation of the net
realizable  value  of  this  investment,  resulting  in an  impairment  loss  of
$250,000.

SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000

Sales for the six months  ended June 30,  2001 were  $34,917,900,  a decrease of
$9,881,600,  or  approximately  22%,  compared to $44,799,500 for the six months
ended June 30, 2000. There was a decrease in sales  attributable to our computer
products  subsidiaries (PMI and PMI-GA) for the six months ended June 30,2001 of
$7,619,600 or approximately  18.6% compared to the corresponding  period of June
30, 2000. Sales recognized by PMI-GA were  approximately  $5,371,900  during the
six months ended June 30, 2001.  The decrease was due to the overall  decline in
the computer component market and the lack of any new and innovative high-demand
products  in the  multimedia  arena  during  a  period  of  continuous  economic
slowdown. Because of the uncertainty regarding the economic down turn, customers
were delaying their purchase  decisions.  Approximately  $1,545,900 of the sales
earned by us during the six months ended June 30, 2001 was  attributable to FNC,
a decrease of $2,261,900 or approximately 59% compared to $3,807,800 for the six
months  ended  June  30,  2000  as FNC has  experienced  pricing  pressures  and
increased competition.

Gross margin for the six months ended June 30, 2001 was  $2,359,700,  a decrease
of  $1,193,100,  or 33.6%,  compared to $3,552,800 for the six months ended June
30, 2000. The gross margin as a percentage of sales  decreased from 7.9% for the
six months  ended June 30, 2000 to 6.7% for the six months  ended June 30, 2001.
This  decrease  in gross  margin  percentage  arose  primarily  as a  result  of
reduction in vendor rebate, advertising funding programs and increase in freight
cost. Additionally, our computer products division experienced pricing pressures
in selling its products. We believe that because of the economic slowdown, there
was an excess  supply of computer  products  during the first half of 2001 which
reduced  demand  and  increased  pressure  on gross  margins.  The gross  margin
generated by our  computer  products  subsidiaries  (PMI and PMI-GA) for the six
months  ended June 30,  2001 was  $2,178,300,  a decrease  of  $871,300 or 28.5%
compared to $3,049,600  for the six months ended June 30, 2000. The gross margin
relating to PMI-GA for the six months  ended June 30, 2001 was  $228,300.  Gross
margin  relating to FNC for the six months ended June 30,2001 was  $181,400,  or

                                       14
<PAGE>
11.7% of FNC's sales during the same period as compared to $503,200, or 13.2% of
FNC's sales during the six months ended June 30,  2000.  This  decrease in gross
margin was primarily a result of pricing  pressures and weaker demand for higher
margin  corporate IT planning  services.  Since FNC's sales levels accounted for
only 4% and 8.5% of our consolidated  sales during the first quarter of 2001 and
2000,  respectively,  the gross margin percentage earned by FNC had only a minor
effect on our overall  gross margin in both  periods.  Gross margin  relating to
PMI-GA for the six months ended June 30, 2001 was $228,300,  or 4.2% of PMI-GA's
sales.

Selling, general, administrative expenses for the six months ended June 30, 2001
were $4,141,200, an increase of $922,600, or 29%, compared to $3,218,600 for the
six months ended June 30, 2000. Although we implemented cost cutting measures in
anticipation of the economic slowdown,  expenses increased  primarily due to the
continued establishment of our FNC and PMI-GA operations,  including among other
things,  additional  expenses  associated with our new distribution  facility in
Georgia.  We reduced our  headcount by 4 people during the first quarter of 2001
and again by 5 people during the second  quarter of 2001.  During the first half
of 2001, we also increased  spending for professional  services to assist in the
formation of an acquisition strategy. As a percentage of sales, selling, general
and administrative expenses increased to 11.8% for the six months ended June 30,
2001 compared to 7.2% for the six months ended June 30, 2000  resulting  from an
increase in our operating expenses during a period of decreased sales.

For the six months  ended June 30,  2001 we incurred a loss from  operations  of
($1,781,500)  compared to income from  operations of $334,200 for the six months
ended June 30, 2000. As a percentage of sales,  loss from  operations was (5.0%)
for the six months  ended June 30, 2001  compared to income from  operations  of
0.7% for the six months ended June 30, 2000.  This change was  primarily  due to
the  decrease in sales and gross  margin  percentage  and  increase in operating
expenses during the period.

Interest expense for the six months ended June 30, 2001 was $141,700, a decrease
of $2,800,  or 2%,  compared to $144,600 for the six months ended June 30, 2000.
Interest  income  decreased from $115,100 for the six months ended June 30, 2000
to $88,000 for the six months  ended June 30,  2001,  a decrease of $27,100,  or
24%, which was  principally  caused by lower market interest rates available for
short term  investments  of cash and cash  equivalents  and a reduction  in cash
balances.

During the six months ended June 30, 2001, we  established a 100% reserve on our
TargetFirst  Inc.  investment  as a result of our ongoing  evaluation of the net
realizable  value  of  this  investment,  resulting  in an  impairment  loss  of
$250,000.

LIQUIDITY AND CAPITAL RESOURCES

Since  inception,  we  have  financed  our  operations  primarily  through  cash
generated by operations and borrowings under our floor plan inventory loan.

At June  30,  2001,  we had  consolidated  cash and  cash  equivalents  totaling
$2,531,000  and working  capital of  $6,423,200.  At December 31,  2000,  we had
consolidated cash and cash equivalents  totaling  $4,874,200 and working capital
of $7,624,400.

Net cash used in operating  activities during the six months ended June 30, 2001
was $949,500,  which  principally  reflected  the net loss  incurred  during the
period, which was partially offset by a decrease in accounts receivable.

Net cash used in investing  activities during the six months ended June 30, 2001
was $41,500, primarily resulting from the acquisition of property and equipment,
which was  partially  offset by the  repayment of the notes  receivable  owed by
certain shareholders.

Net cash used by financing  activities  was  $1,352,200 for the six months ended
June 30, 2001,  primarily  from the decrease in the floor plan inventory loan as
well as payment of the mortgage loans for our facility. The floor plan inventory
loan was terminated during the three months ended March 31, 2001 as the creditor
filed for bankruptcy.

                                       15
<PAGE>
On July 13,  2001,  Pacific  Magtron  Inc.  (PMI) and Pacific  Magtron (GA) Inc.
(PMI-GA)  obtained  a new $4  million  (subject  to credit  and  borrowing  base
limitations)   accounts   receivable  and  inventory   financing  facility  from
Transamerica  Commercial  Finance  Corporation  (the  "Bank").  This new  credit
facility has a term of two years and subject to  automatic  renewal from year to
year  thereafter.  The credit facility can be terminated by either party upon 60
days' prior written  notice and  immediately  if the Companies lose the right to
sell or deal in any product line of  inventory.  The Companies are subject to an
early termination fee equal to 1% of their then established credit limit.

The facility includes a $2.4 million inventory line (subject to a borrowing base
of up to 85% of eligible  accounts  receivable plus up to $1,500,000 of eligible
inventories),  a $600,000 working capital line and a $1 million letter of credit
facility  used as  security  for  inventory  purchased  on term from  vendors in
Taiwan.  Borrowing  under  the  inventory  loans  are  subject  to 30 to 60 days
repayment,  at which time interest begins to accrue at the prime rate, which was
6.75% at June 30, 2001.  Draws on the working  capital line also accrue interest
at the prime rate.

Under the agreement,  PMI and PMI-GA granted  security  interest in all of their
accounts,   chattel  paper,  cash,  documents,   equipment,   fixtures,  general
intangibles, instruments, inventories, leases, supplier benefits and proceeds of
the  foregoing.  The Companies are also required to maintain  certain  financial
covenants.  As of June 30, 2001,  the Companies  were in  compliance  with these
covenants.

The  credit  facility  provided  by the  Bank is  guaranteed  by both  PMIC  and
Frontline. As of June 30, 2001, there were no draws on the credit line.

In March, 2001,  Frontline obtained a $2 million  discretionary  credit facility
from Deutsche Financial Services Corporation ("Deutsche") to purchase inventory.
To secure payment,  Deutsche  obtained a security interest in all of Frontline's
inventory,   equipment,   fixtures,  accounts,   reserves,   documents,  general
intangible assets and all judgements,  claims,  insurance policies, and payments
owed or made to  Frontline.  Under the loan  agreement,  all draws  mature in 30
days.  Thereafter,  interest  accrues  at the  lesser of 16% per annum or at the
maximum lawful contract rate of interest  permitted under  applicable law. As of
June 30, 2001,  Frontline had an outstanding balance of $3,500 under this credit
facility.

Frontline is required to maintain certain financial covenants to qualify for the
credit line, and the company was in compliance with the  requirements as of June
30, 2001. The credit facility provided to Frontline by the financial institution
is guaranteed by PMIC. The credit facility can be terminated by Deutsche with 30
days prior notice or immediately upon a default.

On May 7, 2001,  our Board of Directors  authorized a share  repurchase  program
whereby up to $100,000 worth of our common stock may be repurchased  and held as
treasury stock. Through June 30, 2001, we purchased 1,800 shares for treasury at
a cost of $1,100 and an additional  3,200 shares at a cost of $2,000  subsequent
to June 30, 2001.  We estimate  that  approximately  $96,900 will be required to
repurchase  these  shares on the open  market  under  this  program  during  the
remainder of 2001 using available cash from operations.

We presently have  insufficient  working capital to pursue our long-term  growth
plans with respect to expansion of our service and product offerings.  Moreover,
we expect  that  additional  resources  are needed to fund the  development  and
marketing  of Lea's  software.  We  believe,  however,  that the cash  flow from
operations, borrowings under our credit facility and trade credit from suppliers
will satisfy our  anticipated  requirements  for working  capital to support our
present operations through the next 12 months.

Our stock is  currently  traded  on The  Nasdaq  SmallCap  Market.  However,  we
received notice in July 2001 from Nasdaq that we failed to maintain a minimum

                                       16
<PAGE>
market value of public float of $1 million and a minimum bid price of $1.00 over
30 consecutive trading days as required by Nasdaq's rules. We have until October
1,  2001 to  regain  compliance  with  these  rules.  If we fail to  demonstrate
compliance  with these rules by October 1, 2001, our stock will be delisted.  We
are striving to comply with Nasdaq's rules before October 1, 2001.  However,  to
the extent that we fail in our  endeavors,  our stock will be quoted on the Over
the Counter Bulletin Board  ("OTCBB").  It is important to understand that there
are  significant  consequences  associated  with our common stock trading on the
OTCBB rather than a national exchange. The effects of not being able to list our
stock on a national exchange include limited release of the market prices of our
securities,  limited  coverage of us by analysts,  and  volatility  of our stock
prices due to low trading  volume.  These factors may limit our ability to issue
additional securities or to secure additional financing.

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2000,  the Emerging  Issues Task Force  ("EITF")  reached a consensus on
Issue 00-10,  "Accounting  for Shipping and Handling Fees and Costs." This issue
addresses

the income statement  classification for shipping and handling fees and costs by
companies.  The Company  believes  that its current  accounting  policies are in
conformity  with this issue and does not  believe  that Issue  00-10 will have a
material effect on the Company's financial statements.

In May 2000,  the EITF  reached a  consensus  on Issue  00-14,  "Accounting  for
Certain Sales  Incentives."  This issue addresses the recognition,  measurement,
and income statement  classification for sales incentives offered voluntarily by
a vendor without charge to customers that can be used in, or are  exercisable by
a  customer  as a result  of, a single  exchange  transaction.  The  Company  is
currently  analyzing  Issue  00-14.  However,   based  on  management's  current
understanding and interpretation, Issue 00-14 is not expected to have a material
impact on the Company's financial position or results of operations, except that
certain reclassifications may occur.

In April 2001,  the EITF  reached a consensus  on Issue  00-25,  "Vendor  Income
Statement  Characterization  of  Consideration  to a Purchaser  of the  Vendor's
Products or Services."  This issue  addresses the  recognition,  measurement and
income  statement  classification  of  consideration,  other than that  directly
addressed by Issue 00-14, from a vendor to a retailer or wholesaler. The Company
is currently  analyzing  Issue 00-25.  However,  based on  management's  current
understanding and interpretation, Issue 00-25 is not expected to have a material
impact on the

Company's  financial  position or results of  operations,  except  that  certain
reclassifications  may occur.  The consensus's  reached in Issue 00-25 and Issue
00-14 (amended by Issue 00-25) are effective for fiscal quarters beginning after
December 15, 2001.

In June 2001, the Financial Accounting Standards Board finalized FASB Statements
No. 141,  BUSINESS  COMBINATIONS  (SFAS 141),  and No. 142,  GOODWILL  AND OTHER
INTANGIBLE  ASSETS (SFAS 142).  SFAS 141 requires the use of the purchase method
of  accounting  and  prohibits  the use of the  pooling-of-interests  method  of
accounting for business  combinations  initiated  after June 30, 2001.  SFAS 141
also requires that the Company recognize  acquired  intangible assets apart from
goodwill if the  acquired  intangible  assets meet  certain  criteria.  SFAS 141
applies to all  business  combinations  initiated  after  June 30,  2001 and for
purchase  business  combinations  completed  on or after July 1,  2001.  It also
requires,  upon adoption of SFAS 142, that the Company  reclassify  the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

SFAS 142  requires,  among  other  things,  that  companies  no longer  amortize
goodwill,  but instead  test  goodwill  for  impairment  at least  annually.  In
addition,  SFAS 142 requires that the Company  identify  reporting units for the
purposes of assessing  potential  future  impairments of goodwill,  reassess the
useful  lives  of  other  existing  recognized   intangible  assets,  and  cease
amortization of intangible  assets with an indefinite useful life. An intangible

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asset  with an  indefinite  useful  life  should be  tested  for  impairment  in
accordance  with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal  years  beginning  after  December  15,  2001 to all  goodwill  and other
intangible assets recognized at that date,  regardless of when those assets were
initially  recognized.  SFAS 142 requires the Company to complete a transitional
goodwill  impairment  test six months from the date of adoption.  The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142.

INFLATION

Inflation has not had a material  effect upon our results of operations to date.
In the  event the rate of  inflation  should  accelerate  in the  future,  it is
expected  that  to the  extent  resulting  increased  costs  are not  offset  by
increased revenues, our operations may be adversely affected.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk for changes in interest  rates relates  primarily to
one of our bank mortgage loans with a $2,422,900  balance at June 30, 2001 which
bears  fluctuating  interest  based on the bank's  90-day LIBOR rate. We believe
that fluctuations in interest rates in the near term would not materially affect
our consolidated operating results. We are not exposed to material risk based on
exchange rate fluctuation or commodity price fluctuation.

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                                     PART II

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

On June 14,  2001,  the Company  issued  333,333  shares of its common  stock to
Business  Talkradio Net, Inc. in exchange for radio  advertising  services to be
received over a three-year period.  All of the shares vested upon issuance.  The
Company  believes  that  this  issuance  is  exempt  under  Section  4(2) of the
Securities Act of 1933 as a transaction  not involving any public  offering.  No
underwriter was involved in connection with the sale of securities.

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

(a) The Company held its annual meeting of stockholders  at its  headquarters on
June 8, 2001.  A total of  10,100,000  outstanding  shares of common  stock were
entitled to be voted at the meeting.  89.2%  percent or 9,009,600  shares of the
outstanding shares were represented in person or by proxy.

(b) The following  seven directors were each elected to a one-year term expiring
in 2002:

Theodore S. Li
9,009,600 shares of common stock for election
        0 shares of common stock withheld

Hui Lee
9,009,600 shares of common stock for election
        0 shares of common stock withheld


Jey Hsin Yao
9,009,600 shares of common stock for election
        0 shares of common stock withheld

Betty Lin
9,009,600 shares of common stock for election
        0 shares of common stock withheld

Hank C. Ta
9,009,600 shares of common stock for election
        0 shares of common stock withheld

Limin Hu
9,009,600 shares of common stock for election
        0 shares of common stock withheld

John C. Reed
9,009,600 shares of common stock for election
        0 shares of common stock withheld

(c) Our stockholders  approved the selection of BDO Seidman, LLP as auditors for
our 2001 fiscal year as follows:  9,009,500  shares  voted in favor;  100 shares
voted against; and 0 shares abstained (including broker non-votes).

ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          10.1      Accounts   Receivable  and  Inventory   Financing  Agreement
                    between Transamerica Commercial Finance Corporation, Pacific
                    Magtron,  Inc. and Pacific Magtron (GA), Inc. dated July 13,
                    2001.

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     (b)  Reports on Form 8-K

          Form 8-K  filed on June 24,  2001 to  report  that a  footnote  in our
          Consolidated  Financial  Statements,  included  in our Annual  Report,
          inadvertently  included a discussion  regarding an  acquisition by the
          Company's Frontline subsidiary.  The acquisition was never consummated
          and an asset purchase agreement was not signed.

                                   SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant  has duly  caused this report on Form 10-Q to be signed on its behalf
by the undersigned, thereunto duly authorized, this 14th day of August, 2001.

                                PACIFIC MAGTRON INTERNATIONAL CORP.,
                                a Nevada corporation



                                By /s/ Theodore S. Li
                                   -----------------------------------------
                                   Theodore S. Li
                                   President and Chief Financial Officer

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