<PAGE>   1
EXHIBIT 10.7

Coast Business Credit(R)


                 FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT


BORROWER:         VIRTUAL TECHNOLOGY CORPORATION
ADDRESS:          3100 WEST LAKE STREET, SUITE 410
                  MINNEAPOLIS, MN 55416

BORROWER:         GTI ACQUISITION CORPORATION
ADDRESS:          7615 GOLDEN TRIANGLE DRIVE, SUITE G
                  MINNEAPOLIS, MN 55344

BORROWER:         T2 ACQUISITION CORPORATION
ADDRESS:          6698 SHADY OAK ROAD
                  EDEN PRAIRIE, MN 55344

DATE:             DECEMBER 10, 1999


THIS FIRST AMENDMENT TO THE LOAN AND SECURITY AGREEMENT is entered into as of
the above date between COAST BUSINESS CREDIT, a division of Southern Pacific
Bank ("Coast"), a California corporation, with offices at 12121 Wilshire
Boulevard, Suite 1400, Los Angeles, California 90025, and Virtual Technology
Corporation, GTI Acquisition Corporation and T2 Acquisition Corporation (jointly
and severally, the "Borrower") whose chief executive offices are located
respectively at the above addresses ("Borrower's Addresses"). This Amendment
shall for all purposes be deemed to be a part of the Loan and Security Agreement
("Loan Agreement"), and the same is an integral part of the Loan Agreement.

                              CONSENT AND APPROVAL

1.   Coast hereby consents and approves Borrower's request to add T2 Acquisition
     Corporation, a Minnesota Corporation ("T2") as a co-borrower, jointly and
     severally liable for all Obligations under the Loan Agreement and all
     documents related thereto (collectively, "Loan Documents").

2.   T2 agrees to be bound by all of the terms and conditions in the Loan
     Documents, and to be liable, jointly and severally, for all Obligations
     thereunder whether now existing or hereinafter arising.




                                    AMENDMENT


                                       1


<PAGE>   2

1.   The Loan Documents are hereby amended in all respects to define Borrower to
     include, jointly and severally, T2. All other terms and conditions, as
     amended, shall remain the same, and are hereby ratified and affirmed.

2.   Section 2.1 (b) of the Schedule shall be amended as follows:

              "Inventory  Loans,  subject  to  an  appraisal  acceptable  to
              Coast, in an amount not to exceed the lesser of:

              (1)  Fifty percent (50%) of
                   the value of Virtual
                   Technology Corporation
                   and GTI Acquisition
                   Corporation's Eligible
                   Inventory (as defined
                   in Section 1 of the
                   Agreement), calculated
                   at the lower of cost
                   or market value and
                   determined on a
                   first-in, first-out
                   basis, plus

              (2)  Forty-five percent
                   (45%) of the value of
                   T2 Acquisition
                   Corporation's Eligible
                   Inventory (as defined
                   in Section 1 of the
                   Agreement), calculated
                   at the lower of cost
                   or market value and
                   determined on a
                   first-in, first-out
                   basis, or

              (3)  Five Million Dollars
                   ($5,000,000.00), plus"


3.   Section 2 of the Schedule is hereby amended to add the following
     sub-paragraph at the end of the existing section:

          "The availability of the Inventory Loans advanced against T2's
     Eligible Inventory, as set forth in Section 2.1 (b) (2), is subject to
     Coast's receipt of a final appraisal of the T2 Inventory being not less
     than fifty percent (50%) of Orderly Liquidation Value."

4.   Section 3.2 of the Schedule entitled "Facility Fee" is hereby amended to
     substitute "$6,000" in place of "$5,000".

5.   Section 8.1 of the Schedule is hereby amended to add the following
     sub-paragraphs:

          "17. Virtual Technology Corporation ("VTC") shall execute and issue an
     additional warrant to Coast with respect to shares of voting common stock
     of VTC representing 250,000 shares of common stock with a term of three (3)
     years and an aggregate exercise price equal to the average stock price of
     the past thirty (30) trading days immediately preceding the date of the
     First Amendment to the Loan and Security Agreement. The warrant shall
     include standard and customary issuer representations, warranties and such
     other provisions as Coast shall require, in form and substance acceptable
     to Coast.


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     18. Borrower shall as of January 1, 2000, and at all times thereafter,
maintain a minimum consolidated Tangible Net Worth of not less than a negative
Three Million Five Hundred Thousand Dollars ($3,500,000.00), measured monthly."

6. Section 8.3 of the Schedule is hereby amended to add the following
   sub-paragraph:

     "Quarterly inventory appraisals (desktop only), as soon as available, and
in any event within forty-five (45) days after the end of each fiscal quarter of
Borrower."

7. Section 9.1 of the Schedule entitled "Maturity Date" is hereby amended to
   substitute "March 31, 2003" in place of "March 31, 2002".

8. Section 9.1 of the Schedule entitled "Early Termination Fee" is hereby
   amended to read as follows:

           "An amount equal to the greater of (i) an amount equal to all
   interest due and payable during the six (6) months immediately preceding the
   effective date of termination, or (ii) an amount equal to the average monthly
   interest due and payable based on the greater of the six (6) month monthly
   interest immediately preceding the effective date of termination or, if the
   effective date of termination is less than six (6) months from the Closing
   Date, an amount equal to the average monthly interest due hereunder
   multiplied by the number of full or partial months from the effective date of
   termination to the Maturity Date, or (iii) an amount equal to the average
   monthly interest accrued during the six (6) months immediately preceding the
   effective date of termination multiplied by the number of full or partial
   months from the effective date of termination to the Maturity Date."

                        VARIANCE FROM FINANCIAL COVENANTS

1. Coast hereby consents and agrees to waive Borrower's failure to comply with
   the minimum consolidated Tangible Net Worth provision set forth in Section
   8.1 (13) of the Schedule for the months September, 1999 and October, 1999,
   and only as to those two months.

   CONDITIONS PRECEDENT TO EFFECTIVENESS OF FIRST AMENDMENT

1. T2 shall comply with each and every condition precedent contained in the Loan
   Documents.

2. Borrowers' execution and return of this First Amendment.

3. Borrowers' execution and return of a Stock Pledge, in form and substance
   acceptable to Coast, pledging all of the stock of T2 as additional Collateral
   (as defined in Section 1 of the Loan and Security Agreement).

4. Borrower shall pay Coast a Restructuring Fee by way of an additional Warrant,
   in form and substance acceptable to Coast, for an additional 200,000 shares
   of VTC, as set forth above under Amendment Section 5.

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<PAGE>   4

5.   Borrower shall pay Coast a Waiver Fee by way of an additional Warrant, in
     form and substance acceptable to Coast, for an additional 50,000 shares of
     VTC, as set forth above under Amendment Section 5.

6.   Borrowers' execution and return of a Security Agreement in Patent and
     Trademarks, in form and substance acceptable to Coast, assigning rights in
     and to all trademarks acquired from Tech Squared, Inc.

7.   Borrowers' delivery of a fully executed assignment from Tech Squared, Inc.
     to T2 of Tech Squared, Inc.'s trademarks.

8.   Coast's receipt and approval of a fully executed copy of the Asset Purchase
     Agreement and all Schedules and Exhibits thereto between T2 and Tech
     Squared, Inc.

9.   Confirmation, in form and substance acceptable to Coast, that all
     conditions to the Tech Squared, Inc. Asset Purchase Agreement have been
     satisfied and title to all assets transferred to T2.

10.  Coast's receipt and approval of an Opinion of Counsel, in form and
     substance satisfactory to Coast, in connection with the transaction
     contemplated in this First Amendment.

11.  Confirmation, in form and substance acceptable to Coast, of Borrower's
     receipt in December 1999 of an equity infusion of not less than Two Million
     Dollars ($2,000,000.00).


     EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN, ALL OF THE TERMS AND CONDITIONS OF
     THE LOAN AGREEMENT AND ALL OTHER DOCUMENTS AND AGREEMENTS BETWEEN COAST AND
     BORROWER, AS AMENDED, SHALL CONTINUE IN FULL FORCE AND EFFECT AND THE SAME
     ARE HEREBY RATIFIED AND AFFIRMED. THE WAIVERS CONTAINED HEREIN DO NOT
     CONSTITUTE A WAIVER OF ANY OTHER PROVISION OR TERM OF THE LOAN AGREEMENT
     NOR ANY RELATED DOCUMENT OR AGREEMENT, NOR AN AGREEMENT TO WAIVE ANY TERM
     OR CONDITION OF THE LOAN AGREEMENT NOR ANY RELATED DOCUMENT OR AGREEMENT IN
     THE FUTURE.


                      Signatures follow on separate page 5



Borrower:
VIRTUAL TECHNOLOGY CORPORATION


By:/s/ Gregory Appelhof
   ----------------------


                                       4

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      Gregory Appelhof, President


And by:   /s/ John Harvatine
       ---------------------
       John L. Harvatine, Chief Financial Officer

Borrower:
GTI ACQUISITION CORPORATION


By:  /s/ Gregory Appelhof
   ------------------------
   Gregory Appelhof, President


And by:   /s/ John Harvatine
       ---------------------
       John L. Harvatine, Chief Financial Officer

Coast:
COAST BUSINESS CREDIT


By:  /s/ Todd Davock
   ----------------------
   Todd Davock, Vice President

The undersigned hereby agrees to be bound by all of the terms and
conditions set forth in the Loan Documents, and further expressly agrees to
be liable, jointly and severally, for all outstanding Obligations existing
as of the date hereof and arising hereafter.

Borrower:
T2 ACQUISITION CORPORATION


By:    /s/ Gregory Appelhof
   -------------------------------
   Gregory Appelhof, President and Chief Executive Officer


And by:  /s/ John Harvatine
       --------------------------
       John L. Harvatine, Chief Financial Officer, Secretary and Treasurer

        Signature page to First Amendment to Loan and Security Agreement

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<PAGE>   6
EXHIBIT 10.7

COAST BUSINESS CREDIT(R)


                 SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT


BORROWER:         VIRTUAL TECHNOLOGY CORPORATION
ADDRESS:          3100 WEST LAKE STREET, SUITE 410
                  MINNEAPOLIS, MN 55416

BORROWER:         GTI ACQUISITION CORPORATION
ADDRESS:          7615 GOLDEN TRIANGLE DRIVE, SUITE G
                  MINNEAPOLIS, MN 55344

BORROWER:         T2 ACQUISITION CORPORATION
ADDRESS:          6698 SHADY OAK ROAD
                  EDEN PRAIRIE, MN 55344

DATE:             DECEMBER 15, 1999


THIS SECOND AMENDMENT TO THE LOAN AND SECURITY AGREEMENT is entered into as of
the above date between COAST BUSINESS CREDIT, a division of Southern Pacific
Bank ("Coast"), a California corporation, with offices at 12121 Wilshire
Boulevard, Suite 1400, Los Angeles, California 90025, and Virtual Technology
Corporation, GTI Acquisition Corporation and T2 Acquisition Corporation (jointly
and severally, the "Borrower") whose chief executive offices are located
respectively at the above addresses ("Borrower's Addresses"). This Amendment
shall for all purposes be deemed to be a part of the Loan and Security Agreement
("Loan Agreement"), and the same is an integral part of the Loan Agreement.

                                    RECITALS

1.   Coast and Borrower entered into a First Amendment to the Loan and Security
     Agreement as of December 10, 1999.

2.   Condition Precedent to Effectiveness of First Amendment No. 11 ("Condition
     No. 11") requires Borrower's receipt in December 1999 of an equity infusion
     of not less than Two Million Dollars ($2,000,000.00).

3.   Borrower has requested that Coast extend additional credit as if the First
     Amendment is effective even though Borrower, to date, is unable to satisfy
     Condition No. 11.

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             LIMITED AND CONDITIONAL WAIVER FROM FINANCIAL COVENANTS

1.   Coast hereby consents and agrees to a limited, conditional waiver of
     Condition No. 11 as follows:

              (a) Coast will deem the First Amendment effective upon Coast's
                  receipt, in form and substance acceptable to Coast, of
                  Borrower's receipt of an equity infusion of not less than One
                  Million Dollars ($1,000,000.00) in December 1999.

                               CONDITION OF WAIVER

1.   On or before December 31, 1999, Borrower shall confirm its receipt, in form
     and substance acceptable to Coast, of a total equity infusion in December
     1999 of not less than Two Million Dollars ($2,000,000.00), inclusive of the
     One Million Dollars ($1,000,000.00) that is a condition precedent to the
     effectiveness of this Amendment.

                            AGREEMENT OF THE PARTIES

1.   Coast and Borrower agree that Borrower's failure to satisfy Condition of
     Waiver No. 1, above, shall be an Event of Default under the Loan Agreement.

     CONDITIONS PRECEDENT TO EFFECTIVENESS OF SECOND AMENDMENT

1.   Borrowers' execution and return of this Second Amendment.

2.   Coast's receipt of confirmation, in form and substance acceptable to Coast,
     of Borrower's receipt of an equity infusion of not less than One Million
     Dollars ($1,000,000.00) in December 1999.


     EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN, ALL OF THE TERMS AND CONDITIONS OF
     THE LOAN AGREEMENT AND ALL OTHER DOCUMENTS AND AGREEMENTS BETWEEN COAST AND
     BORROWER, AS AMENDED, SHALL CONTINUE IN FULL FORCE AND EFFECT AND THE SAME
     ARE HEREBY RATIFIED AND AFFIRMED. THE WAIVERS CONTAINED HEREIN DO NOT
     CONSTITUTE A WAIVER OF ANY OTHER PROVISION OR TERM OF THE LOAN AGREEMENT
     NOR ANY RELATED DOCUMENT OR AGREEMENT, NOR AN AGREEMENT TO WAIVE ANY TERM
     OR CONDITION OF THE LOAN AGREEMENT NOR ANY RELATED DOCUMENT OR AGREEMENT IN
     THE FUTURE.



                  Signatures follow on separate page three (3)

Borrower:

                                       2

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VIRTUAL TECHNOLOGY CORPORATION


By:      /s/ Gregory Appelhof
   --------------------------------
   Gregory Appelhof, President


And by:  /s/ John Harvatine
       ----------------------------
       John L. Harvatine, Chief Financial Officer


Borrower:
GTI ACQUISITION CORPORATION


By:    /s/ Gregory Appelhof
   --------------------------------
   Gregory Appelhof, President


And by:  /s/ John Harvatine
       ----------------------------
       John L. Harvatine, Chief Financial Officer


Borrower:
T2 ACQUISITION CORPORATION


By:    /s/ Gregory Appelhof
   --------------------------------
   Gregory Appelhof, President and Chief Executive Officer


And by:  /s/ John Harvatine
       ----------------------------
       John L. Harvatine, Chief Financial Officer, Secretary and Treasurer


Coast:
COAST BUSINESS CREDIT


By:    /s/ Britt Terrell
   --------------------------------
   Britt Terrell, Vice President

        Signature page to Second Amendment to Loan and Security Agreement

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