**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB/A (FIRST AMENDMENT)**


x
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      fiscal year ended December 31, 2004





ྑ
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                ACT OF
                1934








Commission
      file number 0-07418





**eLINEAR,
      INC.**


(Exact
      name of small business issuer as specified in its charter)




Delaware                                                                                                                     
                                      
 76-0478045


(State
      or
      other jurisdiction of incorporation or
      organization)                                                                   
 (IRS Employer Identification No.)





2901
      West Sam Houston Parkway North, Suite E-300, Houston, Texas
      77043


(Address
      of principal executive offices)     (Zip
      Code)





Registrant's
      telephone number, including area code: (713)
      896-0500




Securities
      registered pursuant to Section 12(b) of the Act: None








Securities
      registered pursuant to Section 12(g) of the Act: $.02 Par Value Common
      Stock





Check
      whether the Issuer (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 o





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.࿠





Issuer's
      revenues for the fiscal year ended December 31, 2004, were
      $24,065,753.





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the Issuer as of March 17, 2005, based upon the average bid
      and asked price as of such date on the American Stock Exchange, was
      $8,919,733.





The
      Registrant's common stock outstanding as of March 17, 2005, was 22,212,012
      shares.





DOCUMENTS
      INCORPORATED BY REFERENCE:


The
        Registrant is incorporating by reference in Part III of this Form 10-KSB/A
        certain information contained in the Registrant's definitive proxy statement
        for
        its annual meeting of shareholders, which was filed by the Registrant on
        May 6,
        2005.






Transitional
      Small Business Disclosure Format (Check One): Yesྑ Noྈ














**eLINEAR,
      INC.**


**INDEX
      TO FORM 10-KSB/A**


**December
      31, 2004**




Explanatory
                Note
            3**Part
                I**
            Item
                1.
            Description
                of Business
            4Item
                2.
            Description
                of Property
            7Item
                3.
            Legal
                Proceedings
            8Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            8**Part
                II**
            Item
                5.
            Market
                for Common Equity and Related Stockholder Matters
            8Item
                6.
            Management's
                Discussion and Analysis and Results ofOperations
                and Financial Condition
            10Item
                7.
            Financial
                Statements
            19Item
                8.
            Changes
                in and Disagreements with Accountants onAccounting
                and Financial Disclosure
            41Item
                8A.
            Controls
                and Procedures
            41Item
                8B.
            Other
                Information
            41**Part
                III**
            Item
                13.
            Exhibits
            42














**EXPLANATORY
      NOTE**





**This
      Amendment No. 1 on Form 10-KSB/A amends eLinear’s annual report on Form 10-KSB
      for the year ended December 31, 2004, which was originally filed with SEC on
      March 18, 2005. The purpose of this Amendment No. 1 is to revise the items
      set
      forth below based on comments received from the SEC staff on September 21,
      2005.
      Except as otherwise expressly stated, this Amendment No. 1 does not reflect
      any
      events occurring after the filing of the original Form 10-KSB filing, nor does
      it modify or update in any way the disclosures contained in the original Form
      10-KSB filing. This Amendment No.1 continues to speak as of the date of the
      original Form 10-KSB filing except that eLinear has included as exhibits updated
      certifications from the Company’s chief executive officer and principal
      accounting officer, as Exhibits 31.1, 31.2, 32.1 and 32.2, respectively. This
      Amendment No.1 should be read in conjunction with the Company’s filings made
      with the SEC subsequent to the date of the original Form 10-KSB filing,
      including any amendments to those filings.**








Some
      of
      the statements contained in this report discuss future expectations,
      contain projections of results of operations or financial condition, or
      state other "forward-looking" information. The words "believe," "intend,"
      "plan," "expect," "anticipate,"


"estimate,"
      "project" and similar expressions identify such statement was made. These
      statements are subject to known and unknown risks, uncertainties, and other
      factors that could cause the actual results to differ materially from those
      contemplated by the statements. The forward-looking information is based on
      various factors and is derived using numerous assumptions:




changes
            in general economic
            and business conditions affecting Information Technology ("IT") consulting
            development and implementation, computer-based project management consulting
            and strategic business consulting industries;
        technical
            developments that make the Company's products or services
            obsolete;
        changes
            in the Company's business strategies;
        the
            level of demand for the Company's products or services; and
        the
            Company's ability to develop or maintain strategic relationships; and
            global
            economic conditions.


The
      Company does not promise to update forward-looking information to reflect actual
      results or changes in assumptions or other factors that could affect those
      statements. Future events and actual results could differ materially from those
      expressed in, contemplated by, or underlying such forward-looking
      statements.





**ITEM
      1. DESCRIPTION OF BUSINESS**





**Overview**





eLinear,
      Inc., a Delaware corporation (the "Company" or "eLinear"), is a total IT
      solutions provider of technology consulting, network and storage solutions
      infrastructure and a provider of digital voice, data, video and security
      services for both commercial and residential customers. Typically, the Company's
      customers are Fortune 2000 and Small to Medium Business ("SMB") organizations.
      The Company's services are offered to companies seeking to increase productivity
      or reduce costs through investing in technology. A majority of the Company's
      customers are located in Houston, Texas. The Company's Internet address
      is http://www.elinear.com .
      Information contained on the Company's web site is not a part of this report.
      The Company's stock is traded on the American Stock Exchange under the symbol
      "ELU".





The
      Company provides IT consulting services through consulting solutions, creative
      web site design, web site content management software and technical project
      management and development services. Through NetView Technologies, Inc., a
      wholly-owned subsidiary ("NetView"), the Company provides network and storage
      solutions through product fulfillment, network and infrastructure design, data
      storage architecture and is a certified partner with several Fortune 100 IT
      solutions providers. Through NewBridge Technologies, Inc., a wholly-owned
      subsidiary ("NewBridge"), the Company provides structured cabling, cabling
      infrastructure design and implementation, security installation and monitoring
      and digital services of voice, data and video over fiber optic networks to
      its
      residential and commercial customers. Through TanSeco Systems, Inc., a
      wholly-owned subsidiary ("TanSeco"), the Company has business centered on
      premise security solutions which includes a three-year contract with RadioShack
      Corporation to install kiosks throughout the United States, third party 24X7
      security monitoring contracts with a variety of commercial customers and project
      work installing security devices and fiber/cable in client locations across
      the
      US.





**Organizational
      History**





The
      Company operated as a technology consulting business from December 1999 until
      its acquisition of NetView in April 2003. It acquired its Internet consulting
      business as a result of a reverse merger with Imagenuity, Inc. ("Imagenuity")
      in
      1999. Since 1999 to date, its Internet consulting business consisted of Internet
      consulting services, creative web site design, web site content management
      and
      software and technical project management and development services. For the
      fiscal year ended December 31, 2004, the consulting segment contributed less
      than 1% of eLinear's revenue. From 1995, its inception, the Company, which
      at
      the time was named Kinetics.com, was engaged in marketing proprietary software
      programs for use on the world wide web of the Internet. Kinetics.com marketed
      two software programs designed for use on the Web in 1995 and 1996. During
      1996,
      several creditors of Kinetics.com obtained court judgments against it as a
      result of non-payment of financial obligations and in 1997, Kinetics.com
      transferred all of its assets to an unaffiliated third party. Subsequent to
      the
      asset transfer, the only activities of Kinetics.com consisted of negotiating
      settlements with its creditors and attempting to identify a suitable acquisition
      or merger candidate. While Kinetics.com was the survivor in the merger, from
      an
      accounting standpoint the transaction was accounted for as though it was a
      recapitalization of Imagenuity and a sale of shares by Imagenuity in exchange
      for the net assets of Kinetics.com. On July 31, 2000, the Company changed its
      name to eLinear, Inc.











As
      a result
      of the demise of such companies as Enron and others in Houston, Texas, IT
      consulting was extremely limited and in order to
      grow
      its business, the Company determined it should expand its offerings and
      accordingly, acquired NetView, NewBridge and TanSeco.





On
      April
      15, 2003, eLinear issued 12,961,979 shares of common stock for 100% of the
      outstanding common stock of NetView. After the merger the stockholders of
      NetView owned approximately 90% of the combined entity. For financial reporting
      purposes this transaction was treated as an acquisition of eLinear and a
      recapitalization of NetView using the purchase method of accounting. For
      accounting purposes, the shares issued to eLinear's shareholders were accounted
      for as the consideration paid by NetView for the acquisition of eLinear and
      was
      valued using the stock price on the date issued. The purchase allocation
      resulted in goodwill of $451,920. NetView's historical financial statements
      replace eLinear's in the accompanying financial statements.





On
      July
      31, 2003, eLinear completed the acquisition of all the issued and outstanding
      shares of NewBridge, a provider of communications deployment. Pursuant to the
      transaction, eLinear issued an aggregate of 850,000 shares of restricted common
      stock and options to purchase 300,000 shares of common stock. NewBridge was
      incorporated in the State of Texas on February 20, 2002, and changed its name
      from MMGD, Inc. to NewBridge on August 7, 2003. As of the effective date,
      NewBridge became a wholly owned subsidiary of eLinear. The acquisition was
      accounted for using the purchase method of accounting. For accounting purposes,
      the shares issued to the NewBridge shareholders were accounted for as the
      consideration paid by eLinear for the acquisition of NewBridge and were valued
      using the stock price on the date issued. The purchase allocation resulted
      in
      goodwill of $1,491,102.





In
      November 2004, the Company acquired all of the outstanding and issued stock
      of
      TanSeco from RadioShack Corporation ("RadioShack"). The Company purchased the
      stock with cash and acquired inventory, fixed assets and security monitoring
      contracts. Concurrent with this transaction, TanSeco entered into a three-year
      services agreement with RadioShack whereby TanSeco will provide the
      installation, service, repair and inspection of security, closed circuit
      television and fire systems used by RadioShack for the security of its more
      than
      5,000 company-owned stores, kiosks and other physical locations.





**The
      Company's Products and Services**





The
      Company offers its products and services through four distinct business segments
      as follows:





1.Consulting
                services - the Company offers through this business segment strategic
                consulting services, creative web site design, web site content management
                software and technical project management and development
                services;




2.Product
                fulfillment and network and storage solutions - through NetView,
                the
                Company offers a complete solution to its customers for the acquisition,
                management and configuration of complex storage and network server
                installations;





3.Communications
                deployment - through NewBridge, the Company provides structured cabling,
                which is a set of cabling and connectivity products that integrate
                the
                voice, data, video and various management systems of a structure,
                cabling
                infrastructure design and implementation, which is the design and
                implementation of the structured cabling systems, security installation
                and monitoring and digital services of voice, data and video over
                fiber
                optic networks to its residential and commercial customers;
                and





4.Premise
                security solutions - through TanSeco, the Company has business centered
                on
                premise security solutions which includes a three-year contract with
                RadioShack Corporation to install kiosks throughout the United States,
                third party 24X7 security monitoring contracts with a variety of
                commercial customers and project work installing security devices
                and
                fiber/cable in client locations across the
                US.





The
      products the Company sells are "off the shelf" products and it does not incur
      expenses associated with research and development. The Company does not intend
      to incur research and development costs in the future as it relies on its
      vendors and suppliers of products to provide the product upgrades. The Company
      will rely on its clients to purchase the upgrades from the Company.





The
      combination of these four business segments provides a total IT solution to
      the
      Company's customers.





5




*Technology
      Integration and Consulting Services*




The
      Company's technology consulting segment offers a full set of services ranging
      from traditional technology consulting to managing complex technology
      integration projects. The Company focuses on providing solutions to technology
      related issues ranging from
      managing a software selection process to installation and integration of complex
      software products. In addition to providing complete customer technology
      services, the Company markets a proprietary software product called "LinearCMS."
      This product is designed to allow non-technical personnel to develop and
      maintain web pages on one or more web sites through a web browser. It allows
      collaboration between subject matter experts, web site copywriters and business
      users, creating a working environment that intelligently differentiates web
      site
      content from design, and separates content within pages so it can be presented,
      transformed and syndicated for multiple purposes. The Company does not have
      any
      patents or copyrights on this product. Typically, the Company's contracts it
      has
      with its customers are cancelable at any time with fourteen to thirty days'
      notice. The Company markets its services through its in-house sales
      staff.





*Product
      Fulfillment and Network and Storage Solutions*





NetView
      is a proven supplier of IT product fulfillment and network and storage
      solutions. NetView is classified as a value-added reseller ("VAR") and has
      various retail agreements and certifications with such companies as Hewlett
      Packard, Cisco and IBM. Typically, NetView's customers are Fortune 2000
      businesses and Small to Medium Business ("SMB") organizations of which NetView
      markets its products and services through its own direct sales and marketing
      team, direct mail and trade shows.





*Communications
      Deployment*





NewBridge
      provides structured cabling, cabling infrastructure design and implementation,
      security installation and monitoring and digital services of voice, data and
      video over fiber optic networks to its residential and commercial customers.
      NewBridge markets its products and services through its own direct sales and
      marketing team. Typical customers of NewBridge are government agencies, school
      districts and new construction residential sub-divisions.





*Premise
      Security Solutions*





Through
      TanSeco the Company has business centered on premise security solutions which
      includes a three-year contract with RadioShack to install kiosks throughout
      the
      United States, 24X7 security monitoring contracts with a variety of commercial
      customers and project work installing security devices and fiber/cable in client
      locations across the US.





*Sales
      and Marketing*





The
      Company utilizes its in-house staff of sales and sales support personnel to
      market its products and services. The Company intends to increase this staff
      to
      fully implement its business plan. The Company believes it can obtain a greater
      market share by cross-selling its products and services to its existing customer
      base and identifying new customers which can benefit from the Company's total
      IT
      solutions products and services. A majority of the Company's customers are
      located in Houston and Dallas, Texas, however, the Company intends to expand
      its
      marketing strategy through acquisitions of complimentary
      businesses.





With
      respect to the source of the Company's revenue, the Company had one customer
      which provided more than 10% of the Company's revenue for the fiscal year ended
      December 31, 2004.





**Competition**





The
      IT
      marketplace is intensely competitive and subject to rapid technological change.
      The Company's competitors include other IT solutions firms, Internet
      professional service firms, software firms, product and service fulfillment
      companies for the acquisition, management and configuration of storage and
      network installations and providers of communications deployment. These
      competitors are national, regional and local, including recognizable companies
      such as EDS, IBM, CompuCom and Accenture. While the Company competes with many
      entities that have well established brand names, large customer bases and
      greater resources than it, it believes that its primary competitors are smaller
      companies with business plans similar to the Company's that rely upon
      pre-existing relationships to generate repeat business. The Company anticipates
      that it will face additional competition from new entrants that provide
      significant performance, price, creative or other advantages over those offered
      by the Company. Many of these competitors have greater name recognition and
      resources than the Company.





The
      Company's primary focus is on solving well-defined customer problems or
      providing a need-proven service. It is focused on delivering reliable and
      effective IT consulting solutions, managed services, software, security
      solutions, Internet telephony solutions, and network and storage solutions
      that
      enable enterprises to restructure and integrate entire business processes,
      extending them across enterprise boundaries to employees, customers and
      suppliers. The Company believes that as its line of products, services and
      solutions grows through internal and external initiatives, its sales force
      will
      be presented with cross-selling potential. With appropriate training, its goal
      is that each customer sales representative will be responsible for selling
      all
      of eLinear's offerings.










**Customers**





One
      customer accounted for 18% of the Company's revenue for fiscal year 2004. It
      does not maintain long-term contractual arrangements with any of its customers
      and, accordingly, there is no assurance that its customers will continue to
      conduct business with eLinear in the future. The loss of this customer would
      have a material adverse effect on its business operations. The Company's
      business model relies upon negotiated sales transactions with its customers
      on a
      transaction by transaction basis. Because it does not enter into long-term
      contracts with its customers, there is no assurance that the Company will be
      able to conduct repeat business or long-term business with any one of its
      current customers. The failure of its customers to continue to do business
      with
      it would have a material adverse effect on its business operations.





**Intellectual
      Property, Proprietary Rights and Licenses**





The
      Company's success depends to a significant degree on its methodologies and
      software applications. The Company does not have any patents, registered
      copyrights or registered trademarks. The Company relies, instead, on laws
      protecting trade secrets, common law rights with respect to copyrights and
      trademarks, as well as non-disclosure and other contractual agreements to
      protect proprietary rights. There can be no guarantee that those laws, and
      the
      procedures initiated to protect its business, will prevent misappropriation
      of
      its proprietary software and web site applications. In addition, those
      protections do not preclude competitors from developing products with similar
      features as those of the Company.





Although
      the Company believes its products and services are unique and do not infringe
      upon the proprietary rights of others, there can be no assurance that
      infringement claims will not be brought against the Company in the future.
      Any
      such claim could result in costly litigation or have a material adverse effect
      on the Company's business, operating results and financial
      condition.





**Research
      and Development**





The
      Company relies on the providers of the products it sells to upgrade their
      products through research and development. Consequently, the Company does not
      perform research and development and has not incurred any research and
      development costs during the two previous fiscal years and does not anticipate
      incurring any such costs in the current fiscal year.







**Government
      Regulation**





The
      Company's communications deployment business sometimes requires licensing when
      dealing with a government agency. NewBridge is licensed by the State of Texas
      as
      an alarm installation company. Additionally, NewBridge is in the process of
      applying for CLEC status to provide voice services. The residential communities
      that it will provide video and data services for are not in "franchised" areas.
      The utility easements in which it deploys the infrastructure are public and
      are
      therefore unregulated.





**Employees**





As
      of
      March 10, 2005, the Company had 126 full-time employees which had increased
      from
      116 at December 31, 2004. None of the Company's employees are covered by any
      collective bargaining agreements. Management believes that its relations with
      its employees are good and the Company has not experienced any work stoppages
      attributable to employee disagreements.





**Volatility
      of Stock Market**





There
      have been significant fluctuations in the market price for the Company's common
      stock. Factors such as variations in the Company's revenues, earnings and cash
      flow and announcements of innovations or acquisitions by the Company or its
      competitors could cause the market price of the common stock to fluctuate
      substantially. In addition, the stock market has experienced price and volume
      fluctuations that have particularly affected companies in the IT services
      markets, resulting in changes in the market price of the stock of many companies
      which may not have been directly related to the operating performance of those
      companies. Such broad market fluctuations may adversely affect the market price
      of the Company's common stock.




**ITEM
      2. DESCRIPTION OF PROPERTY**





The
      Company's executive and administrative offices are located at 2901 West Sam
      Houston Parkway North, Suite E-300, Houston, Texas 77043. It leases these
      facilities. Its lease covers approximately 25,300 square feet and expires on
      November 30, 2005. Its lease payments are $19,228 per month for the period
      October 2004 through April 2005 and $20,240 per month for the period May through
      November 2005. The Company also has a marketing and sales office in Dallas,
      Texas. It leases these facilities. Its lease covers approximately 7,186 square
      feet and expires May 31, 2009. The lease payments are $8,898 per month and
      includes monthly operating expenses, which will vary based on actual operating
      expenses of the property. TanSeco leases office and warehouse space in Fort
      Worth, Texas. The lease covers approximately 7,972 square feet and expires
      October 31, 2007. The lease payments are $8,304 per
      month. The Company has no present plans to invest in real estate, real estate
      mortgages, or persons or entities primarily engaged in real estate
      activities.









**ITEM
      3. LEGAL PROCEEDINGS**





From
      time
      to time, the Company may become involved in litigation arising in the ordinary
      course of its business. The Company is presently not subject to any material
      legal proceedings outside of the ordinary course of business except as set
      forth
      below:





On
      December 16, 1999, eLinear and Imagenuity were served with a complaint captioned
      Chris Sweeney v. Kinetics.com, Inc. and Imagenuity, Inc., Circuit Court, Duval
      County, Florida, Civil Case Number 1999-7252-CA. The complaint alleged a breach
      of an alleged oral modification of a written employment agreement between the
      plaintiff, Chris Sweeney, and Imagenuity and alleged breaches by eLinear and
      Imagenuity of fiduciary obligations which the plaintiff claims were owed to
      him.
      Plaintiff is seeking as damages 20% of the Company's common stock received
      by
      the sole shareholder of Imagenuity in connection with the merger of Imagenuity
      with and into eLinear's subsidiary. After the filing of the complaint, eLinear's
      subsidiary, eLinear Corporation, was added as a defendant. The Company intends
      to vigorously contest the case. While the Company believes the case to have
      no
      merit, at this stage it is impossible to predict the amount or range of
      potential loss, if any.





In
      December 1999, the Company counter-sued Chris Sweeney in a lawsuit captioned
      eLinear Corporation v. Chris Sweeney, United States District Court, District
      of
      Colorado, Case Number 99-WM-2434. The complaint sought a determination of the
      rights of the parties with respect to the termination of Chris Sweeney's
      employment agreement with Imagenuity. The lawsuit was indefinitely stayed
      pending resolution of the Florida litigation discussed above.





On
      October 17, 2003, the Company filed a civil suit against Jon Ludwig, its former
      CEO, for the following causes of action: breach of fiduciary duty; negligent
      misrepresentation; theft of trade secrets; theft/conversion of property;
      wrongful interference with existing and prospective contracts; and civil
      conspiracy. This case is currently in the 127th Judicial District in the
      District Court of Harris County, Texas. Ipath, a direct competitor of the
      Company and the current employer of defendant Ludwig, was added as an additional
      defendant. The Company is alleging that IPath conspiracy, wrongful interference
      with existing and prospective contracts, and fraud for its complicity with
      Ludwig in the latter's breach of fiduciary duty. The trial date has been set
      for
      April 18, 2005.





On
      November 11, 2004, the Company filed a demand for arbitration with the American
      Arbitration Association against McData Corporation for breach of contract
      relating to the termination of the contract in June 2004. Arbitrators are being
      appointed and discovery is in the early stage.




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





No
      matters
      were submitted during the fourth quarter of the period covered in this report
      to
      a vote of shareholders.


**PART
      II**




**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





The
      Company's common stock trades on the American Stock Exchange under the symbol
      "ELU" since April 1, 2004. Prior thereto, its common stock traded on the OTC
      Bulletin Board. The following table sets forth the approximate high and low
      closing sales prices per share as reported on the American Stock Exchange and
      OTC Bulletin Board for the Company's common stock for the last two fiscal years.
      The quotations reflect inter-dealer prices, without retail markups, markdowns
      or
      commissions and may not represent actual transactions.




High
            
            LowYear
                2004Quarter ended December 31
            
            $
            1.60
            
            $
            0.84Quarter ended September 30
            
            $
            2.11
            
            $
            0.89Quarter ended June 30
            
            $
            3.25
            
            $
            1.50Quarter ended March 31
            
            $
            3.50
            
            $
            1.85Year
                2003Quarter ended December 31
            
            $
            2.75
            
            $
            1.19Quarter ended September 30
            
            $
            1.62
            
            $
            0.65Quarter ended June 30
            
            $
            1.00
            
            $
            0.45Quarter ended March 31
            
            $
            0.45
            
            $
            0.45





As
      of March
      10, 2005, there were approximately 215 shareholders of record of the Company's
      common stock which does not include those shareholders whose common stock is
      held in street name. The Company has neither declared nor paid any cash
      dividends to date and current existing debt instruments preclude the Company
      from paying dividends. The Company does not anticipate paying dividends in
      the
      foreseeable future until such time as the Company has sufficient cash flow
      from
      operations to justify payment of a dividend.










**Equity
      Compensation Plan Information**





The
      following table gives information about the Company's common stock that may
      be
      issued upon the exercise of options under its 2000 Stock Option Plan, 2003
      Stock
      Option Plan and 2004 Stock Option Plan as of December 31, 2004, which have
      been
      approved by the Company's shareholders, and under compensation arrangements
      that
      were not approved by the Company's shareholders.





Plan
                Category
            
            Number
                of Securities
              To
                be Issued Upon
              Exercise
                of Outstanding
              Options,
                Warrants and Rights
              (A)
            
            Weighted
                Average
              Exercise
                Price of
              Outstanding
                Options,
              Warrants
                and Rights
              (B)
            
            Number
                of Securities
              Remaining
                Available for
              Future
                Issuance Under
              Equity
                Compensation
              Plans
                (Excluding Securities
              Reflected
                in Column A)
              (C)Equity
                Compensation Plans Approved by Security Holders
            
            
            3,481,250
            
            $
            1.60
            
            
            828,434Equity
                Compensation Plans Not Approved by Security Holders
            
            
            1,008,333
            (1)
            
            5.62
            
            
            --Total
            
            
            4,489,583
            
            $
            2.50
            
            
            828,424





(1)
            Includes
                options to purchase 93,333 shares of common stock at $39.38 per share,
                75,000 shares of common stock at $3.00 per share, 375,000 shares
                of common
                stock at $2.90 per share, 265,000 shares of common stock at $2.18
                per
                share and 200,000 shares of common stock at $0.50 per share. These
                options
                have expiration dates from 2005 through 2013 and each was negotiated
                on an
                issuance-by-issuance basis between the holder and the
                Company..





**Recent
      Sales of Unregistered Securities**





Set
      forth
      below is certain information concerning all issuances of securities by the
      Company during the fiscal quarter ended December 31, 2004, that were not
      registered under the Securities Act.





On
      December 6, 2004, the Company issued 37,500 shares of common stock to a third
      party in consideration of a settlement in a dispute of a consulting contract
      valued at $60,000 pursuant to the exemption provided by Section 4(2) of the
      Securities Act.





During
      December 2004, the Company issued 319,248 shares of common stock to certain
      investors as forgiveness of penalties of $353,224 associated with the delay
      in
      obtaining effectiveness of  the Company's registration statement pursuant
      to the exemption provided by Section 4(2) of the Securities Act.





All
      of
      the above transactions were completed pursuant to Section 4(2) of the Securities
      Act. With respect to issuances made pursuant to Section 4(2) of the Securities
      Act, the transactions did not involve any public offering and were sold to
      a
      limited group of persons. Each recipient either received adequate information
      about the Company or had access, through employment or other relationships,
      to
      such information, and the Company determined that each recipient had such
      knowledge and experience in financial and business matters that they were able
      to evaluate the merits and risks of an investment in the Company.





Except
      as
      otherwise noted, all sales of the Company's securities were made by officers
      of
      the Company who received no commission or other remuneration for the
      solicitation of any person in connection with the respective sales of securities
      described above. The recipients of securities represented their intention to
      acquire the securities for investment only and not with a view to or for sale
      in
      connection with any distribution thereof and appropriate legends were affixed
      to
      the share certificates and other instruments issued in such
      transactions.








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





*The
      following discussion and analysis of the Company's financial condition as of
      December 31, 2004, and the Company's results of operations for the years in
      the
      two-year period ended December 31, 2004 and 2003, should be read in conjunction
      with the Company's audited consolidated financial statements and notes thereto
      included elsewhere in this report.*





**Overview**





The
      Company currently consists of four operating segments:





·*Consulting
                services*.
                The Company offers consulting services, creative web site design,
                web site
                content management software and technical project management and
                development services.





·*Product
                fulfillment*and network and storage solutions. Through NetView the Company offers
                a
                complete solution to its customers for the acquisition, management
                and
                configuration of complex storage and network server
                installations.





·*Communications
                deployment*.
                Through NewBridge the Company provides structured cabling, which
                is a set
                of cabling and connectivity products that integrate voice, data,
                video and
                various management systems, cabling infrastructure design and
                Implementation, which is the design and implementation of the structured
                cabling systems, security installation and monitoring and digital
                services
                of voice, data and video over fiber optic networks to its residential
                and
                commercial customers.





·*Security
                solutions*.
                Through TanSeco the Company has business centered on premise security
                solutions which includes a three-year contract with RadioShack Corporation
                to install kiosks throughout the United States, 24X7 security monitoring
                contracts with a variety of commercial customers and project work
                installing security devices and fiber/cable in client locations across
                the
                US.





The
      Company operated as a technology consulting business from December 1999 until
      its acquisition of NetView in April 2003. It acquired its Internet consulting
      business as a result of a reverse merger with Imagenuity, Inc. (Imagenuity)
      in
      1999. Since 1999 to date, its Internet consulting business consisted of Internet
      consulting services, creative web site design, web site content management
      and
      software and technical project management and development services. For the
      fiscal year ended December 31, 2004, the consulting segment contributed less
      than 1% of its revenue. Immediately prior to acquiring the business of
      Imagenuity, eLinear, which at the time was named Kinetiks.com, Inc.
      (“Kinetiks.com") did not engage in any business activities except for
      negotiating and compromising debt and searching for merger candidates. While
      Kinetics.com was the survivor in the merger, from an accounting standpoint
      the
      transaction was accounted for as though it was a recapitalization of Imagenuity
      and a sale of shares by Imagenuity in exchange for the net assets of
      Kinetics.com. On July 31, 2000, the Company changed its name to eLinear,
      Inc.





The
      Company completed the acquisitions of NetView and NewBridge during 2003. In
      April 2003, the Company issued 12,961,979 shares of common stock for all of
      the
      outstanding common stock of NetView. After the merger the stockholders of
      NetView owned approximately 90% of eLinear.





Although
      NetView became a wholly-owned subsidiary, for accounting purposes this
      transaction was treated as an acquisition of eLinear and a recapitalization
      of
      NetView using the purchase method of accounting. The acquisition resulted in
      goodwill of $451,920. Since NetView is deemed to be the acquiring company for
      accounting purposes, the financial information for the year ended December
      31,
      2003 is information derived from the financial statements of
      NetView.





In
      July
      2003, the Company completed the acquisition of all the outstanding shares of
      NewBridge. Pursuant to the transaction, eLinear issued 850,000 shares of its
      common stock valued at $935,000, using the market price on July 31, 2003, and
      options to purchase 300,000 shares of common stock valued at $274,000 using
      the
      Black-Scholes option pricing model, to the shareholders of NewBridge. The
      acquisition was accounted for using the purchase method of accounting resulting
      in goodwill of $1,491,102, as restated.





In
      November 2004, the Company acquired all of the outstanding and issued stock
      of
      TanSeco from RadioShack. As a result, TanSeco became a wholly-owned subsidiary
      of eLinear. The Company purchased the stock with cash and acquired inventory,
      fixed assets
      and security monitoring contracts. Concurrent with this transaction, TanSeco
      entered into a three-year services agreement with RadioShack whereby TanSeco
      will provide the installation, service, repair and inspection of security,
      closed circuit television and fire systems used by RadioShack for the security
      of its more than 5,000 company-owned stores, kiosks and other physical
      locations.










**Recent
      Developments**





On
      February 28, 2005, the Company entered into financing arrangements for a total
      principal amount of $12 million with Laurus, Iroquois Capital LP (Iroquois),
      RHP
      Master Fund (RHP), Basso Private Opportunity Holding Fund Ltd. (Basso Private),
      and Basso Multi-Strategy Holding Fund Ltd. (Basso Multi), collectively, the
      (Investors) in which it issued to: (i) Laurus a convertible secured note in
      the
      principal amount of $5,000,000 and a common stock purchase warrant to purchase
      up to 750,000 shares of Company common stock at an exercise price of $1.25
      per
      share; (ii) Iroquois a convertible secured note in the principal amount of
      $5,000,000 and a common stock purchase warrant to purchase up to 750,000 shares
      of Company common stock at an exercise price of $1.25 pre share; (iii) RHP
      a
      convertible secured note in the principal amount of $1,000,000 and a common
      stock purchase warrant to purchase up to 150,000 shares of Company common stock
      at an exercise price of $1.25 per share; (iv) Basso Private a convertible
      secured note in the principal amount of $220,000 and a common stock purchase
      warrant to purchase up to 33,000 shares of Company common stock at an exercise
      price of $1.25 per share; and (v) Basso Multi a convertible secured note in
      the
      principal amount of $780,000 and a common stock purchase warrant to purchase
      up
      to 117,000 shares of Company common stock at an exercise price of $1.25 per
      share. The terms between the Company and each of the respective Investors are
      substantially similar and the Company has agreed to treat each of the
      Investors *pro
      rata* with
      respect to this financing, including conversion, redemption and payments
      thereto.





These
      notes are secured by all of the Company and its subsidiaries' assets. The
      payment of interest and principal, under certain circumstances, may be made
      with
      shares of the Company common stock at a conversion price of no less than $1.00
      per share. The Company has agreed to register the resale of the shares of the
      Company common stock underlying the Investor Notes and the shares issuable
      upon
      exercise of the Warrants. The Investor Notes will accrue interest at a rate
      per
      annum equal to the prime rate published in the Wall Street Journal plus seventy
      five basis points, as may be adjusted. The Company has the ability to
      prepay any amounts owed under these Investors Notes at 110% of the principal
      amount.





Under
      the
      terms of the Investor Notes and related documents, 20% (including applicable
      fees) of the principal amount of the Investor Notes was provided to Company
      for
      immediate use upon the closing of the Investor Notes (Amortizing Principal),
      the
      remaining 80% (net of applicable fees) is held in restricted accounts for each
      respective Investors (Restricted Account). The Company is obligated to make
      monthly payments, either in cash or stock as determined by the Investor Notes,
      beginning on June 1, 2005 for the Amortizing Principal, plus applicable interest
      (the Monthly Payment). The Monthly Payment will be made (i) automatically by
      a
      conversion in stock at a Fixed Conversion Price, (ii) at the discretion of
      the
      Company at a reduced conversion price, or (iii) in cash paid by the Company
      at
      110% of the Monthly Payment. The Monthly Payments shall be automatically made
      in
      Company common stock at the Fixed Conversion Price if (i) the shares of the
      Company common stock underlying the shares of the Investor Notes are registered;
      and (ii) the average trading price of the Company common stock for the five
      days
      preceding the Monthly Payment is greater than 110% of the Fixed Conversion
      Price. If the Monthly Payment is not automatically converted into shares of
      Company common stock because the average trading price of the Company common
      stock for the five trading days prior to the due date of the Monthly Payment
      is
      less than 110% of the Fixed Conversion Price, the Company may, at its
      discretion, make the Monthly Payment in Company common stock at a conversion
      price equal to 85% of the average trading price of the Company common stock
      for
      the five lowest closing days for the 22 trading days prior to the Company's
      notice, but in no case shall the conversion price be less than $1.00. As of
      February 28, 2005 the Fixed Conversion Price is $1.00, subject to adjustment,
      but in no case less than $1.00.





The
      Company will receive cash disbursements (less applicable accrued interest)
      for
      the amounts held in the Restricted Account after (i) the Amortizing Principal,
      plus interest, is paid in full, (ii) the shares of the Company common stock
      underlying the Investor Notes are registered; and (iii) either the Company
      or
      the Investor converts any amounts held in the Restricted Accounts into shares
      of
      the Company's common stock. If the Company converts the amounts held in the
      Restricted Account, the amounts shall be converted at either (i) a price equal
      to 85% of the average of the five lowest closing prices of the Company common
      stock during the 22 trading days immediately prior to the date of a respective
      repayment notice if the average closing price of the Company common stock is
      less than 110% of the Fixed Conversion Price, but in no instance may such shares
      by converted for less than $1.00; or (ii) at the Fixed Conversion Price, if
      the
      average closing price of the Company common stock for the five consecutive
      trading days immediately preceding the respective repayment notice is greater
      than or equal to 115% of the Fixed Conversion Price.





The
      Investors may convert all or any portion of the principal amounts of their
      respective Investor Notes, including any accrued interest or fees thereon at
      the
      Fixed Conversion Price.





Notwithstanding
      the foregoing, the Company's right to issue shares of its common stock in
      payment of obligations under the Investor Notes shall be subject to the
      limitation that the number of aggregate shares of common stock issued to each
      Investor shall not exceed 25% of the aggregate dollar trading volume of the
      Company common stock for the 22 trading days immediately preceding the date
      on
      which the conversion is to occur. Furthermore, the Investors are not entitled
      to
      convert their respective Investor Notes; if the aggregate Investors beneficial
      ownership of the Company's common stock would exceed *pro
      rata* 19.99%
      of the outstanding shares of common stock of the Company at the time of the
      conversion.





The
      warrants issued pursuant to this funding are exercisable by the Investors until
      February 28, 2012, at $1.25 per share of Company common stock. The Warrants
      are
      exercisable immediately.





The
      Company has agreed to file a registration statement with the Securities and
      Exchange Commission within a definitive period of time not to exceed 45 days
      from February 28, 2005, in order to register the resale of the shares of common
      stock underlying the Investor Notes and the shares issuable upon exercise of
      the
      Warrants. If the Company fails to meet this deadline, if the registration
      statement is not declared effective prior to 105 days from February 28, 2005,
      if
      the registration statement ceases to remain effective, or certain other events
      occur, the Company has agreed to pay the Investors liquidated damages of 1.25%
      of the principal amount of the Investor Notes per month.









**Critical
      Accounting Policies**





*General*





The
      Consolidated Financial Statements and Notes to Consolidated Financial Statements
      contain information that is pertinent to this management's discussion and
      analysis. The preparation of financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of any contingent assets and liabilities.
      Management believes these accounting policies involve judgment due to the
      sensitivity of the methods, assumptions and estimates necessary in determining
      the related asset and liability amounts. Management believes it has exercised
      proper judgment in determining these estimates based on the facts and
      circumstances available to its management at the time the estimates were made.
      The significant accounting policies are described in the Company's financial
      statements (See Note 2 in Notes to Consolidated Financial
      Statements).





*Revenue
      Recognition*





The
      Company's revenue recognition policy is objective in that it recognizes revenue
      when products are shipped or services are delivered. Accordingly, there are
      no
      estimates or assumptions that have caused deviation from its revenue recognition
      policy. Additionally, the Company has a limited amount of sales returns which
      would affect its revenue earned.





The
      Company accounts for arrangements that contain multiple elements in accordance
      with EITF 00-21, "Revenue Arrangements with Multiple Deliverables". When
      elements such as hardware, software and consulting services are contained in
      a
      single arrangement, or in related arrangements with the same customer, the
      Company allocates revenue to each element based on its relative fair value,
      provided that such element meets the criteria for treatment as a separate unit
      of accounting. The price charged when the element is sold separately generally
      determines fair value. In the absence of fair value for a delivered element,
      the
      Company allocates revenue first to the fair value of the undelivered elements
      and allocates the residual revenue to the delivered elements. In the absence
      of
      fair value for an undelivered element, the arrangement is accounted for as
      a
      single unit of accounting, resulting in a delay of revenue recognition for
      the
      delivered elements until the undelivered elements are fulfilled. The Company
      limits the amount of revenue recognition for delivered elements to the amount
      that is not contingent on the future delivery of products or services or subject
      to customer-specified return or refund privileges.





The
      Company recognizes revenue from the sale of manufacturer's maintenance and
      extended warranty contracts in accordance with EITF 99-19 net of its costs
      of
      purchasing the related contracts.





*Allowance
      for Doubtful Accounts*





The
      Company maintains an allowance for doubtful accounts, which reflects the
      estimate of losses that may result from the inability of some of the Company's
      customers to make required payments. The estimate for the allowance for doubtful
      accounts is based on known circumstances regarding collectability of customer
      accounts and historical collections experience. If the financial condition
      of
      one or more of the Company's customers were to deteriorate, resulting in an
      impairment of their ability to make payments, additional allowances may be
      required. Material differences between the historical trends used to estimate
      the allowance for doubtful accounts and actual collection experience could
      result in a material change to the Company's consolidated results of operations
      or financial position.





*Goodwill*





As
      of
      December 31, 2004, the Company had $1,100,000 of goodwill, as restated,
      resulting from the acquisition of NewBridge.
      Goodwill represents the excess of cost over the fair value of the net tangible
      assets acquired and is not amortized. However, goodwill is subject to an
      impairment assessment at least annually which may result in a charge to
      operations if the fair value of the reporting segment in which the goodwill
      is
      reported declines. In September 2004, the Company performed a valuation analysis
      of the discounted projected estimated future cash flows of NewBridge and the
      Company elected to write down a portion of the goodwill related to NewBridge.
      Due to the large amount of goodwill presently on the Company's financial
      reports, if an impairment is required, the Company's financial condition and
      results of operations would be negatively affected. During March 2004, the
      Company recorded an impairment charge of approximately $451,000 related to
      the
      goodwill associated with the NetView acquisition.










*Accounting
      for Stock-Based Compensation*





The
      Company accounts for stock-based compensation based on the provisions of
      Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
      Employees, as amended by the Financial Accounting Standards Board Interpretation
      No. 44, Accounting for Certain Transactions Involving Stock Compensation
      Accounting Principles Board Opinion No. 25 and Financial Accounting Standards
      Board Interpretation No. 44 state that no compensation expense is recorded
      for
      stock options or other stock-based awards to employees that are granted with
      an
      exercise price equal to or above the estimated fair value per share of the
      company's common stock on the grant date. The Company adopted the disclosure
      requirements of Statement of Financial Accounting Standards No. 123, Accounting
      for Stock-Based Compensation, which requires compensation expense to be
      disclosed based on the fair value of the options granted at the date of the
      grant.





In
      December 2002, the Financial Accounting Standards Board issued its Statement
      No.
      148, Accounting for Stock-Based Compensation -- Transition and Disclosure--an
      amendment of Financial Accounting Standards Board Statement No. 123. This
      Statement amends Statement of Financial Accounting Standards No. 123, to provide
      alternative methods of transition for an entity that voluntarily changes to
      the
      fair value based method of accounting for stock-based employee compensation.
      It
      also amends the disclosure provisions of Statement of Financial Accounting
      Standards No. 123 to require prominent disclosure about the effects on reported
      net income of an entity's accounting policy decisions with respect to
      stock-based employee compensation. The transition and annual disclosure
      provisions of Statement of Financial Accounting Standards No. 148 are effective
      for fiscal years ending after December 15, 2002, and the interim disclosure
      provisions were effective for the first interim period beginning after December
      15, 2002. The Company did not voluntarily change to the fair value based method
      of accounting for stock-based employee compensation, therefore, the adoption
      of
      Statement of Financial Accounting Standards No. 148 did not have a material
      impact on its operations and/or financial position.





*Derivative
          Financial Instruments*
 
 The
          Company accounts for all derivative financial instruments in accordance
          with
          SFAS No. 133. Derivative financial instruments are recorded as liabilities
          in
          the consolidated balance sheet, measured at fair value. When available,
          quoted
          market prices are used in determining fair value. However, if quoted market
          prices are not available, the Company estimates fair value using either
          quoted
          market prices of financial instruments with similar characteristics or
          other
          valuation techniques.
 
 The
          value
          of the derivative liabilities relating to the Convertible Note in the financial
          statements are subject to the changes in the trading value of the Company’s
          common stock and other assumptions. As a result the Company’s financial
          statements may fluctuate from quarter to quarter based on factors such
          as
          trading value of the Company’s Common Stock, the amount of shares converted by
          Laurus in connection with the Laurus Convertible Note and exercised in
          connection with the Warrant outstanding. Consequently, the Company's
          consolidated financial position and results of operations may vary from
          quarter
          to quarter based on conditions other than the Company’s operating revenue and
          expenses. See note 6 and 9 regarding valuation methods used for derivative
          liabilities.
 
 Derivative
          financial instruments that are not designated as hedges or that do not
          meet the
          criteria for hedge accounting under SFAS No. 133 are recorded at fair value,
          with gains or losses reported currently in earnings. All derivative financial
          instruments held by the Company as December 31, 2004 were not designated
          as
          hedges.







**Results
      of Operations and Financial Condition**





The
      Company's primary business focus is on solving well-defined customer problems
      or
      providing a need-proven service. It is focused on delivering reliable and
      effective IT solutions, managed services, software, security solutions, Internet
      telephony solutions and network and storage solutions that enable enterprises
      to
      restructure and integrate entire business processes while extending them across
      enterprise boundaries to customers, employees and suppliers. As its arsenal
      of
      products, services and solutions grows through internal and external
      initiatives, its sales force will be required to leverage its cross-selling
      potential. The Company earns its revenue through the sales efforts of its four
      distinct business segments. When products and/or services are purchased, the
      Company invoices its customers and subsequently receives payment for those
      products and/or services, which generates the cash needed to pay for those
      products and/or services. Due to its growth, the Company has been required
      to
      obtain various lines of credit to finance
      the purchase of these products.





Prior
      to
      the acquisitions of NetView, NewBridge and TanSeco, the Company was a technology
      consulting services firm providing strategic consulting solutions, creative
      web
      site design, web site content management software and technical project
      management and development services to companies seeking to increase
      productivity or reduce costs through investing in technology. In order to
      diversify its business plan, the Company began seeking merger candidates.
      eLinear selected NetView due to its list of customers and management with the
      view toward cross-selling its consulting services with NetView's network and
      storage solutions customers. Its acquisition of NewBridge was determined by
      its
      desire to provide a total IT solutions product to its customers, which NewBridge
      provided the ability to expand its business in the area of communications
      deployment. The acquisition of TanSeco provided the Company an opportunity
      to
      enter the security solutions business segment. In addition to its consulting
      services it previously provided, it now offers a full range of IT solutions.
      These acquisitions have in fact expanded its customer base and provided
      additional sales opportunities, which were not previously available to it.
      The
      Company intends to expand its business in all four segments of which it
      operates.





eLinear
      is specifically focused on growing its business across all offerings. This
      growth will, in some instances, be pursued internally and in others, externally
      via acquisitions.





*Internal
      Growth*





The
      primary focus internally will be on making strategic hires for its network
      solutions, IP Telephony solutions and security solutions. This has and will
      continue to include:





1)account
                executives that bring to eLinear established relationships with customers;
                and





2)technical
                resources and engineers that can assess, architect, design, implement,
                support and maintain all the different aspects required by the Company's
                solutions.





Much
      of
      the Company's internal growth will also come from leveraging its ability to
      cross-sell its diverse offerings to its entire customer base. The Company also
      plans to expand into the geographies that its current customers have presences
      in, and hence, would be relatively easier than expanding into other geographies
      without any inroads into them. More specifically, below are some current
      initiatives being developed:





1)IP
                Telephony - the design, architecting, implementation and roll-out
                of
                corporate Voice Over Internet Protocol (VOIP) telephone systems integrated
                with data networks, eliminating the need for traditional switching
                telephone systems. The Company has identified several account executives
                and engineers that would enable broader customer coverage. Concurrently,
                the Company is in the process of upgrading its certification levels
                with
                partners in order to provide it with better services, pricing and
                opportunities, primarily with Cisco
                Systems;





2)Network
                Solutions - the Company continually hires account executives and
                engineers
                that enable broader customer coverage by bringing new customers and
                skills
                to eLinear. During 2004, the Company hired nearly 25 people in Dallas
                as
                an extension of its Houston presence;
                and





3)Security
                Solutions - the Company is now focused on growing its security system
                sales to its customers, with the solutions being enabled via strategic
                partnerships with such companies as Cisco Systems, Netscreen and
                others.





All
      of its
      solutions are distributed through its internal sales and engineering
      forces.










*External
      Growth*





The
      primary focus externally will be on making strategic acquisitions into areas
      that the Company feels it wants to compete, but will not be able to establish
      and grow a competitive presence internally. The security systems arena is an
      area where the Company's acquisitions will be targeted. Intrusion technology
      firms and security consulting firms that can perform vulnerability assessments,
      penetration testing and security policy creation represent areas that the
      Company feels it can be more effective by acquiring into.





*Financing
      Growth*





Currently,
      the Company has enough cash on hand and credit through its lines of credit
      to
      fund its internal working capital needs, which include internal growth
      initiatives over the next twelve months, and evaluating acquisitions. Moving
      forward, should the Company determine that it is strategically important to
      make
      multiple acquisitions, then the Company may need to pursue additional funding
      for those acquisitions.





*Purchase
      of New Products*





From
      a
      procurement perspective, the Company has lines of credit with Textron, Ingram
      Micro and GE Financial that are needed in order to fund the purchase of hardware
      required for its solutions offerings. Its new products are purchased primarily
      through one of the following four vendors: Ingram Micro, GE Financial, Synnex
      and Tech Data. If the credit line at each vendor becomes over extended, then
      that vendor gets paid by Textron immediately upon invoicing of the product.
      eLinear then has 30 days to pay the vendor and 45 days to pay Textron. This
      enables eLinear to maintain liquidity and rapid procurement on behalf of its
      customers.





*NetView
      Acquisition*





The
      acquisition of NetView brought to eLinear customers that need services in the
      network solutions market, including the design, procurement, implementation,
      support and maintenance of corporate networks. NetView's customer base ranges
      from the likes of the Fortune 2000 to Small to Medium Businesses (SMB). Industry
      verticals that Netview customers are in, and hence are new markets to eLinear,
      include energy, healthcare, state and local governments, finance and several
      others. The opportunities acquired are general in nature and there was not
      any
      specific opportunity that was deemed material in making this acquisition.
      Network solutions will be selectively expanded through the hiring of key account
      executives with long-term, well-established client relationships.





*NewBridge
      Acquisition*





The
      acquisition of NewBridge brought to eLinear customers that need services in
      the
      network infrastructure market, including the design, procurement,
      implementation, support and maintenance of physical network infrastructure
      such
      as structured cabling, network access points (drops), secure card access, closed
      circuit TV, and other services. NewBridge's customer base includes Houston
      based
      businesses, large and small, that require physical infrastructure for networks
      in new facilities, expansions, upgrades and for maintenance of existing
      facilities. Industry verticals that NewBridge customers are in include energy
      and state and local governments. Part of the strategic reason for the
      acquisition was an opportunity to develop infrastructure services for
      residential communities. Network infrastructure solutions will be selectively
      expanded through the hiring of key account executives with long-term,
      well-established commercial client relationships. There is little emphasis
      on
      the residential aspect of the infrastructure.





*TanSeco
      Acquisition*





The
      acquisition of TanSeco allowed the Company to enter the premise security
      solutions business segment. Through this wholly-owned subsidiary, the Company
      offers security services to RadioShack Corporation under a three-year agreement,
      security monitoring through third parties and project work installing security
      devices and fiber/cable in client locations throughout the US.





*Challenges
      and Risks*





1)Continued
                improvement in IT spending trends, specifically on security and regulatory
                compliance technology enablement. eLinear plans to address this by
                continually refocusing on solutions that are critical to clients
                granting
                eLinear access to areas that warrant technology and strategic
                spending;2)General
                economic conditions at the local, regional and national level;
                and3)Continued
                access to capital and human capital resources. eLinear continually
                attends
                conferences where capital sources are marketing their services and
                such
                relationships are continually maintained. The Company continually
                utilizes
                the services of recruiters in order to ensure access to high quality
                human
                capital talent.










**Results
      of Operations**





**Year
      Ended December 31, 2004 to Year Ended December 31, 2003**





The
      following table sets forth certain operating information regarding the Company
      for the years ended December 31, 2004 and 2003:





2004
              
              
              2003(Restated)Revenue
              
              $
              24,065,753
              
              $
              13,501,140Cost
                  of revenue
              
              
              20,476,838
              
              
              11,367,405Gross
                  profit
              
              
              3,588,915
              
              
              2,133,735Selling,
                  general and administrative expenses
              
              
              10,456,866
              
              
              3,151,263Depreciation
                  and amortization
              
              
              151,630
              
              
              20,290Loss
                  from operations
              
              
              (7,019,581
              )
              
              (1,037,818
              )Other
                  income (expense)
              
              
              3,172,235
              
              
              15,657Net
                  loss
              
              $
              (3,847,346
              )
              $
              (1,022,161
              )Net
                  loss per share - basic and diluted
              
              $
              (0.19
              )
              $
              (0.07
              )








*Revenue.* Total
      revenue for the year ended December 31, 2004 was $24,065,753 which was an
      increase of 78% over the prior year period of $13,501,140. Revenue from the
      consulting services business segment for fiscal 2004 was $106,515, which was
      less than 1% of total revenue. The consulting services business segment has
      seen
      a significant decline in customer utilization during 2003 and 2004. During
      February 2004, the Company hired a primary consultant and several consulting
      engineers and the Company intends to concentrate its efforts on building
      additional consulting services customer relationships during the current fiscal
      year. If successful, the Company does intend to add additional personnel to
      increase sales, however, there are no guarantees that the Company will be
      successful in this endeavor.





Revenue
      generated from the network and storage solutions business segment for fiscal
      2004 was $21,753,584, which was an increase of $9,067,451, or 71%, over fiscal
      2003. The network and storage solutions business segment contributed 90% of
      total revenue for fiscal 2004. The Company was able to increase its revenue
      over
      the 2003 period primarily by the addition of sales personnel who had previous
      customer relationships and the Company opened a sales office in Dallas, Texas
      with satellite offices in Austin, Texas and Oklahoma City, Oklahoma. The
      increase in revenue was due to an increase in the amount of product sold and
      was
      not affected by an increase in pricing. eLinear intends to focus on adding
      additional customers and personnel to service these customers.





Revenue
      from the communications deployment business segment for fiscal 2004 was
      $1,827,873, which was 8% of total revenue. This was an increase of $1,621,236,
      or 785%, over the 2003 period. Since the acquisition of NewBridge did not occur
      until July 31, 2003, revenue from the communications deployment segment for
      fiscal 2003 was only for the period July 31 to December 31, 2003. The Company
      continues to add new customers in this area and has increased its business
      from
      its existing customer base.





Of
      the
      revenue generated for the period ended December 31, 2004, one customer provided
      in excess of 10% of the Company's revenue. This customer provided 18% of the
      Company's revenue during fiscal 2004. The loss of that customer may have an
      adverse financial effect on the Company.





*Cost
      of revenue.* Total
      cost of revenue for the year ended December 31, 2004 was $20,476,838, an
      increase of $9,109,433, or 80%, over the 2003 period of $11,367,405. For the
      network and storage solutions business segment, cost of revenue is comprised primarily
      of the costs associated with acquiring hardware and software to fill customer
      orders. For the consulting services business segment, cost of revenue consists
      primarily of full-time personnel and contract employee costs associated with
      projects the Company provides to its customers for a fee. For the communications
      deployment and security solutions business segments, cost of revenue consists
      primarily of materials and personnel to build the customer
      infrastructure.





The
      primary component of the increase in cost of revenue was the cost of procuring
      hardware and software to fill an expanded number of customer orders. The cost
      of
      hardware and software as a percent of revenue increased from 85% for fiscal
      2003
      to 87% for fiscal 2004. This increase was a result of the addition of a major
      customer which received favorable pricing from the Company. In order to obtain
      and retain this customer, the Company lowered its standard pricing for resale
      of
      computer hardware and software to this customer. The Company was unable to
      obtain a reduction in the cost of hardware and software purchased from its
      vendors, resulting in a decrease in its gross margin. The Company does not
      anticipate the favorable pricing it has granted to this customer will change
      in
      the future. The Company's principal suppliers of hardware and software products
      are Hewlett Packard and Cisco, which contributed approximately 49% of its sales
      for fiscal 2004. The Company anticipates they will continue to be its principal
      suppliers in the future. Total cost of products amounted to $19,194,420 for
      fiscal 2004. The Company anticipates that cost of revenue will increase as
      revenue increases.










*Gross
      profit.* Total
      gross profit increased from $2,133,735 for the year ended December 31, 2003,
      to
      $3,588,915 for the year ended December 31, 2004. The increase in gross profit
      was a result of an increase in revenue from all business segments, with the
      exception of the consulting services business segment. Total gross profit as
      a
      percentage of revenue decreased from 16% for fiscal 2003 to 15% for fiscal
      2004.
      The primary reason for the decrease was a result of favorable pricing for
      hardware and software purchases a major customer.





*Operating
        expenses.* Total
        operating expenses for the year ended December 31, 2004, were $10,608,496,
        an
        increase of $7,436,943, or 234%, over fiscal 2003 of $3,171,553. The various
        components of this increase are as follows


·The
                  Company has added additional personnel in its network and storage
                  solutions business segment to facilitate the rapid increase in
                  customer
                  orders, and it has reduced personnel in its consulting services
                  business
                  segment, reflecting an increase in the use of subcontractors to
                  execute on
                  projects as opposed to hiring full-time employees. At December
                  31, 2003,
                  the Company employed 27 which had increased to 116 as of December
                  31,
                  2004. Additionally, the Company opened a sales office in Dallas,
                  Texas and
                  satellite offices in Austin, Texas and Oklahoma City, Oklahoma.
                  The net
                  effect was an increase in payroll and related costs of $3,243,203,
                  which
                  costs are composed of payroll, payroll taxes, sales commissions
                  and
                  employee benefits.·Office
                  administration expenses increased from $338,674 for the 2003 period
                  to
                  $1,524,253 for the 2004 period. The components of office administration
                  are office rent, office administration, sales and marketing and
                  dues and
                  subscriptions. The Company incurred initial start-up costs when
                  opening
                  its sales offices in Dallas, Austin and Oklahoma City and relocating
                  its
                  corporate headquarters in Houston, Texas. The Company does not
                  anticipate
                  these costs will be incurred in the future.·Professional
                  services, which is comprised of legal, accounting and consulting
                  fees,
                  increased from $526,664 for the previous year period to $2,208,666
                  for the
                  current fiscal period. The Company has incurred additional legal,
                  accounting and outside services fees during the current fiscal
                  year in
                  association with its financings and current litigation which was
                  partially
                  offset by a reduction in contract services. The Company incurred
                  non-cash
                  stock compensation expense of $857,484 for common stock issued
                  to
                  consultants.·In
                  March 2004 the consulting services reporting unit lost its largest
                  consulting contract and the other operations that it had prior
                  to the
                  NetView acquisition with additional revenue declines due to the
                  loss of a
                  key consulting services employee after the acquisition. Based on
                  projected
                  future cash flows from the reporting unit, management determined
                  a full
                  impairment charge of $451,925 was
                  required.




§In
      September 2004, the Company
      recorded impairment expense totaling $391,102 related to a portion of the
      goodwill related to the NewBridge acquisition in July 2003. The Company
      performed a valuation analysis of the discounted projected estimated future
      cash
      flows from the reporting unit. Based on the valuation analysis, the Company
      elected to write down the goodwill for NewBridge to $1,100,000 resulting in
      the
      impairment charge.





·Other
                  expenses increased from $614,504 for prior year to $1,093,286 for
                  the
                  current fiscal period. The Company has initiated an investor
                  awareness/marketing program to reach out to current and potential
                  investors and provide them with current news releases and information
                  about eLinear as well as to establish nationwide name recognition
                  to build
                  the Linear name brand for future business. This program consists
                  of
                  investor conferences, electronic media distribution, newspaper
                  coverage,
                  third party representation through introduction to institutional
                  entities
                  and radio coverage. The program was designed by in-house eLinear
                  employees. The cost of this program during the twelve months ended
                  December 31, 2004 approximated $862,000. The Company has incurred
                  penalties in association with Laurus and its financings in January
                  and
                  February 2004 of $102,597 and $370,931, respectively, as a result
                  in
                  delays in its two registration statements filed with the SEC, which
                  penalties are included in the other expenses category. A majority
                  of the
                  remaining expenses were the Company's listing fee to the American
                  Stock
                  Exchange.





*Interest
        Expense.* Interest
        expense for the year ended December 31, 2004 increased to $614,504 from $30,775
        for the prior year. Of this amount approximately $330,000 was attributable
        to a
        write-off of debt discounts associated with the Laurus credit facility. The
        balance was attributable to the amortization of debt discounts and interest
        charges associated with the Laurus credit facility.





*Change
        in Fair Value of Derivatives.* The
        decrease in derivative liabilities in connection with the Laurus credit facility
        and common stock warrants resulted in income of $5,325,553 for the year ended
        December 31, 2004.




*Loss
        on Early Extinguishment of Debt.*  The Company recorded a loss of
        $1,555,347 in connection with the modification of the Laurus credit facility
        during October 2004.




*Net
        Loss* .
        The net
        loss for the year ended December 31, 2004 was $3,847,346 or $0.19 per share
        basic and diluted, compared to a net loss of $1,022,161, or $0.07 per share
        basic and diluted, for the previous year.





**Liquidity
      and Capital Resources**





The
      following summary table presents comparative cash flows of the Company for
      the
      years ended December 31, 2004 and 2003:





2004
            
            2003Net
                cash used in operating activities
            
            $
            (7,112,080
            )
            $
            (1,106,769
            )Net
                cash used in investing activities
            
            $
            (1,962,163
            )
            $
            (19,143
            )Net
                cash provided by financing activities
            
            $
            9,418,629
            
            $
            1,559,501





*Changes
        in cash flow.* Net cash
        used in operating activities for the year ended December 31, 2004, was
        $7,112,080 compared to net cash used in operating activities of $1,106,769
        for
        the prior year. This was an increase of $6,005,311 over the prior year. The
        primary components of net cash used in operating activities for fiscal 2004
        were
        a net loss of $3,847,346, increases in accounts receivable resulting from
        increased sales when compared to the prior fiscal year and increases in
        inventory and other current assets. The cash used in operating activities
        includes net non-cash charges totaling $860,134, an increase in accrued
        liabilities of $864,891 which was comprised of accrued payables, payroll
        and
        sales taxes and an increase in accounts payable. Cash used in investing
        activities increased to $1,962,163 for the current fiscal year. In November
        2004, the Company purchased all the outstanding stock of TanSeco for $750,000
        in
        cash and acquired inventory, fixed assets and security monitoring contracts.
        The
        Company purchased computer hardware, office equipment and furniture and incurred
        leasehold improvements during the current period for its new offices and
        employees totaling $688,016. The Company does not believe it will incur
        significant purchases in the future. As part of the Company's loan agreement
        with Textron, the Company was required to deposit $500,000 in a restricted
        account in order to obtain a letter of credit. Cash provided by financing
        activities increased from approximately $1,560,000 during fiscal 2003 to
        approximately $9,419,000 for the current fiscal year. This increase was
        attributable to sales of common stock of approximately $4,586,000, net proceeds
        from the Laurus financing agreement of $4,705,697, and the exercise of stock
        options and warrants of $615,843. This was partially offset by the repayment
        of
        notes due to Messrs. Allen and Casey of $215,703 and payment of $273,000
        in
        finders fees associated with the Laurus financing agreement.





*Capital
      Resources* .
      The
      Company has funded its operations through the sale of common stock, the exercise
      of stock options and warrants, short-term borrowings from two of its officers,
      lines of credit and the Laurus financing agreement. During January and February
      2004, the Company sold shares of common stock in two private placements for
      aggregate net proceeds of $4,585,792. During the year ended December 31, 2004,
      the Company received $615,843 through the exercise of stock options and
      warrants. NetView has funded its operations by way of loans from Messrs. Allen
      and Casey. At December 31, 2003, the amount due these individuals was $215,703.
      These notes were subsequently repaid during January 2004. NetView has funded
      its
      purchases of network and storage solutions products primarily through vendor
      provided financing arrangements. In March 2003, NetView obtained a $1 million
      line of credit from Textron Financial Corporation to fund purchases of network
      and storage solutions product for delivery to customers. This line of credit
      was
      secured by all of its assets. In February 2004, the Company retired this line
      of
      credit, entered into a new $500,000 credit facility secured by a $500,000 letter
      of credit to Textron and entered into a new credit facility with Laurus
      discussed above.










*Liquidity.* As of
      December 31, 2004, the Company had cash balances in non-restricted accounts
      of
      $898,869 and positive working
      capital of approximately $1,886,000. In January 2004, the Company completed
      a
      private offering and raised gross proceeds of approximately $2,500,000. In
      February 2004, the Company completed a private offering and raised gross
      proceeds of $2,460,000. Both of these financings include warrants, which, if
      exercised, could raise up to approximately $6,900,000.





In
      February 2004, the Company obtained a secured revolving note with Laurus. Under
      the terms of the agreement, the Company can borrow up to $5,000,000 at an annual
      interest rate of prime plus .75% (with a minimum rate of 4.75%). The agreement
      contains two notes: a minimum secured revolving note totaling $2,000,000 and
      a
      revolving credit facility totaling $3,000,000 based on eligible accounts
      receivable. At December 31, 2004, the Company had drawn down $2,000,000 under
      the term loan and $2,705,697 under the revolver.





On
      February 28, 2005, the Company entered into financing arrangements for a total
      principal amount of $12 million as described in "Recent Developments".  Of
      this financing $2,400,000 gross proceeds has been funded to the Company and
      $9,600,000 may be funded upon satisfaction of certain conditions, of which
      there
      can be no assurance that this will occur.




The
      Company believes it has sufficient capital to implement its business plan during
      fiscal 2005 and to seek out acquisitions in order to more quickly grow its
      business. Management believes that it will not begin to generate cash flow
      from
      operations during fiscal 2005, however, it believes it has sufficient capital
      resources to fund operations during fiscal 2005. If expenses are in excess
      of
      its estimates or if revenue declines, the Company may need to obtain additional
      financing to fund its operations. If the Company is required to obtain
      additional financing, it will be required to do so on a best efforts basis,
      as
      it currently has no commitments for any further financing.





**Off-Balance
      Sheet Arrangements**





The
      Company does not have any off-balance sheet arrangements.





**New
      Accounting Pronouncements**





During
      December 2002, the FASB issued SFAS No. 148. Statement 148 establishes standards
      for two alternative methods of transition to the fair value method of accounting
      for stock-based employee compensation of FASB SFAS No. 123 Accounting for
      Stock-Based Compensation (SFAS 123). SFAS 148 also amends and augments the
      disclosure provisions of SFAS 123 and Accounting Principles Board Opinion 28
      "Interim Financial Reporting" to require disclosure in the summary of
      significant accounting policies for all companies of the effects of an entity's
      accounting policy with respect to stock-based employee compensation on reported
      net income and earnings per share in annual and interim financial statements.
      The transition standards and disclosure requirements of SFAS 148 are effective
      for fiscal years and interim periods ending after December 15, 2002. The Company
      has adopted only the disclosure provisions of this statement.





SFAS
      No.
      150, Accounting for Certain Financial Instruments with Characteristics of Both
      Liabilities and Equity, was issued in May 2003 and requires issuers to classify
      as liabilities (or assets under certain circumstances) three classes of
      freestanding financial instruments that represent obligations for the issuer.
      SFAS No. 150 is effective for financial instruments entered into or modified
      after May 31, 2003 and is otherwise effective at the beginning of the first
      interim period beginning after December 15, 2003. The adoption of this statement
      did not have a material effect on the Company's financial position, results
      of
      operations or cash flows.














ITEM
      7. FINANCIAL STATEMENTS











**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

















To
      the
      Board of Directors of:


eLinear,
      Inc.


Houston,
      Texas





We
      have
      audited the accompanying balance sheet of eLinear, Inc., as of December 31,
      2004
      and 2003 and the related statements of operations, changes in shareholder’s
      equity (deficit) and cash flows for each of the two years ended December 31,
      2004 and 2003. These financial statements are the responsibility of eLinear's
      management. Our responsibility is to express an opinion on these financial
      statements based on our audit.





We
      conducted our audit in accordance with auditing standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our 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 eLinear, Inc. as of December 31,
      2004 and 2003, and the results of its operations and cash flows for each of
      the
      two years ended December 31, 2004 and 2003, in conformity with accounting
      principles generally accepted in the United States of America.








As
        discussed in Notes 3 and 15, the Company restated its prior period
        financial statements.














Lopez,
      Blevins, Bork & Associates, LLP


Houston,
      Texas


March
      3,
      2005








**eLINEAR,
      INC.**


**AND
      SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**





December
                  31,2004
              
              2003**ASSETS**
              
              (Restated)
              
              (Restated)Current
                  assets:Cash
              
              $
              898,869
              
              $
              554,483Cash in restricted accounts
              
              
              504,580
              
              
              --Accounts receivable, net of allowance of $311,569 and $69,289
                  atDecember 31, 2004 and 2003, respectively
              
              
              5,010,733
              
              
              1,637,217Inventory
              
              
              446,446
              
              
              190,555Other current assets
              
              
              126,316
              
              
              45,708Total current assets
              
              
              6,986,944
              
              
              2,427,963Property
                  and equipment, net
              
              
              805,798
              
              
              43,662Other
                  assets:Goodwill
              
              
              1,100,000
              
              
              1,943,022Contract rights
              
              
              273,693
              
              
              --Deposits
              
              
              34,616
              
              
              15,049Total other assets
              
              
              1,540,655
              
              
              1,958,071Total
                  assets
              
              $
              9,201,051
              
              $
              4,429,696**LIABILITIES
                  AND SHAREHOLDERS' EQUITY (DEFICIT)**Current
                  liabilities:Accounts payable, trade
              
              $
              1,266,738
              
              $
              1,101,603Line of credit - revolver
              
              
              2,784,543
              
              
              --Payable to officers
              
              
              --
              
              
              36,336Accrued liabilities
              
              
              1,049,974
              
              
              148,747Warrant liabilities - current
              
              
              412,174
              
              
              --Notes payable, officers
              
              
              --
              
              
              215,703Total current liabilities
              
              
              5,513,429
              
              
              1,502,389Long-term
                  debt (less unamortized discount of $328,780)
              
              
              1,671,220
              
              
              --Compound
                  embedded derivative liability
              
              
              339,752
              
              
              --Warrant
                  liability - non-current
              
              
              1,950,525
              
              
              --Total liabilities
              
              
              9,474,926
              
              
              1,502,389Commitments
                  and contingencies (Note 8)Shareholders'
                  equity (deficit):Preferred stock, $.02 par value, 10,000,000 shares authorized,
                  none
                  issued
              
              
              --
              
              
              --Common stock, $.02 par value, 100,000,000 shares
                  authorized,21,622,598 and 17,020,754 shares issued and outstanding atDecember 31, 2004 and 2003, respectively
              
              
              432,452
              
              
              340,415Additional paid-in capital
              
              
              4,536,758
              
              
              3,982,631Accumulated deficit
              
              
              (5,243,085
              )
              
              (1,395,739
              )Total shareholders' equity (deficit)
              
              
              (273,875)
              
              
              2,927,307Total
                  liabilities and shareholders' equity (deficit)
              
              $
              9,201,051
              
              $
              4,429,696








See
      accompanying notes to consolidated financial statements.





**eLINEAR,
      INC.**


**AND
      SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**FOR
      THE YEARS ENDED DECEMBER 31, 2004 AND 2003**








2004
              
              2003(Restated)Revenue:Products
              
              $
              21,472,050
              
              $
              12,623,092Services
              
              
              2,513,383
              
              
              878,048Other
              
              
              80,320
              
              
              --Total revenue
              
              
              24,065,753
              
              
              13,501,140Cost
                  of revenue:Products
              
              
              19,194,420
              
              
              10,840,416Services
              
              
              1,282,418
              
              
              526,989Total cost of revenue
              
              
              20,476,838
              
              
              11,367,405Gross
                  profit
              
              
              3,588,915
              
              
              2,133,735Operating
                  expenses:Selling, general and administrative expenses:Payroll and related expenses
              
              
              4,787,634
              
              
              1,544,431Office administration
              
              
              1,524,253
              
              
              338,674Professional services
              
              
              2,208,666
              
              
              526,664Impairment of goodwill
              
              
              843,027
              
              
              --Other
              
              
              1,093,286
              
              
              741,494Total selling, general and administrative
              
              
              10,456,866
              
              
              3,151,263Depreciation and amortization
              
              
              151,630
              
              
              20,290Total operating expenses
              
              
              10,608,496
              
              
              3,171,553Loss
                  from operations
              
              
              (7,019,581
              )
              
              (1,037,818
              )Other
                  income (expense):Interest, net
              
              
              (614,504
              )
              
              (30,775
              )Change in fair value of derivatives
              
              
              5,325,553
              
              
              --Loss on early
                extinguishment of debt
              
              
              (1,555,347
              )
              
              --Other
              
              
              16,533
              
              
              46,432Total other income (expense)
              
              
              3,172,235
              
              
              15,657Net
                  loss
              
              $
              (3,847,346
              )
              $
              (1,022,161
              )Net
                  loss per share:Basic and diluted
              
              $
              (0.19
              )
              $
              (0.07
              )Weighted
                  average number of common shares outstanding:Basic and diluted
              
              
              20,289,723
              
              
              14,382,140











See
      accompanying notes to consolidated financial statements.





**eLINEAR,
      INC.**


**AND
      SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)**


**FOR
      THE YEARS ENDED DECEMBER 31, 2004 AND 2003**











Common
                  Stock
              
              Additional
              
              
              
              TotalShares
              
              Amount
              
              Paid-in
                Capital
              
              Accumulated
                  Deficit
              
              Shareholders'
                Equity
                  (Deficit)Balances
                  January 1, 2003
              
              
              12,961,979
              
              $
              259,240
              
              $
              --
              
              $
              (373,578
              )
              $
              (114,338
              )Stock issued in reverse acquisition
              
              
              1,043,761
              
              
              20,875
              
              
              429,843
              
              
              --
              
              
              450,718Stock issued for cancellation of warrants
              
              
              134,750
              
              
              2,695
              
              
              51,205
              
              
              --
              
              
              53,900Exercise of stock options
              
              
              573,700
              
              
              11,474
              
              
              733,969
              
              
              --
              
              
              745,443Issuance of stock options for forgiveness of debt
              
              
              --
              
              
              --
              
              
              13,188
              
              
              --
              
              
              13,188Stock issued for services
              
              
              126,000
              
              
              2,520
              
              
              340,789
              
              
              --
              
              
              343,309Stock options issued for services
              
              
              --
              
              
              --
              
              
              114,493
              
              
              --
              
              
              114,493Stock issued for cash, net of costs
              
              
              1,330,564
              
              
              26,611
              
              
              811,644
              
              
              --
              
              
              838,255Stock options issued for acquisition
              
              
              --
              
              
              --
              
              
              274,000
              
              
              --
              
              
              274,000Stock issued for acquisition
              
              
              850,000
              
              
              17,000
              
              
              1,213,500
              
              
              --
              
              
              1,230,500Net loss
              
              
              --
              
              
              --
              
              
              --
              
              
              (1,022,161
              )
              
              (1,022,161
              )Balances,
                  December 31, 2003
              
              
              17,020,754
              
              
              340,415
              
              
              3,982,631
              
              
              (1,395,739
              )
              
              2,927,307Exercise of stock options
              
              
              312,600
              
              
              6,252
              
              
              409,010
              
              
              --
              
              
              415,262Exercise of stock warrants
              
              
              200,581
              
              
              4,012
              
              
              299,992
              
              
              --
              
              
              304,004Stock issued for cash, net of costs
              
              
              3,194,225
              
              
              63,884
              
              
              4,521,908
              
              
              --
              
              
              4,585,792Value assigned to warrants
              
              
              --
              
              
              --
              
              
              (6,089,693
              )
              
              --
              
              
              (6,089,693
              )Stock issued for services
              
              
              575,190
              
              
              11,504
              
              
              845,980
              
              
              --
              
              
              857,484Stock option expense
              
              
              --
              
              
              --
              
              
              220,091
              
              
              --
              
              
              220,091Stock issued for cancellation of penalties
              
              
              319,248
              
              
              6,385
              
              
              346,839
              
              
              --
              
              
              353,224Net loss
              
              
              --
              
              
              --
              
              
              --
              
              
              (3,847,346
              )
              
              (3,847,346
              )Balances
                  December 31, 2004 (Restated)
              
              
              21,622,598
              
              $
              432,452
              
              $
              4,536,758
              
              $
              (5,243,085
              )
              $
              (273,875
              )











See
      accompanying notes to consolidated financial statements.





**eLINEAR,
      INC.**


**AND
      SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**FOR
      THE YEARS ENDED DECEMBER 31, 2004 AND 2003**





2004
              
              2003(Restated)Cash
                  flows from operating activities:Net loss
              
              $
              (3,847,346
              )
              $
              (1,022,161
              )Adjustments to reconcile net loss to net cash used in operating
                  activities:Depreciation and amortization
              
              
              149,210
              
              
              20,290Impairment of goodwill
              
              
              843,022
              
              
              --Bad debt expense
              
              
              242,280
              
              
              --Amortization of debt discounts
              
              
              356,453
              
              
              --Change in fair value of derivatives
              
              
              (5,325,553
              )
              
              --Loss on early
                extinguishment of debt
              
              
              1,555,347
              
              
              --Stock and stock option based compensation
              
              
              1,077,575
              
              
              511,702Stock issuance and warrant repricing for payment of
                  penalties
              
              
              506,224
              
              
              --Changes in assets and liabilities:Accounts receivable
              
              
              (3,615,796
              )
              
              (311,486
              )Inventory
              
              
              (2,914
              )
              
              (173,608
              )Other current assets
              
              
              (80,608
              )
              
              (45,708
              )Accounts payable
              
              
              165,135
              
              
              (115,517
              )Accrued liabilities
              
              
              864,891
              
              
              29,719Net
                  cash used in operating activities
              
              
              (7,112,080
              )
              
              (1,106,769
              )Cash
                  flows from investing activities:Purchase of property and equipment
              
              
              (688,016
              )
              
              (9,886
              )Restricted cash
              
              
              (504,580
              )
              
              --Acquisition of TanSeco
              
              
              (750,000
              )
              
              --Deposits
              
              
              (19,567
              )
              
              (9,257
              )Net
                  cash used in investing activities
              
              
              (1,962,163
              )
              
              (19,143
              )Cash
                  flows from financing activities:Proceeds from notes payable due to officers
              
              
              --
              
              
              161,262Repayment on notes payable due to officers
              
              
              (215,703
              )
              
              (185,459
              )Proceeds from revolver, net
              
              
              2,705,697
              
              
              --Proceeds from long-term debt
              
              
              2,000,000
              
              
              --Payment of up-front financing costs
              
              
              (273,000
              )
              
              --Proceeds from exercise of stock options and warrants
              
              
              615,843
              
              
              745,443Proceeds from sale of common stock, net
              
              
              4,585,792
              
              
              838,255Net
                  cash provided by financing activities
              
              
              9,418,629
              
              
              1,559,501Net
                  increase in cash
              
              
              344,386
              
              
              433,589Cash
                  and cash equivalents, beginning of year
              
              
              554,483
              
              
              120,894Cash
                  and cash equivalents, end of year
              
              $
              898,869
              
              $
              554,483Non-cash
                  transactionsIssuance of stock in reverse acquisition
              
              $
              --
              
              $
              450,718Issuance of stock acquisition
              
              $
              --
              
              $
              1,504,500Issuance of options for forgiveness of debt
              
              $
              --
              
              $
              13,188





See
      accompanying notes to consolidated financial statements.








**eLINEAR,
      INC.**


**AND
      SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2004**





Note
      1.
      Organization and Nature of Business





eLinear,
      Inc. (“eLinear” or “the Company”) is a communications, security and compliance
      company providing integrated technology solutions including information and
      physical security, IP Telephony and network and storage solutions
      infrastructure. Typically, the Company's customers are Fortune 2000 and small
      to
      medium sized business organizations. eLinear's services are offered to companies
      seeking to increase productivity or reduce costs through investing in
      technology. eLinear has a national and international footprint and has its
      headquarters in Houston, Texas.





On
      April
      15, 2003, eLinear, Inc. issued 12,961,979 shares of common stock for 100% of
      the
      outstanding common stock of NetView Technologies, Inc. (NetView). After the
      merger the stockholders of NetView owned approximately 90% of the combined
      entity. For financial reporting purposes this transaction was treated as an
      acquisition of eLinear and a recapitalization of NetView using the purchase
      method of accounting. (See Note 4.)





Prior
      to
      its acquisition of NetView, eLinear, Inc. was a technology consulting services
      firm providing strategic consulting solutions, creative web site design, web
      site content management software, and technical project management and
      development services to companies seeking to increase productivity or reduce
      costs through investing in technology. The Company's current customers are
      based
      in the United States.





NetView
      was incorporated in the State of Texas in December 2001 as an S-Corporation
      and
      commenced operations on January 1, 2002. NetView is an information technology
      solutions company that provides its customers with network and storage solutions
      infrastructure and related services. NetView's focus is on creating recurring
      revenue streams from a diverse client base. NetView markets its products and
      services through its own direct sales and marketing team, direct mail and trade
      shows. NetView sells to entities throughout the United States; however, a
      majority of its revenue is earned from sales in the State of Texas.





On
      July
      31, 2003, eLinear completed the acquisition of all the issued and outstanding
      shares of NewBridge Technologies, Inc. (formerly MMGD, Inc.) (NewBridge). (See
      Note 4.) NewBridge is a digital provider of voice, data, video and security
      services to residential and commercial developments. These services are over
      a
      fiber or wireless infrastructure. NewBridge markets its services through its
      own
      sales force and the majority of its revenue is earned in Texas.





On
      November 3, 2004, eLinear acquired all of the outstanding and issued stock
      of
      TanSeco Systems, Inc., a Delaware corporation (TanSeco), from RadioShack
      Corporation, a Delaware corporation. TanSeco is a nation wide security solutions
      company, established over 35 years ago, that provides single source, integrated
      life safety and physical security systems and security monitoring services
      to
      commercial customers.





Hereinafter,
      all references to eLinear include the operations and financial condition of
      NetView for the two years ended December 31, 2004, and the operations of eLinear
      consolidated with NetView since April 15, 2003, with NewBridge consolidated
      since July 31, 2003 and with TanSeco consolidated since November 8, 2004. (see
      Note 4).








Note
      2.
      Summary of Significant Accounting Policies




*a) 
      Consolidation*


As
        of
        December 31, 2004, eLinear had three wholly owned subsidiaries, NetView
        Technologies, Inc., NewBridge Technologies, Inc. and TanSeco Systems, Inc.
        All
        material inter-company balances and inter-company transactions have been
        eliminated.




b) *Cash
      and Cash Equivalents*




Cash
        and cash
        equivalents consist of cash on hand and held in banks in unrestricted accounts.
        The Company considers all highly liquid investments with an original maturity
        of
        three months or less to be cash equivalents.








Inventories
      are stated at the lower of average cost or market. The Company continually
      assesses the appropriateness of inventory valuations giving consideration to
      obsolete, slow-moving and non-saleable inventory.




d) *Property
      and Equipment*




Property
      and equipment are stated at cost. Depreciation is computed using the
      straight-line method over the estimated economic lives of the assets that range
      between three and seven years.





e) *Income
      Taxes*




The
      Company accounts for income taxes using the liability method, under which the
      amount of deferred income taxes is based on the tax effects of the differences
      between the financial and income tax basis of the Company's assets, liabilities
      and operating loss carry forwards at the balance sheet date based upon existing
      tax laws. Deferred tax assets are recognized if it is more likely than not
      that
      the future income tax benefit will be realized. Since utilization of net
      operating loss carry forwards is not assured, no benefit for future offset
      of
      taxable income has been recognized in the accompanying financial
      statements.










f) *Goodwill*




Goodwill
      represents the excess of the purchase price over net assets acquired. Goodwill
      is not amortized, but is tested at least annually for impairment. The impairment
      testing is performed at a reporting unit level and consists of two steps. In
      the
      first step, the Company compares the fair value of each reporting unit to its
      carrying value. The Company determines the fair value of its reporting units
      using the income approach, which requires the Company to calculate the fair
      value of a reporting unit based on the present value of estimated future cash
      flows. If the fair value of the reporting unit exceeds the carrying value of
      the
      net assets assigned to that unit, goodwill is not impaired and the Company
      is
      not required to perform further testing. If the carrying value of the net assets
      assigned to the reporting unit exceeds the fair value of the reporting unit,
      then the Company must perform the second step in order to determine the implied
      fair value of the reporting unit's goodwill and compare it to the carrying
      value
      of the reporting unit's goodwill. If the carrying value of a reporting unit's
      goodwill exceeds its implied fair value, then the Company must record an
      impairment loss equal to the difference.





g) *Long-lived
      Assets*




The
      Company reviews for the impairment of long-lived assets whenever events or
      changes in circumstances indicate that the carrying amount of an asset may
      not
      be recoverable. An impairment loss would be recognized when estimated future
      cash flows expected to result from the use of the asset and its eventual
      disposition are less than its carrying amount. The Company has not identified
      any such impairment losses.





h) *Use
      of Estimates*




The
      preparation of the Company's financial statements in conformity with generally
      accepted accounting principles requires the Company's 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 revenue and expenses during
      the reporting period. Actual results could differ from those
      estimates.





i) *Comprehensive
      Income (Loss)*





Comprehensive
      income is defined as all changes in shareholders' equity, exclusive of
      transactions with owners, such as capital instruments. Comprehensive income
      includes net income or loss, changes in certain assets and liabilities that
      are
      reported directly in equity such as translation adjustments on investments
      in
      foreign subsidiaries, changes in market value of certain investments in
      securities and certain changes in minimum pension liabilities. The Company's
      comprehensive loss was equal to its net loss for the years ended December 31,
      2004 and 2003.





j) *Revenue
      Recognition*





*Consulting
      Services Segment* -
      Revenue from time-and-materials service contracts, maintenance agreements and
      other services are recognized as services are provided.





*Communications
      Deployment Segment* -
      Revenues from fixed-price contracts related to the delivery of voice, video
      and
      data services are recognized in the period the services are performed. These
      services are generally provided over a period of several weeks to months,
      depending on the size of the contract.





*Network
      Storage and Solutions Segment* -
      Revenues on the sale of products, which are shipped from eLinear's stock of
      inventory, are recognized when the products are shipped provided that
      appropriate signed documentation of the arrangement, such as a signed contract,
      purchase order or letter of agreement, has been received, the fee is fixed
      or
      determinable and collectability is reasonably assured. In accordance with
      Emerging Issues Task Force ("EITF") Issue No. 99-19 "Recording Revenue Gross
      as
      a Principal Versus Net as an Agent", revenue from drop shipments of third-party
      hardware and software sales are recognized upon delivery, and recorded at the
      gross amount when eLinear is responsible for fulfillment of the customer order,
      has latitude in pricing, has risk of loss during shipment of the inventory,
      incurs credit risk on the receivable and
      has
      discretion in the selection of the supplier.  Shipping and handling costs
      are included in cost of goods sold





*Security
      Solutions Segment* -
      Revenue from the sale of goods and services is recognized as the goods and
      services are provided. Revenue from security and fire monitoring is recognized
      monthly pursuant to the monitoring contract.





The
      Company accounts for arrangements that contain multiple elements in accordance
      with EITF 00-21, "Revenue Arrangements with Multiple Deliverables". When
      elements such as hardware, software and consulting services are contained in
      a
      single arrangement, or in related arrangements with the same customer, the
      Company allocates revenue to each element based on its relative fair value,
      provided that such element meets the criteria for treatment as a separate unit
      of accounting. The price charged when the element is sold separately generally
      determines fair value. In the absence of fair value for a delivered element,
      the
      Company allocates revenue first to the fair value of the undelivered elements
      and allocates the residual revenue to the delivered elements. In the absence
      of
      fair value for an undelivered element, the arrangement is accounted for as
      a
      single unit of accounting, resulting in a delay of revenue recognition for
      the
      delivered elements until the undelivered elements are fulfilled. The Company
      limits the amount of revenue recognition for delivered elements to the amount
      that is not contingent on the future delivery of products or services or subject
      to customer-specified return or refund privileges.





The
      Company recognizes revenue from the sale of manufacturer's maintenance and
      extended warranty contracts in accordance with EITF 99-19 net of its costs
      of
      purchasing the related contracts.





The
      Company performs ongoing credit evaluations of its customers' financial
      condition and maintains reserves for potential credit losses based upon the
      expected collectability of total accounts receivable. To date, losses resulting
      from uncollectible receivables have not exceeded management's
      expectations.










*m)
      Earnings (Loss) Per Share*





The
      Company computes net income (loss) per share pursuant to Statement of Financial
      Accounting Standards No. 128 Earnings Per Share. Basic net loss per share is
      computed by dividing income or loss applicable to common shareholders by the
      weighted average number of shares of the Company's common stock outstanding
      during the period. Diluted net income per share is determined in the same manner
      as basic net income per share except that the number of shares is increased
      assuming exercise of dilutive stock options and warrants using the treasury
      stock method and dilutive conversion of the Company's convertible debt and
      preferred stock.





During
        the year ended December 31, 2004 options to purchase 4,514,583 shares of
        common
        stock, warrants to purchase 4,114,577 shares of common stock and 1,030,928
        shares of common stock issuable upon the conversion of the Laurus credit
        facility were excluded from the calculation of earnings per share since their
        inclusion would be antidilutive. During the years ended December 31, 2004
        and
        2003 there was no convertible preferred stock outstanding.





During
      the year ended December 31, 2003, options to purchase 1,990,183 shares of common
      stock and warrants to purchase 26,611 shares of common stock were excluded
      from
      the calculation of earnings per share since their inclusion would be
      antidilutive.





*n)
      Stock-Based Compensation*





The
      Company accounts for compensation costs associated with stock options and
      warrants issued to employees under the provisions of Accounting Principles
      Board
      Opinion No. 25 (APB 25) whereby compensation is recognized to the extent the
      market price of the underlying stock at the date of grant exceeds the exercise
      price of the option granted. (See Note 9, Stock Options and Warrants).
      Accordingly, no compensation expense has been recognized for grants of options
      to employees with the exercise prices at or above market price of the Company's
      common stock on the measurement dates. During the year ended December 31, 2004,
      eLinear recognized compensation expense totaling $141,968 under the intrinsic
      value method for stock options issued to employees and $67,123 under the fair
      value method for options issued to outside directors. eLinear recognized
      compensation expense totaling $62,000 in 2003 under the intrinsic value method
      for stock options issued to employees and $52,493 under the fair value method
      for options issued to consultants.





Had
      compensation expense been determined based on the estimated fair value at the
      measurement dates of awards under those plans consistent with the method
      prescribed by SFAS No. 123, the Company's December 31, 2004 and 2003, net loss
      would have been changed to the pro forma amounts indicated below.





December
                  31, 2004
              
              December
                  31, 2003(Restated)Net
                  loss:As reported
              
              $
              (3,847,346
              )
              $
              (1,022,161
              )Stock based compensation under fair value method
              
              
              (381,224
              )
              
              (103,768
              )Pro
                  forma net loss
              
              $
              (4,228,570
              )
              $
              (1,125,929
              )Net
                  loss per share - basic and diluted:As reported
              
              $
              (0.19
              )
              $
              (0.07
              )Stock based compensation under fair value method
              
              
              (0.02
              )
              
              (0.01
              )Pro
                  forma net loss per share - basic and diluted
              
              $
              (0.21
              )
              $
              (0.08
              )








The
      fair
      value of each option grant was estimated on the date of grant using the
      Black-Scholes option pricing model with the following assumptions: risk free
      rate of 3.5%; volatility of 206% for 2004 and 2003 with no assumed dividend
      yield; and expected lives of six months.





o) *Fair
      Value of Financial Instruments*





Financial
      instruments that are subject to fair disclosure requirements are carried in
      the
      financial statements at amounts that approximate fair value and include cash
      and
      cash equivalents, accounts receivable and accounts payable. Fair values are
      based on assumptions concerning the amount and timing of estimated future cash
      flows and assumed discount rates reflecting varying degrees of perceived
      risk.








*p)*  *New
      Accounting Pronouncements*





During
      December 2002, the FASB issued SFAS No. 148. Statement 148 establishes standards
      for two alternative methods of transition to the fair value method of accounting
      for stock-based employee compensation of FASB SFAS No. 123 Accounting for
      Stock-Based Compensation (SFAS 123). SFAS 148 also amends and augments the
      disclosure provisions of SFAS 123 and Accounting Principles Board Opinion 28
      "Interim Financial Reporting" to require disclosure in the summary of
      significant accounting policies for all companies of the effects of an entity's
      accounting policy with respect to stock-based employee compensation on reported
      net income and earnings per share in annual and interim financial statements.
      The transition standards and disclosure requirements of SFAS 148 are effective
      for fiscal years and interim periods ending after December 15, 2002. The Company
      has adopted only the disclosure provisions of this statement.





SFAS
      No.
      150, Accounting for Certain Financial Instruments with Characteristics of Both
      Liabilities and Equity, was issued in May 2003 and requires issuers to classify
      as liabilities (or assets under certain circumstances) three classes of
      freestanding financial instruments that represent obligations for the issuer.
      SFAS No. 150 is effective for financial instruments entered into or modified
      after May 31, 2003 and is otherwise effective at the beginning of the first
      interim period beginning after December 15, 2003. The adoption of this statement
      did not have a material effect on the Company's financial position, results
      of
      operations or cash flows.





*q)*
            *Vendor
                Rebates*





Through
      May 2003, the Company received vendor rebates for achieving certain purchase
      or
      sales volume. The Emerging Issues Task Force ("EITF") Issue No. 02-16,
      Accounting by a Customer (including a Reseller) for Certain Consideration
      Received from a Vendor" ("EITF 02-16") is effective for arrangements with
      vendors initiated on or after January 1, 2003. EITF 02-16 addresses the
      accounting and income statement classification for consideration given by a
      vendor to a retailer in connection with the sale of the vendor's products or
      for
      the promotion of sales of the vendor's products. The EITF concluded that such
      consideration received from vendors should be reflected as a decrease in prices
      paid for inventory and recognized in cost of sales as the related inventory
      is
      sold, unless specific criteria are met qualifying the consideration for
      treatment as reimbursement of specific, identifiable incremental costs. The
      provisions of this consensus have been applied prospectively.


The
      adoption of EITF 02-16 did not have a material impact on the Company's financial
      statements as a whole.










*r)
        Derivative Financial Instruments*





The
                  Company accounts for all derivative financial instruments in accordance
                  with SFAS No. 133. Derivative financial instruments are recorded
                  as
                  liabilities in the consolidated balance sheet, measured at fair
                  value.
                  When available, quoted market prices are used in determining fair
                  value.
                  However, if quoted market prices are not available, the Company
                  estimates
                  fair value using either quoted market prices of financial instruments
                  with
                  similar characteristics or other valuation
                  techniques.





The
                  value of the derivative liabilities relating to the Convertible
                  Note in
                  the financial statements are subject to the changes in the trading
                  value
                  of the Company’s common stock and other assumptions. As a result the
                  Company’s financial statements may fluctuate from quarter to quarter based
                  on factors such as trading value of the Company’s Common Stock, the amount
                  of shares converted by Laurus in connection with the Laurus Convertible
                  Note and exercised in connection with the Warrants outstanding.
                  Consequently, the Company's consolidated financial position and
                  results of
                  operations may vary from quarter to quarter based on conditions
                  other than
                  the Company’s operating revenue and expenses. See note 6 and 9 regarding
                  valuation methods used for derivative
                  liabilities.





Derivative
                  financial instruments that are not designated as hedges or that
                  do not
                  meet the criteria for hedge accounting under SFAS No. 133 are recorded
                  at
                  fair value, with gains or losses reported currently in earnings.
                  A11
                  derivative financial instruments held by the Company as of December
                  31,
                  2004 were not designated as
                  hedges.





*s)
      Advertising Costs*





For
      the
      years ended December 31, 2004 and 2003, the Company expensed approximately
      $52,000, and $30,000 respectively.





*Reclassifications*





Certain
      amounts as previously presented in the 2003 financial statements have been
      reclassified to conform to the current year presentation.










Note
        3.Restatement of Previously Issued Consolidated Financial
        Statements





In
        order
        to correct the financial statements so that they comply with U.S. generally
        accepted accounting principles (in particular, EITF 00-19, *Accounting
        for Derivative Financial Instruments Indexed to, and Potentially Settled
        In, a
        Company’s Own Stock),* and EITF
        96-19, *Debtors Accounting for a Modification or Exchange of Debt
        Instruments*, the Company’s Consolidated Financial Statements as of and for
        the year ended December 31, 2004, have been restated to reflect a
        reclassification from equity to liabilities of the warrants that the Company
        issued in January and February 2004, to reflect the change in fair value of
        the warrants and compound embedded derivatives since issuance, and to record
        a
        loss on early extinguishment of debt as described in Note 6 “Credit Facilities”
and Note 9 “Common Stock”. As a result of this correction, the Company’s net
        loss for the year ended December 31, 2004, decreased from $8,432,712 to
        $3,715,000 and the Company’s net loss per share decreased from $0.42 to $0.18,
        basic and diluted.


Following
        are restated balance sheet, statement of operations and statement of cash
        flow
        giving effect to the adjustments described in Note 6 “Credit Facilities” and
        Note 9 “Common Stock”.





**eLINEAR,
      INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**





December
                  31,
              
              
              
              December
                  31,2004
              
              Adjustments
              
              2004(Previously
                  Reported)
              
              
              
              (Restated)**ASSETS**Total
                  current assets
              
              $
              6,986,944
              
              
              
              
              $
              6,986,944Property
                  and equipment, net
              
              
              805,798
              
              
              
              
              
              805,798Goodwill
              
              
              1,100,000
              
              
              
              
              
              1,100,000Deferred
                  financing costs, net
              
              
              132,346
              
              
              (132,346
              )
              
              --Contract
                  rights
              
              
              273,693
              
              
              
              
              
              273,693Deposits
              
              
              34,616
              
              
              
              
              
              34,616Total
                  assets
              
              $
              9,333,397
              
              $
              (132,346
              )
              $
              9,201,051**LIABILITIES
                  AND SHAREHOLDERS’ EQUITY (DEFICIT)**Current
                  liabilities:Accounts payable, trade
              
              $
              1,266,738
              
              
              
              
              $
              1,266,738Line of credit - revolver
              
              
              2,784,543
              
              
              
              
              
              2,784,543Accrued liabilities
              
              
              1,049,974
              
              
              
              
              
              1,049,974Warrant liability - current
              
              
              --
              
              
              412,174
              
              
              412,174Total current liabilities
              
              
              5,101,255
              
              
              412,174
              
              
              5,513,429Long-term
                  debt net
              
              
              1,399,397
              
              
              271,823
              
              
              1,671,220Compound
                  embedded derivative liability
              
              
              --
              
              
              339,752
              
              
              339,752Warrant
                  liabilities - non-current
              
              
              --
              
              
              1,950,525
              
              
              1,950,525Total liabilities
              
              
              6,500,652
              
              
              2,974,274
              
              
              9,474,926Shareholders’
                  equity (deficit):Common stock
              
              
              432,452
              
              
              
              
              
              432,452Additional paid-in capital
              
              
              12,228,744
              
              
              (7,691,986
              )
              
              4,536,758Accumulated deficit
              
              
              (9,828,451
              )
              
              4,585,366
              
              
              (5,243,085
              )Total shareholders’ equity (deficit)
              
              
              2,832,745
              
              
              (3,106,620
              )
              
              (273,875
              )Total
                  liabilities and shareholders’ equity (deficit)
              
              $
              9,333,397
              
              $
              (132,346
              )
              $
              9,201,051






















**eLINEAR,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**FOR
      THE YEAR ENDED DECEMBER 31, 2004**











December
                  31,2004
              
              Adjustments
              
              December
                  31, 2004(Previously
                  Reported)
              
              
              
              (Restated)Total
                  revenue
              
              $
              24,065,753
              
              
              
              
              $
              24,065,753Total
                  cost of revenue
              
              
              20,476,838
              
              
              
              
              
              20,467,838Gross profit
              
              
              3,588,915
              
              
              
              
              
              3,588,915Operating
                  expenses:Payroll and related expenses
              
              
              4,787,634
              
              
              
              
              
              4,787,634Office administration
              
              
              1,524,253
              
              
              
              
              
              1,524,253Professional services
              
              
              2,208,666
              
              
              
              
              
              2,208,666Impairment of goodwill
              
              
              843,027
              
              
              
              
              
              843,027Other
              
              
              1,267,457
              
              
              (174,171
              )
              
              1,093,286Depreciation
              
              
              151,630
              
              
              
              
              
              151,630Total operating expenses
              
              
              10,782,667
              
              
              (174,171
              )
              
              10,608,496Loss
                  from operations
              
              
              (7,193,752
              )
              
              174,171
              
              
              (7,019,581
              )Interest, net
              
              
              (1,255,493
              )
              
              640,989
              
              
              (614,504
              )Change in fair value of derivatives
              
              
              --
              
              
              5,325,553
              
              
              5,325,553Loss on
                extinguishment of debt
              
              
              --
              
              
              (1,555,347
              )
              
              (1,555,347
              )Other
              
              
              16,533
              
              
              
              
              
              16,533Net
                  loss
              
              $
              (8,432,712
              )
              $
              4,585,366
              
              $
              (3,847,346
              )Net loss per share:Basic and diluted
              
              $
              (0.42
              )
              
              
              
              $
              (0.19
              )Weighted
                  average number of common shares outstanding:Basic and diluted
              
              
              20,289,723
              
              
              
              
              
              20,289,723










**eLINEAR,
      INC.**


**AND
      SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**FOR
      THE YEAR ENDED DECEMBER 31, 2004**





2004
              
              Adjustments
              
              2004(Previously
                  Reported)
              
              
              
              (Restated)Cash
                  flows used in operating activities:Net loss
              
              $
              (8,432,712
              )
              
              4,585,366
              
              $
              (3,847,346
              )Adjustments to reconcile net loss to cash used in operating
                  activities:Depreciation
              
              
              149,210
              
              
              
              
              
              149,210Impairment of goodwill
              
              
              843,022
              
              
              
              
              
              843,022Bad debt expense
              
              
              242,280
              
              
              
              
              
              242,280Amortization of debt discounts
              
              
              658,517
              
              
              (302,064
              )
              
              356,453Change in fair value of derivatives
              
              
              --
              
              
              (5,325,553
              )
              
              (5,325,553
              )Loss on early
                extinguishment of debt
              
              
              --
              
              
              1,555,347
              
              
              1,555,347Stock and stock option based compensation
              
              
              1,077,575
              
              
              
              
              
              1,077,575Stock issuance and warrant repricing for payment of
                  penalties
              
              
              680,395
              
              
              (174,171
              )
              
              506,224Beneficial conversion feature of note
              
              
              338,925
              
              
              (338,925
              )
              
              --Changes in assets and liabilities:Accounts receivable
              
              
              (3,615,796
              )
              
              
              
              
              (3,615,796
              )Inventory
              
              
              (2,914
              )
              
              
              
              
              (2,914
              )Other current assets
              
              
              (80,608
              )
              
              
              
              
              (80,608
              )Accounts payable
              
              
              165,135
              
              
              
              
              
              165,135Accrued Liabilities
              
              
              864,891
              
              
              
              
              
              864,891Net
                  cash used in operating activities
              
              
              (7,112,080
              )
              
              
              
              
              (7,112,080
              )Net
                  cash used in investing activities
              
              
              (1,962,163
              )
              
              
              
              
              (1,962,163
              )Net
                  cash provided by financing activities
              
              
              9,418,629
              
              
              
              
              
              9,418,629Net
                  increase in cash
              
              
              344,386
              
              
              
              
              
              344,386Cash
                  and cash equivalents, beginning of year
              
              
              554,483
              
              
              
              
              
              554,483Cash
                  and cash equivalents, end of year
              
              $
              898,869
              
              
              
              
              $
              898,869










Note
      4.
      Acquisitions





On
      April
      15, 2003, eLinear, Inc. issued 12,961,979 shares of common stock for 100% of
      the
      outstanding common stock of NetView. After the merger the stockholders of
      NetView owned approximately 90% of the combined entity. For financial reporting
      purposes this transaction was treated as an acquisition of eLinear and a
      recapitalization of NetView using the purchase method of accounting. For
      accounting purposes, the outstanding shares of eLinear immediately prior to
      the
      acquisition was accounted for as the consideration paid by NetView for the
      acquisition of eLinear and was valued at $450,718 using the stock price on
      such
      date. The excess purchase price over the fair value of net tangible assets
      was
      $451,920, all of which was allocated to goodwill. NetView's historical financial
      statements replace eLinear's in these financial statements.





On
      July
      31, 2003, eLinear completed the acquisition of all the issued and outstanding
      shares of NewBridge Technologies, Inc (NewBridge), (formerly MMGD, Inc.).
      Pursuant to the transaction, eLinear issued 850,000 shares of its common stock
      valued at $1,230,500, using the stock price on the date of the merger, and
      options to purchase 300,000 shares of common stock valued at $274,000 using
      Black-Scholes options pricing model to the shareholders of NewBridge. As of
      the
      effective date, NewBridge became a wholly-owned subsidiary of eLinear. The
      acquisition was accounted for using the purchase method of accounting resulting
      in an excess purchase price over the fair value of net tangible assets of
      $1,491,102, as restated, all of which was allocated to goodwill.





The
      following table summarizes the estimated fair value of the net assets acquired
      and liabilities assumed at the acquisition dates.





eLinear
            
            NewBridge
            TotalCurrent
                assets
            
            
            
            $
            110,467
            
            
            
            $
            126,455
            
            $
            236,922Property
                and equipment
            
            
            
            
            11,392
            
            
            
            
            11,082
            
            
            22,474Goodwill
            
            
            
            
            451,920
            
            
            
            
            1,100,000
            
            
            1,943,022Total
                assets acquired
            
            
            
            
            573,779
            
            
            
            
            1,237,537
            
            
            2,202,418Current
                liabilities
            
            
            
            
            123,061
            
            
            
            
            124,139
            
            
            247,200Net
                assets acquired
            
            
            
            $
            450,718
            
            
            
            $
            1,361,676
            
            $
            1,955,218





The
      consolidated statement of operations in the accompanying financial statements
      for the year ended December 31, 2003 includes the operations of eLinear from
      April 15, 2003 through December 31, 2003 and NewBridge from July 31, 2003
      through December 31, 2003. The following are pro forma condensed statements
      of
      operations for the years ended December 31, 2003 and 2002, as though the
      acquisitions had occurred on January 1, 2002.





Twelve
                Months Ended
              December
                31,2003
            
            2002Revenue
            
            $
            14,059,714
            
            $
            8,824,164Net
                loss
            
            $
            (1,093,213
            )
            $
            (264,814
            )Net
                loss per share - basic and diluted
            
            $
            (0.08
            )
            $
            (0.02
            )





On
      November 3, 2004, eLinear acquired all of the outstanding and issued stock
      of
      TanSeco from RadioShack. TanSeco is a nation wide security solutions company,
      established over 35 years ago, that provides single source, integrated life
      safety and physical security systems and security monitoring services to
      commercial customers. Pursuant to this transaction, eLinear offered employment
      to over 35 RadioShack employees. Concurrently with this transaction, TanSeco
      entered into a three-year services agreement with RadioShack, pursuant to which,
      TanSeco will provide the installation, service, repair and inspection of
      security, closed circuit television, and fire systems used by RadioShack for
      the
      security systems of its more than 5,000 company-owned stores located in the
      continental United States, Puerto Rico and the U.S. Virgin Islands, kiosks
      and
      other physical locations. In addition to providing services to RadioShack in
      connection with the services agreement, TanSeco plans to do the following:
      (i)
      continue to provide installation, service, repair, and inspection of security,
      closed circuit television and fire systems to existing customers of TanSeco;
      (ii) seek out and obtain, either independently or through the use of third
      parties, new customers for TanSeco's installation, service, repair, and
      inspection of security, closed circuit television and fire systems services;
      and
      (iii) through the use of third parties, provide monitoring services, which
      may
      include monitoring fire alarms and burglar alarms, to new and existing customers
      of TanSeco.





Note
      5.
      Impairment





As
      of
      December 31, 2004, the Company had $1,100,000 of goodwill, as restated,
      resulting from the acquisition of NewBridge. Goodwill represents the excess
      of
      cost over the fair value of the net tangible assets acquired and is not
      amortized. However, goodwill is subject to an impairment assessment at least
      annually which may result in a charge to operations if the fair value of the
      reporting segment in which the goodwill is reported declines. In March 2004,
      the
      Company recorded impairment expense totaling $451,920 related to 100% of the
      goodwill recorded with the 2003 NetView acquisition. In March 2004 the
      consulting services business segment lost its largest consulting contract and
      the other operations that had been acquired in the acquisition had declined
      due
      to the loss of a key employee after the acquisition. Based on projected
      estimated future cash flows from that business segment, management determined
      a
      full impairment charge was required. In September 2004, the Company performed
      a
      valuation analysis of the discounted projected estimated future cash flows
      of
      NewBridge and the Company elected to write down a portion of the goodwill
      related to NewBridge. Due to the large amount of goodwill presently on the
      Company's financial reports, if an impairment is required, the Company's
      financial condition and results of operations would be negatively
      affected.










Note
      6.
      Credit Facilities





In
      February 2004, the Company obtained a secured revolving note with Laurus Master
      Fund, Ltd. Laurus. Under the terms of the agreement, the Company can borrow
      up
      to $5,000,000 at an annual interest rate of prime plus .75% (with a minimum
      rate
      of 4.75%). The agreement contains two notes: a minimum secured note totaling
      $2,000,000 term note and a revolving credit facility totaling
      $3,000,000 revolver based on eligible accounts receivable.





The
      Contract Rate shall be adjusted as follows: if (i) eLinear shall have registered
      the shares of its Common Stock underlying the conversion of all currently issued
      and outstanding Minimum Borrowing Notes and the Warrant on a registration
      statement declared effective by the Securities and Exchange Commission, and
      (ii)
      the volume weighted average price of the Common Stock as reported by Bloomberg,
      L.P. on the principal market for any of the ten (10) trading days immediately
      preceding any applicable date upon which interest is payable under Section
      5
      hereof exceeds 125% of the applicable Fixed Conversion Price (as defined in
      the
      applicable Minimum Borrowing Note) (the “Specified Percentage”); then Contract
      Rate for the succeeding calendar month shall automatically be reduced by one
      hundred basis points (100 b.p.) for such month; provided that for each
      subsequent incremental twenty-five percent increase above the Specified
      Percentage, the Contract Rate shall be reduced by an additional two hundred
      basis pints (200 b.p.) for the succeeding calendar month, but in no event shall
      the Contract Rate be less than zero percent (0%).





The
      Company has a redemption option in regard to the Convertible Notes and if
      exercised, will pay 115% on the principal amount outstanding at the time of
      such
      pre-payment.





As
      part
      of the above credit facility, the Company agreed to file a registration
      statement with the SEC in order to register the resale of any shares issuable
      upon conversion of up to $2 million of the credit facility and upon the exercise
      of the warrants. The terms of its agreement with Laurus require it to file
      the
      registration statement and have the registration statement declared effective
      by
      a definitive period of time, not to exceed 150 days from February 23, 2004,
      or
      within 15 days of the Company's current registration statement being declared
      effective by the SEC, whichever is earlier. The Company's current registration
      statement was declared effective on September 10, 2004. If the Company fails
      to
      meet this deadline, if the registration statement is not declared effective
      prior to the 90 th day
      after filing the registration statement, if the registration statement ceases
      to
      remain effective, or certain other events occur, the Company has agreed to
      pay
      Laurus liquidated damages of 1.5% of the principal amount of the convertible
      portion of the note per month. In consideration for the issuance of seven-year
      warrants to purchase 150,000 shares of the Company's common stock at $1.90
      per
      share, Laurus forgave approximately $153,000 in penalties. Laurus is limited
      to
      owning or beneficially owning a maximum of 4.99% of the Company's outstanding
      shares of common stock. In addition, each time the Company borrows $2 million
      under the credit facility, the Company will be required to file an additional
      registration statement covering the possible conversion of that amount of the
      note. The Company's registration statement filed with the SEC to register the
      conversion shares and shares underlying the warrants was declared effective
      by
      the SEC on December 30, 2004. The Company is not obligated at any time to
      repurchase any portion of the Laurus conversion shares nor the shares underlying
      the warrants.





Events
      of
      default under the agreements include failure to pay principal, interest or
      other
      fees; breach of covenant; breach of representations and warranties, stop trade;
      default under related agreements; and failure to deliver common stock or
      replacement notes. In the event of default, Laurus may require the Company
      to
      pay the principal balance and interest on the notes shall automatically be
      increased by 5%





*Line
      of Credit - Revolver*





The
      Laurus revolver provides for borrowings of up to the lesser of; (i) $3 million
      or (ii) 90% of the Company's eligible accounts receivable. The Company borrowed
      $1,000,000 under the revolving facility on the date of the agreement. The
      revolving credit facility has a term of three years and accrues interest on
      outstanding balances at the rate of prime (5.50% as of December 31, 2004) plus
      0.75% (with a minimum rate of 4.75%). The Company is permitted to go over its
      borrowing limit, which is referred to as getting an overadvance, if the Company
      gets the approval of Laurus. These overadvances typically accrue interest at
      a
      rate of 1.5% per month, but until August 2004, the Company was not required
      to
      pay this interest amount on any overadvances. In October 2004, Laurus agreed
      to
      fund an additional $500,000, which loan was not deemed an overadvance. This
      credit facility is secured by all of the Company's assets. In consideration
      for
      the issuance of seven-year warrants to purchase 150,000 shares of the Company's
      common stock at $1.90 per share and the forgiveness of penalties owed to Laurus
      in the approximate amount of $153,000 as of October 31, 2004, the Company agreed
      in October 2004 to reduce the conversion price of the credit facility from
      $2.91
      to $1.00 per share. At the option of the holder, the outstanding balance on
      the
      credit facility can be converted into shares of Company common stock at a
      conversion price of $1.00 per share. In connection with the execution of this
      credit facility, and in connection with the October 2004 amendment, the Company
      issued Laurus seven-year warrants to purchase a total of 440,000 shares of
      Company common stock at exercise prices ranging from $1.90 to $3.22 per share.
      The Company has the ability to prepay any amounts owed under this credit
      facility at 115% of the principal amount. All stock conversion prices and
      exercise prices are subject to adjustment for stock splits, stock dividends
      or
      similar events. The Company paid back the $1,000,000 revolver during the quarter
      ended June 30, 2004. As of December 31, 2004, the Company had $2,784,543
      outstanding under the revolver.










*Term
      Note*





The
      term
      note has a term of three years. The Company has the option of paying scheduled
      interest and principal, or prepaying all or a portion of the term note with
      shares of its common stock at the fixed conversion price of $1.00 per share,
      provided that the shares
      are registered with the Securities and Exchange Commission or with cash at
      115%
      of the outstanding balance. Laurus also has the option to convert all or a
      portion of the term note into shares of the Company's common stock at any time,
      subject to certain limitations, at a fixed conversion price of $1.00 per share.
      The term note is secured by a blanket lien on all of the Company's assets.
      As of
      December 31, 2004, the Company had $2,000,000 outstanding under the term note,
      the maximum amount available.





In
      conjunction with the Laurus credit facility, Laurus was paid a fee of $219,500
      and received a seven-year warrant to purchase up to a total of 440,000 shares
      of
      the Company's common stock at prices ranging from $1.90 to $3.22 per share.
      The
      warrants, which are exercisable immediately, were valued at $653,807 using
      a
      modified Black-Scholes option pricing model. The value of these warrants and
      the
      fees paid to Laurus were recorded as a discount to the term note and are being
      amortized over the term of the loan using the effective interest
      method.





In
          order
          to correct the financial statements so that they comply with U.S. generally
          accepted accounting principles, the Company has restated the Consolidated
          Financial Statements and the amendment to the note was accounted for as
          an
          extinguishment of debt in accordance with EITF 96-19 *"Debtor's Accounting
          for a Modification or Exchange of Debt Instruments."*  Accordingly, the
          unamortized discounts aggregating $1,538,924 and the fair value of the
          additional 150,000 warrants issued in connection with the amendment, amounting
          to $115,545, were included in the Company's determination of the debt
          extinguishment recorded in the fourth quarter of fiscal year 2005.  The
          $1,555,347 aggregate loss from these transactions accounted for as an
          extinguishment of debt is included in other expenses for the year ended
          December
          31, 2005.




In
          order
          to correct the financial statements so that they comply with U.S. generally
          accepted accounting principles, the Company has restated the Consolidated
          Financial Statements as of December 31, 2004 to reclassify the Laurus warrants
          from additional paid in capital to liabilities and interest expense effective
          December 31, 2004 to reflect the fact that the registration rights agreement
          into which the company entered in connection with its issuance of the warrants
          requires the Company to pay liquidated damages, which in some cases could
          exceed
          a reasonable discount for delivering unregistered shares and thus would
          require
          the warrants to be classified as a liability until the earlier of the date
          the
          warrants are exercised or expire. In accordance with EITF 00-19, “ *Accounting
          for Derivative Financial Instruments Indexed To, and Potentially Settled
          In, a
          Company’s Own Stock* ”,
          the
          Company has allocated a portion of the offering proceeds to the warrants
          based
          on their fair value. EITF 00-19 also requires that the Company revalue
          the
          warrants as a derivative instrument periodically to compute the value in
          connection with changes in the underlying stock price and other assumptions,
          with the change in value recorded as other expense or other income. The
          Company
          determined the fair value of the warrants as of the following issuance
          dates:





*February
          23, 2004*





The
          company used the Black Scholes option-pricing model with the following
          assumptions: an expected life equal to the contractual term of the warrants
          (seven years); no dividends; a risk free rate of return of 3.5%, which
          equals
          the five-year yield on Treasure bonds at constant (or fixed) maturity;
          and
          volatility of 102%. Under the assumptions, the Black-Scholes option-pricing
          model yielded a value of $2.26 for the $3.05 warrants, $2.25 for the $3.19
          warrants and $2.24 for the $3.32 warrants for an aggregate value of
          $653,807.





*October
          20, 2004*





The
          Company used the Black Scholes pricing model with the following assumptions:
          an
          expected life equal to the contractual term of the warrants (seven years);
          no
          dividends; a risk free rate of 2.78% volatility of 117%. Under the assumptions
          the Black Scholes option pricing model yielded a value of $0.77 for the
          $1.90
          warrants for an aggregate value of $114,934.





The
          Company performed the same calculation as of December 31, 2004 to revalue
          the
          warrants as of that date. In using the Black Scholes option-pricing model,
          the
          Company used an expected life of 5.9 to 6.8 years; an underlying stock
          price of
          $1.20 per share; no dividends; a risk free rate of 2.78% and volatility
          of 99%.
          The resulting aggregate allocated value of the warrants as December 31,
          2004,
          equaled $373,223. The change in fair value of was $395,518 for the year
          ended
          December 31, 2004.





Upon
          the
          earlier of the warrant exercise or the expiration date, the warrant liability
          will be reclassified into shareholders’ equity. Until that time, the warrant
          liability will be recorded at fair value based on the methodology described
          above. Changes in the fair value during each period will be recorded as
          other
          income or other expense. Liquidated damages under the registration rights
          agreement will be expensed as incurred and will be included in operating
          expenses.





The
          Company is also restating the unaudited Consolidated Financial Statements
          to
          record embedded derivatives rather a beneficial conversion features previously
          recorded of $849,207





The
          Notes
          are hybrid instruments which contain both freestanding derivative financial
          instruments and more than one embedded derivative feature which would
          individually warrant separate accounting as a derivative instrument under
          SFAS
          133. The freestanding derivative financial instruments include the Laurus
          Warrants, which were valued individually, and totaled $653,807. The various
          embedded derivative features have been bundled together as a single, compound
          embedded derivative instrument that has been bifurcated from the debt host
          contract, referred to as the “Compound Embedded Derivative Liability”. The
          single compound embedded derivative features include the conversion feature
          within the Notes, the early redemption option, the Contract Rate adjustment
          and
          default provision. The value of the single compound embedded derivative
          liability was bifurcated from the debt host contract and recorded as a
          derivative liability, which resulted in a reduction of the initial carrying
          amount (as amortized discount) of the Notes. The unamortized discount is
          amortized to interest expense using the effective interest method over
          the life
          of the Notes, or 36 months.








Compound
          Embedded Derivative Liability





Using
          a
          layered discounted probability-weighted expected cash flow methodology,
          the fair
          value of the Compound Embedded Derivative Liability was computed at $998,425
          and
          $339,752 at February 23, 2004 and December 31, 2004 respectively. The model
          replicated the economics of the Notes and applied different events based
          on
          various conditions likely to occur over the life of the Note. Multiple
          scenarios
          were used in the model and the underlying assumptions below were applied.
          The
          value of this single, compound embedded derivative instrument was bifurcated
          from the debt host contract and recorded as a derivative liability which
          resulted in a reduction of the initial carrying amount (as unamortized
          discount)
          to the notional amounts of the Convertible Notes.





Probability-Weighted
          Expected Cash Flow Methodology





Compound
                    Embedded Derivative LiabilityFebruary
                    23,2004
                December
                    31,2004Assumptions
                (Inception)Risk
                    Free interest rate
                2.21%
                3.25%Prime
                    RateIncreasing .25% each quarter of first year
                4.00%
                5.25%Timely
                    registrationIncreasing by 1% monthly up to 99%
                95.00%
                95.00%Default
                    statusIncreasing by .1% monthly
                5.00%
                5.00%Alternative
                    financing available and exercisedIncreasing 2.5% monthly up to 25%
                0.00%
                0.00%Trading
                    volume, gross monthly dollarsMonthly increase
                2.00%
                5.00%Annual
                    growth rate of stock price
                31.80%
                31.7%Future
                    projected volatility
                102.00%
                99.00%Ownership
                    limitationMonthly increase
                1.00%
                1.00%Reset
                    ProvisionIncreasing 5% monthly up to 25%
                0.00%
                0.00%





The
          decrease in the fair value of the compound embedded derivative liability
          of
          $932,630 was recorded as other income for the year ended December 31,
          2004.





During
          the quarter ended June 30, 2004, the Company paid back the original $1,000,000
          it had drawn under the revolver during the quarter ended March 31, 2004.
          Therefore, the Company expensed a portion of the discount recorded in connection
          with the credit facility resulting in additional non-cash interest expense
          of
          approximately $330,000 during the quarter ended June 30, 2004. Total non-cash
          interest expense for the year ended December 31, 2004 was $592,630.





As
          a result
          of these contract provisions, the Notes at inception (February 23, 2004)
          and
          December 31, 2004 was adjusted as follows:





February
                    23, 2004
                
                December
                    31, 2004Notional
                    balance
                
                $
                3,000,000
                
                $
                4,784,543Adjustments:Discount for compound embedded derivatives
                
                
                (998,425
                )
                
                (328,780
                )Discount for Laurus warrants
                
                
                (653,807
                )
                
                --Discount for loan costs paid to Laurus
                
                
                (219,500
                )
                
                --Balance,
                    net of unamortized discount
                
                
                1,128,268
                
                
                4,455,763Less
                    current portion (revolver)
                
                
                --
                
                
                (2,784,543
                )Balance,
                    net of current portion and unamortized discount
                
                $
                1,128,268
                
                $
                1,671,220





In
        addition to the $219,500 fee paid to Laurus, the Company paid $273,300 in
        finder’s fees to vSource Capital. The $273,000 was capitalized as deferred
        financing costs and will be amortized using the effective interest method
        over
        the term of the loan agreement.  The balance of approximately $132,000 was
        expensed in connection with the early extinguishment of the debt.




During
      February 2004, the Company retired its $1,000,000 line of credit with Textron
      Financial Corporation with the proceeds from the Laurus credit facility and
      entered into a new $500,000 credit facility with Textron collateralized with
      a
      $500,000 letter of credit.










Note
      7.
      Property and Equipment





Property
      and equipment consist of the following at December 31, 2004 and
      2003:





December
                31,Estimated
                Lives
            
            2004
            
            2003Vehicles
            
            
            5
                years
            
            $
            33,807
            
            $
            12,806Computer
                software and equipment
            
            
            3
                years
            
            
            231,116
            
            
            72,411Furniture
                and equipment
            
            
            7
                years
            
            
            610,349
            
            
            20,159Leasehold
                improvements
            
            
            Life
                of lease
            
            
            129,549
            
            
            --1,004,821
            
            
            105,376Accumulated
                depreciation
            
            
            
            
            
            (199,023
            )
            
            (61,714
            )Net
                property and equipment
            
            
            
            
            $
            805,798
            
            $
            43,662





Note
      8.
      Commitments and Contingent Liabilities





*Lease
      Obligations*





The
      Company's executive and administrative offices are located at 2901 West Sam
      Houston Parkway, North Suite E-300, Houston, Texas 77043. It leases these
      facilities. Its lease covers approximately 25,300 square feet and expires on
      November 30, 2005. Its lease payments are $19,228 per month for the period
      October 2004 through April 2005 and $20,240 per month for the period May through
      November 2005. The Company also has a marketing and sales office in Dallas,
      Texas. It leases these facilities. Its lease covers approximately 7,186 square
      feet and expires May 31, 2009. The lease payments are $8,898 per month and
      includes monthly operating expenses, which will vary based on actual operating
      expenses of the property. TanSeco leases office and warehouse space in Fort
      Worth, Texas. The lease covers approximately 7,972 square feet and expires
      October 31, 2007. The lease payments are $8,304 per month. The Company has
      no
      present plans to invest in real estate, real estate mortgages, or persons or
      entities primarily engaged in real estate activities.





Future
      minimum lease payments under non-cancelable leases with terms in excess of
      one
      year are as follows:





Twelve
                Months Ending December 31,2005
            
            $
            427,6402006
            
            
            209,0482007
            
            
            190,9112008
            
            
            106,7772009
            
            
            35,592Total
            
            $
            969,968





*Legal
      Proceedings*





From
      time
      to time, the Company may become involved in litigation arising in the ordinary
      course of its business. The Company is presently not subject to any material
      legal proceedings outside of the ordinary course of business except as set
      forth
      below:





On
      December 16, 1999, eLinear and Imagenuity were served with a complaint captioned
      Chris Sweeney v. Kinetics.com, Inc. and Imagenuity, Inc., Circuit Court, Duval
      County, Florida, Civil Case Number 1999-7252-CA. The complaint alleged a breach
      of an alleged oral modification of a written employment agreement between the
      plaintiff, Chris Sweeney, and Imagenuity and alleged breaches by eLinear and
      Imagenuity of fiduciary obligations which the plaintiff claims were owed to
      him.
      Plaintiff is seeking as damages 20% of the Company's common stock received
      by
      the sole shareholder of Imagenuity in connection with the merger of Imagenuity
      with and into eLinear's subsidiary. After the filing of the complaint, eLinear's
      subsidiary, eLinear Corporation, was added as a defendant. The Company intends
      to vigorously contest the case. While the Company believes the case to have
      no
      merit, at this stage it is impossible to predict the amount or range of
      potential loss, if any.





In
      December 1999, the Company counter-sued Chris Sweeney in a lawsuit captioned
      eLinear Corporation v. Chris Sweeney, United States District Court, District
      of
      Colorado, Case Number 99-WM-2434. The complaint sought a determination of the
      rights of the parties with respect to the termination of Chris Sweeney's
      employment agreement with Imagenuity. The lawsuit was indefinitely stayed
      pending resolution of the Florida litigation discussed above.





On
      October 17, 2003, the Company filed a civil suit against Jon Ludwig, its former
      CEO, for the following causes of action: breach of fiduciary duty; negligent
      misrepresentation; theft of trade secrets; theft/conversion of property;
      wrongful interference with existing and prospective contracts; and civil
      conspiracy. This case is currently in the 127th Judicial District in the
      District Court of Harris County, Texas. Ipath, a direct competitor of the
      Company and the current employer of defendant Ludwig, was added as an additional
      defendant. The Company is alleging that IPath conspiracy, wrongful interference
      with existing and prospective contracts, and fraud for its complicity with
      Ludwig in the latter's breach of fiduciary duty. The trial date has been set
      for
      April 18, 2005.





On
      November 11, 2004, the Company filed a demand for arbitration with the American
      Arbitration Association against McData Corporation for breach of contract
      relating to the termination of the contract in June 2004. Arbitrators are being
      appointed and discovery is in the early stage.










Note
      9.
      Common Stock





In
      February 2004, the Company sold 1,230,000 shares of its common stock at a price
      of $2.00 per share, together with five-year warrants to purchase an aggregate
      of
      615,000 shares of common stock at an exercise price of $3.00 per share (the
      Class A Warrants, and warrants to purchase 615,000 shares of common stock at
      an
      exercise price of $2.50 per share (the Class B Warrants) expiring on the earlier
      of two years from the closing date or one year from the date a registration
      statement registering the resale of the shares underlying the warrants and
      the
      shares becomes effective for an aggregate purchase price of $2,460,000, in
      a
      private placement transaction. The Company received proceeds totaling
      $2,257,800, net of offering costs of $202,200. In addition, the Company issued
      61,500 Class A Warrants and 61,500 Class B Warrants to vSource1 as a finders
      fee.





All
      of
      the Class A Warrants and Class B Warrants issued in the February 2004 offering
      are exercisable immediately. Subject to certain exceptions, in the event that
      on
      or before the date on which the warrants are exercised, the Company issues
      or
      sells, or is deemed to have issued or sold in accordance with the terms of
      the
      warrants, any shares of common stock for consideration per share less than
      the
      exercise price of the warrants as then in effect, then the exercise price of
      the
      warrants will be adjusted in accordance with a weighted average formula
      contained in the warrants.





In
      January 2004, the Company sold 1,964,223 shares of its common stock at a price
      of $1.29 per share, together with five year
      warrants to purchase an aggregate of 1,178,535 shares of common stock at an
      exercise price of $1.89 per share (the Class A Warrants), and warrants to
      purchase 1,090,145 shares of common stock at an exercise price of $1.55 per
      share (the Class B Warrants), expiring on the earlier of fourteen months from
      the closing date or eight months from the date a registration statement
      registering the resale of the shares underlying the warrants and the shares
      becomes effective for an aggregate purchase price of $2,533,850, in a private
      placement transaction. The Company received proceeds totaling $2,326,481, net
      of
      offering costs of $207,369. In addition, the Company issued 117,854 Class A
      Warrants and 109,015 Class B Warrants to vSource as a finders fee.





All
      of
      the warrants issued in the January 2004 offering are exercisable immediately.
      Subject to certain exceptions, in the event that on or before the date on which
      the warrants are exercised, the Company issues or sells, or is deemed to have
      issued or sold in accordance with the terms of the warrants, any shares of
      common stock for consideration per share less than the exercise price of the
      warrants as then in effect, then the exercise price of the warrants will be
      adjusted to equal the consideration per share of common stock issued or sold
      or
      deemed to have been issued and sold in such dilutive issuance, provided that
      if
      such exercise price is adjusted to a $1.00 per share of common stock, any
      additional issuances shall only further reduce the exercise price of the
      warrants in accordance with a weighted average formula contained in the
      warrants.





In
          order
          to correct the financial statements so that they comply with U.S. generally
          accepted accounting principles, the Company has restated the Consolidated
          Financial Statements as of December 31, 2004 to record the warrants as
          liabilities effective as of January 12 and February 4, 2004 to reflect
          the fact
          that the registration rights agreement into which the company entered in
          connection with its issuance of the warrants requires the Company to pay
          liquidated damages, which in some cases could exceed a reasonable discount
          for
          delivering unregistered shares and thus would require the warrants to be
          classified as a liability until earlier of the date the warrants are exercised
          or expire. In accordance with EITF 00-19, *Accounting
          for Derivative Financial Instruments Indexed To, and Potentially Settled
          In, a
          Company’s Own Stock* ,
          the
          Company has allocated a portion of the offering proceeds to the warrants
          based
          on their fair value. EITF 00-19 also requires that the Company revalue
          the
          warrants as a derivative instrument periodically to compute the value in
          connection with changes in the underlying stock price and other assumptions,
          with the change in value recorded as other expense or other income. The
          restatement reduced paid in capital by $6,089,693 and, increased common
          stock
          warrant liability as of December 31, 2004 by $1,989,073. The net decrease
          in
          fair value of the warrant liabilities presented as “change in fair value of
          derivatives” was approximately $3,997,000 for the year ended December 31, 2004.
          The Company determined the fair value of the warrants as follows as of
          January
          12 and February 4, 2004 (the issuance date):
 
 ·
                The
                    company used the Black Scholes option-pricing model with the
                    following
                    assumptions: an expected life equal to the contractual term of
                    the
                    warrants; no dividends; a risk free rate of return of 3.5%, which
                    equals
                    the five-year yield on Treasure bonds at constant (or fixed)
                    maturity; and
                    volatility of 102%. Under the assumptions, the Black-Scholes
                    option-pricing model yielded a value of $1.57 for the $1.89 warrants,
                    $1.02 for the $1.55 warrants, $2.36 for the $3.00 warrants and
                    $1.82 for
                    the $2.50 warrants for an aggregate value of
                    $6,089,693.
 
 ·
                The
                    Company performed the same calculations as of December 31, 2004,
                    to
                    revalue the warrants as of that date. In using the Black Scholes
                    option-pricing model, the Company used an underlying stock price
                    of $1.20
                    per share; a risk free rate of 2.78%; an expected life equal
                    to the
                    remaining contractual term of the warrants, no dividend; and
                    volatility of
                    99%. The resulting aggregate allocated value of the warrants
                    as of
                    December 31, 2004, equaled $1,989,073. The change in fair value
                    is
                    primarily due to the fair value of the underlying common stock
                    from $2.02
                    per share to $1.20 per share from January 12 to December 31,
                    2004.
 
 ·
                Upon
                    the earlier of the warrant exercise or expiration date, the warrant
                    liability will be reclassified into shareholders’ equity. Until that time,
                    the warrant liability will be recorded at fair value based on
                    the
                    methodology described above. Changes in the fair value during
                    each period
                    will be recorded as other income or other expense. Liquidated
                    damages
                    under the registration rights agreement will be expensed as incurred
                    and
                    will be included in operating expenses.
 
 As
      part of
      the above financings, the Company agreed to file a registration statement with
      the SEC in order to register the resale of the shares purchased and the shares
      issuable upon exercise of the warrants. If (i) the registration statement is
      not
      declared effective prior to the 120 th day
      after the closing date of each financing, (ii) the Company fails to respond
      to
      the comments provided by the SEC to its registration statement within ten days
      of receipt of comments; or (iii) the registration statement has been declared
      effective by the SEC and it ceases to remain continuously effective until all
      the registered securities are resold, the Company has agreed to pay the
      investors 1.5% of the aggregate purchase price for the first month, and if
      the
      event continues to occur, 2.0% of the purchase price per month thereafter.
      The
      Company's registration statement was declared effective by the SEC on September
      10, 2004. As settlement for the penalties, the Company issued 319,248 shares
      of
      its common stock valued at $353,224 and lowered the exercise price on certain
      warrants to $1.00 per share and extended the expiration dates.





The
      Company issued 312,600 shares of common stock for stock options exercised during
      2004 resulting in proceeds totaling $415,262 and 200,581 shares of common stock
      for stock warrants exercised during 2004 resulting in proceeds totaling
      $200,581.


The
      Company issued
      575,190 shares of its common stock valued at $857,484 to third parties for
      consulting services during 2004. The Company measured the transactions at the
      date of issuance at the quoted market price. There are no performance
      commitments or penalties for non-performance, therefore, the Company recorded
      the services at the date of issuance.










Note
      10.
      Stock Options and Warrants





*Stock
      Option Plans*





On
      March
      31, 2000, the directors of the Company approved the 2000 Stock Option Plan
      (the
å2000 Plan) under which up to 1,000,000 shares of the Company's common stock
      may
      be issued. The 2000 Plan was approved by the Company's shareholders at its
      annual shareholder meeting. Under the 2000 Plan, incentive and nonqualified
      stock options may be granted to employees, directors and consultants of the
      Company. Awards under the 2000 Plan will be granted as determined by the
      Company's Board of Directors. The options that may be granted pursuant to the
      2000 Plan may be either incentive stock options qualifying for beneficial tax
      treatment for the recipient or nonqualified stock options. The term of the
      options granted under the 2000 Plan will be fixed by the Company, provided
      the
      maximum option term may not exceed ten years from the grant date (incentive
      stock options are granted at an exercise price of not less than 100% (110%
      for
      individuals owning 10% or more of the Company's common stock at the time of
      grant) of the common stock's fair market value at the date of grant.
      Nonqualified stock options may be granted at an exercise price determined by
      the
      Company's Board of Directors. Vesting rights will be fixed by the Company's
      Board of Directors provided, however, that an outside director not have the
      right to exercise more than 50% of the shares granted until six months after
      the
      grant date. As of December 31, 2004, incentive stock options to purchase 639,000
      shares exercisable at prices ranging from $0.32 to $2.65 per share that vest
      immediately to over a four-year period were outstanding. As of December 31,
      2004, non-qualified stock options to purchase 187,750 shares exercisable at
      prices ranging from $0.75 to $39.38 per share that vest immediately to over
      a
      four-year period were outstanding. Of these amounts, 229,250 options were vested
      as of December 31, 2004.





On
      April
      16, 2003, the Board of Directors adopted the 2003 Stock Option Plan (the 2003
      Plan), which allows for the issuance of up to 2,000,000 stock options to
      directors, executive officers, employees and consultants of the Company. The
      2003 Plan was approved by the Company's shareholders at its annual shareholder
      meeting. Under the 2003 Plan, incentive and nonqualified stock options may
      be
      granted to employees, directors and consultants of the Company. Awards under
      the
      2003 Plan will be granted as determined by the Company's Board of Directors.
      The
      options that may be granted pursuant to the 2003 Plan may be either incentive
      stock option qualifying for beneficial tax treatment for the recipient or
      nonqualified stock options. The term of the options granted under the 2003
      Plan
      will be fixed by the Company, provided the maximum option term may not exceed
      ten years from the grant date (incentive stock options are granted at an
      exercise price of not less than 100% (110% for individuals owning 10% or more
      of
      the Company's common stock at the time of grant) of the common stock's fair
      market value at the date of grant. Nonqualified stock options may be granted
      at
      an exercise price determined by the Company's Board of Directors. Vesting rights
      will be fixed by the Company's Board of Directors. As of December 31, 2004,
      incentive stock options to purchase 979,500 shares exercisable at prices ranging
      from $0.67 to $3.25 per share that vest immediately to over a four-year period
      were outstanding. As of December 31, 2004, non-qualified stock options to
      purchase 495,000 shares exercisable at $0.50 per share that vest immediately
      to
      over a three-year period were outstanding. Of these amounts, 469,325 options
      were vested as of December 31, 2003. In addition to the options granted pursuant
      to the 2003 Plan, the Company issued 364,658 shares of its common stock to
      outside consultants for services.





On
      February 10, 2004, the Board of Directors adopted the 2004 Stock Option Plan
      (the 2004 Plan), which allows for the issuance of up to 2,000,000 stock options
      to directors, executive officers, employees and consultants of the Company.
      The
      2004 Plan was approved by the Company's shareholders at its annual shareholder
      meeting. Under the 2004 Plan, incentive and nonqualified stock options may
      be
      granted to employees, directors and consultants of the Company. Awards under
      the
      2004 Plan will be granted as determined by the Company's Board of Directors.
      The
      options that may be granted pursuant to the 2004 Plan may be either incentive
      stock option qualifying for beneficial tax treatment for the recipient or
      nonqualified stock options. The term of the options granted under the 2004
      Plan
      will be fixed by the Company, provided the maximum option term may not exceed
      ten years from the grant date (incentive stock options are granted at an
      exercise price of not less than 100% (110% for individuals owning 10% or more
      of
      the Company's common stock at the time of grant) of the common stock's fair
      market value at the date of grant. Nonqualified stock options may be granted
      at
      an exercise price determined by the Company's Board of Directors. Vesting rights
      will be fixed by the Company's Board of Directors. As of December 31, 2004,
      incentive stock options to purchase 1,205,000 shares exercisable at prices
      ranging from $0.90 to $3.10 per share that vest over a four-year period were
      outstanding. There were no nonqualified stock options outstanding as of December
      31, 2004, and none of the options outstanding were exercisable. In addition
      to
      the options granted pursuant to the 2004 Plan, the Company issued 162,942 shares
      of its common stock to outside consultants for services.


Stock
      option activity during the periods indicated is as follows:





Number
                of Shares
            
            Weighted
                Average Exercise PriceOutstanding,
                January 1, 2003
            
            
            1,187,083
            
            $
            5.44Granted
            
            
            1,376,800
            
            
            0.73Exercised
            
            
            (573,700
            )
            
            1.31Forfeited
            
            
            --
            
            
            --Expired
            
            
            --
            
            
            --Outstanding,
                December 31, 2003
            
            
            1,990,183
            
            
            3.38Granted
            
            
            2,901,500
            
            
            1.74Exercised
            
            
            (312,600
            )
            
            1.33Forfeited
            
            
            (64,500
            )
            
            0.85Expired
            
            
            --
            
            
            --Outstanding,
                December 31, 2004
            
            
            4,514,583
            
            $
            2.51Exercisable,
                December 31, 2004
            
            
            1,706,908
            
            $
            3.79





At
      December 31, 2004, the range of exercise prices and weighted average remaining
      contractual life of outstanding options was $0.32 to $39.38 and 4.2 years,
      respectively. The weighted average grant date fair value of the options issued
      in 2004 and 2003 amounted to $1.74 and $0.73, respectively.





*Common
      Stock Warrants*





In
      connection with the debt (Note 6) and equity (Note 9) fundings, the Company
      issued warrants to acquire common stock at various prices. The following table
      summarizes the warrants outstanding as of December 31, 2004:





Exercise
                Price
            
            Financing
                Date
            
            Outstanding
                Warrants
            
            Expiration
                Date$0.70
            
            
            December
                2003
            
            
            26,611
            
            
            December
                2005$1.00
            
            
            January
                2004
            
            
            666,859
            
            
            June
                2005$1.00
            
            
            February
                2004
            
            
            240,000
            
            
            June
                2005$1.55
            
            
            January
                2004
            
            
            381,719
            
            
            March
                2005$1.89
            
            
            January
                2004
            
            
            1,296,388
            
            
            January
                2009$2.50
            
            
            February
                2004
            
            
            386,500
            
            
            February
                2006$3.00
            
            
            February
                2004
            
            
            676,500
            
            
            February
                2009$1.90
            
            
            October
                2004
            
            
            150,000
            
            
            October
                2011$3.05
            
            
            February
                2004
            
            
            200,000
            
            
            February
                2011$3.19
            
            
            February
                2004
            
            
            50,000
            
            
            February
                2011$3.22
            
            
            February
                2004
            
            
            40,000
            
            
            February
                2011Total
            
            
            
            
            
            4,114,577





All
      warrants are exercisable at December 31, 2004. The Company has not filed and
      is
      not required to file a registration statement for the warrants issued for its
      December 2003 financing.




37


Note
      11.
      Related Party Transactions





Notes
      payable and accrued liabilities due to officers of the Company at December
      31,
      2003, consisted of the following:





Note
                payable to an officer with interest at 7% per annum and principal
                and
                interest due July 1, 2004, without collateral.
            
            $
            81,303Note
                payable to an officer with interest at 7% per annum and principal
                and
                interest due July 1, 2004, without collateral.
            
            
            134,400Accrued
                liabilities due to officers
            
            
            36,336Total
            
            $
            252,039





Accrued
      liabilities includes $31,336 of accrued interest related to the notes payable
      to
      officers and $5,000 in advances from an officer. During January 2004, the
      Company repaid the aforementioned notes payable.





Note
      12.
      Industry Segments





The
      Company
      has adopted the provisions of Statements of Financial Accounting Standards
      No.
      131, Disclosures about Segments of an Enterprise and Related Information (SFAS
      131). At December 31, 2004, the Company's four business units, NetView,
      NewBridge, eLinear and TanSeco, have separate management teams and
      infrastructures that offer different products and services;.





**For
                  the Year Ended December 31, 2004**
                **(Restated)**Dollars ($)
              Consulting
                  Services
              
              Network
                  and Storage Solutions
              
              Communications
                  Deployment
              
              Security
                Solutions
              
              ConsolidatedRevenue
              
              106,515
              
              
              21,753,584
              
              
              1,827,873
              
              
              377,781
              
              
              24,065,753Segment loss
              
              (1,424,404
              )
              
              (1,356,590
              )
              
              (878,379
              )
              
              (187,973
              )
              
              (3,847,346
              )Total assets
              
              1,730,410
              
              
              4,726,771
              
              
              1,781,988
              
              
              1,094,228
              
              
              9,333,397Capital expenditures
              
              343,636
              
              
              295,113
              
              
              11,286
              
              
              37,981
              
              
              688,016Depreciation
              
              55,929
              
              
              66,572
              
              
              4,703
              
              
              24,426
              
              
              151,630




**For
                the Year Ended December 31, 2003**
              **(Restated)**Dollars ($)
            Consulting
                Services
            
            Network
                and Storage Solutions
            
            Communications
                Deployment
            
            Security
              Solutions
            
            ConsolidatedRevenue
            
            608,370
            
            
            12,686,133
            
            
            206,637
            
            
            --
            
            
            13,501,140Segment loss
            
            (717,565
            )
            
            (216,303
            )
            
            (88,293
            )
            
            --
            
            
            (1,022,161
            )Total assets
            
            1,071,083
            
            
            1,695,284
            
            
            1,663,329
            
            
            --
            
            
            4,429,696Capital expenditures
            
            --
            
            
            9,886
            
            
            --
            
            
            --
            
            
            9,886Depreciation
            
            2,686
            
            
            15,568
            
            
            2,036
            
            
            --
            
            
            20,290







The
      accounting policies of the reportable segments are the same. The Company
      evaluates the performance of its operating segments based on income before
      net
      interest expense, income taxes, depreciation expense, accounting changes and
      non-recurring items.




Note
      13.
      Income Taxes





eLinear
      has incurred net losses since the merger with NetView (See Note 4.) and,
      therefore, has no tax liability. The net deferred tax asset generated by the
      loss carry-forward has been fully reserved. The valuation allowance increased
      by
      approximately $170,000. The cumulative operating loss carry-forward is
      approximately $6,000,000 and $1,000,000 at December 31, 2004 and 2003,
      respectively, and will expire in the years 2024 and 2023.





Deferred
      income taxes consist of the following at December 31, 2004 and
      2003:





December
                31,2004
            
            2003Deferred
                tax assets
            
            $
            2,000,000
            
            $
            170,000Valuation
                allowance
            
            
            (2,000,000
            )
            
            (170,000
            )$
            --
            
            $
            --





NetView
      was an S-Corporation in 2002 and upon the completion of the merger with eLinear
      (See Note 4.), NetView terminated its S-Corporation status for income tax
      purposes. The pro forma income tax expense shown in the accompanying financial
      statements indicates the results as if the Company applied the current policy
      for income taxes.




Note
      14.
      Significant Concentration





One
      customer accounted for approximately 18% of sales for the year ended December
      31, 2004. No other customers represented more than 10% of sales of the Company
      for the year ended December 31, 2004. The Company had three customers which
      had
      in excess of 10% of the Company's accounts receivable balance at December 31,
      2004. These customers had 17%, 11% and 10%, respectively, of the Company's
      accounts receivable balance.





38




Note
      15.
      Other Restatement





The
      Company originally filed the financial statements and accounted for the stock
      issued in the acquisition of NewBridge using an average stock price fifteen
      days
      prior to and subsequent to the date of the merger. The Company has revised
      the
      average stock price and calculated the purchase price using the stock price
      on
      the date of the merger. The balance sheet was restated to increase goodwill
      and
      additional paid in capital by $295,500 for the change in the value of the
      stock.





Note
      16.
      Subsequent Events - Unaudited





*Funding*





On
      February 28, 2005, the Company entered into financing arrangements for a total
      principal amount of $12 million with Laurus, Iroquois Capital LP (Iroquois),
      RHP
      Master Fund (RHP), Basso Private Opportunity Holding Fund Ltd. (Basso Private),
      and Basso Multi-Strategy Holding Fund Ltd. (Basso Multi), collectively, the
      (Investors) in which it issued to: (i) Laurus a convertible secured note in
      the
      principal amount of $5,000,000 and a common stock purchase warrant to purchase
      up to 750,000 shares of Company common stock at an exercise price of $1.25
      per
      share; (ii) Iroquois a convertible secured note in the principal amount of
      $5,000,000 and a common stock purchase warrant to purchase up to 750,000 shares
      of Company common stock at an exercise price of $1.25 pre share; (iii) RHP
      a
      convertible secured note in the principal amount of $1,000,000 and a common
      stock purchase warrant to purchase up to 150,000 shares of Company common stock
      at an exercise price of $1.25 per share; (iv) Basso Private a convertible
      secured note in the principal amount of $220,000 and a common stock purchase
      warrant to purchase up to 33,000 shares of Company common stock at an exercise
      price of $1.25 per share; and (v) Basso Multi a convertible secured note in
      the
      principal amount of $780,000 and a common stock purchase warrant to purchase
      up
      to 117,000 shares of Company common stock at an exercise price of $1.25 per
      share. The terms between the Company and each of the respective Investors are
      substantially similar and the Company has agreed to treat each of the
      Investors *pro
      rata* with
      respect to this financing, including conversion, redemption and payments
      thereto.





These
      notes are secured by all of the Company and its subsidiaries' assets. The
      payment of interest and principal, under certain circumstances, may be made
      with
      shares of the Company common stock at a conversion price of no less than $1.00
      per share. The Company has agreed to register the resale of the shares of the
      Company common stock underlying the Investor Notes and the shares issuable
      upon
      exercise of the Warrants. The Investor Notes will accrue interest at a rate
      per
      annum equal to the prime rate published in the Wall Street Journal plus seventy
      five basis points, as may be adjusted. The Company has the ability to
      prepay any amounts owed under these Investors Notes at 110% of the principal
      amount.





Under
      the
      terms of the Investor Notes and related documents, 20% (including applicable
      fees) of the principal amount of the Investor Notes was provided to Company
      for
      immediate use upon the closing of the Investor Notes (Amortizing Principal),
      the
      remaining 80% (net of applicable fees) is held in restricted accounts for each
      respective Investors (Restricted Account). The Company is obligated to make
      monthly payments, either in cash or stock as determined by the Investor Notes,
      beginning on June 1, 2005 for the Amortizing Principal, plus applicable interest
      (the Monthly Payment). The Monthly Payment will be made (i) automatically by
      a
      conversion in stock at a Fixed Conversion Price, (ii) at the discretion of
      the
      Company at a reduced conversion price, or (iii) in cash paid by the Company
      at
      110% of the Monthly Payment. The Monthly Payments shall be automatically made
      in
      Company common stock at the Fixed Conversion Price if (i) the shares of the
      Company common stock underlying the shares of the Investor Notes are registered;
      and (ii) the average trading price of the Company common stock for the five
      days
      preceding the Monthly Payment is greater than 110% of the Fixed Conversion
      Price. If the Monthly Payment is not automatically converted into shares of
      Company common
      stock because the average trading price of the Company common stock for the
      five
      trading days prior to the due date of the Monthly Payment is less than 110%
      of
      the Fixed Conversion Price, the Company may, at its discretion, make the Monthly
      Payment in Company common stock at a conversion price equal to 85% of the
      average trading price of the Company common stock for the five lowest closing
      days for the 22 trading days prior to the Company's notice, but in no case
      shall
      the conversion price be less than $1.00. As of February 28, 2005 the Fixed
      Conversion Price is $1.00, subject to adjustment, but in no case less than
      $1.00.










The
      Company will receive cash disbursements (less applicable accrued interest)
      for
      the amounts held in the Restricted Account after (i) the Amortizing Principal,
      plus interest, is paid in full, (ii) the shares of the Company common stock
      underlying the Investor Notes are registered; and (iii) either the Company
      or
      the Investor converts any amounts held in the Restricted Accounts into shares
      of
      the Company's common stock. If the Company converts the amounts held in the
      Restricted Account, the amounts shall be converted at either (i) a price equal
      to 85% of the average of the five lowest closing prices of the Company common
      stock during the 22 trading days immediately prior to the date of a respective
      repayment notice if the average closing price of the Company common stock is
      less than 110% of the Fixed Conversion Price, but in no instance may such shares
      by converted for less than $1.00; or (ii) at the Fixed Conversion Price, if
      the
      average closing price of the Company common stock for the five consecutive
      trading days immediately preceding the respective repayment notice is greater
      than or equal to 115% of the Fixed Conversion Price.





The
      Investors may convert all or any portion of the principal amounts of their
      respective Investor Notes, including any accrued interest or fees thereon at
      the
      Fixed Conversion Price.





Notwithstanding
      the foregoing, the Company's right to issue shares of its common stock in
      payment of obligations under the Investor Notes shall be subject to the
      limitation that the number of aggregate shares of common stock issued to each
      Investor shall not exceed 25% of the aggregate dollar trading volume of the
      Company common stock for the 22 trading days immediately preceding the date
      on
      which the conversion is to occur. Furthermore, the Investors are not entitled
      to
      convert their respective Investor Notes; if the aggregate Investors beneficial
      ownership of the Company's common stock would exceed *pro
      rata* 19.99%
      of the outstanding shares of common stock of the Company at the time of the
      conversion.





The
      warrants issued pursuant to this funding are exercisable by the Investors until
      February 28, 2012, at $1.25 per share of Company common stock. The warrants
      are
      exercisable immediately.





The
      Company has agreed to file a registration statement with the Securities and
      Exchange Commission within a definitive period of time not to exceed 45 days
      from February 28, 2005, in order to register the resale of the shares of common
      stock underlying the Investor Notes and the shares issuable upon exercise of
      the
      Warrants. If the Company fails to meet this deadline, if the registration
      statement is not declared effective prior to 105 days from February 28, 2005,
      if
      the registration statement ceases to remain effective, or certain other events
      occur, the Company has agreed to pay the Investors liquidated damages of 1.25%
      of the principal amount of the Investor Notes per month.





*Stock
      Option Plan*





On
      December 21, 2004, the Board of Directors adopted the 2005 Stock Option Plan
      (the 2005 Plan), which allows for the issuance of up to 4,000,000 stock options
      to directors, executive officers, employees and consultants of the Company.
      The
      2005 Plan must be approved by the Company's shareholders before any stock
      options may be issued pursuant to the 2005 Plan. Under the 2005 Plan, incentive
      and nonqualified stock options may be granted to employees, directors and
      consultants of the Company. Awards under the 2005 Plan will be granted as
      determined by the Company's Board of Directors. The options that may be granted
      pursuant to the 2005 Plan may be either incentive stock options qualifying
      for
      beneficial tax treatment for the recipient or nonqualified stock options. The
      term of the options granted under the 2005 Plan will be fixed by the Company,
      provided the maximum option term may not exceed ten years from the grant date
      (incentive stock options are granted at an exercise price of not less than
      100%
      (110% for individuals owning 10% or more of the Company's common stock at the
      time of grant) of the common stock's fair market value at the date of grant.
      Nonqualified stock options may be granted at an exercise price determined by
      the
      Company's Board of Directors. Vesting rights will be fixed by the Company's
      Board of Directors. As of December 31, 2004, there were no options outstanding
      under the 2005 Plan.





*Related
      Party Transaction*





On
      February 18, 2005, the Company borrowed $135,000 from Tommy Allen, vice chairman
      of the Company. This loan was repaid on March 8, 2005.








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





On
      October 12, 2004, the Company dismissed Malone & Bailey, PLLC as its
      auditors. Malone & Bailey's audit report on eLinear's consolidated financial
      statements as of December 31, 2003, and for the year then ended did not contain
      an adverse opinion or disclaimer of opinion, or qualification or modification
      as
      to uncertainty, audit scope or accounting principles. The Company filed a Report
      on Form 8-K on October 14, 2004, reflecting that it replaced Malone &
Bailey, LLP, as its independent auditor with Lopez, Blevins, Bork &
Associates, LLP ("Lopez Blevins"). Members of Lopez Blevins, prior to the
      formation of Lopez Blevins, performed all the audit-related work while employed
      with Malone & Bailey, LLP, in connection with conducting eLinear's audit for
      the fiscal year ended December 31, 2003. Lopez Blevins reaudited eLinear's
      fiscal year ended December 31, 2003. There were no other changes to the Amended
      Form 10-KSB for the year ended December 31, 2003, previously filed on September
      8, 2004.





During
      the most recent fiscal year ended December 31, 2003, and in the subsequent
      interim periods through the date of dismissal, there were no disagreements
      with
      Malone & Bailey on any matters of accounting principles or practices,
      financial statement disclosure, or auditing scope and procedures which, if
      not
      resolved to the satisfaction of Malone & Bailey would have caused Malone
& Bailey to make reference to the matter in their report. eLinear requested
      Malone & Bailey to furnish it a letter addressed to the Commission stating
      whether it agreed with the above statements. A copy of that letter, dated
      October 14, 2004, is filed as Exhibit 16.1 to the Form 8-K.





The
      Company retained the services on October 13, 2004 of Lopez, Blevins, Bork &
Associates, LLP as eLinear's principal accountant to audit the financial
      statements of eLinear for the year ended December 31, 2004. The decision to
      change accountants was approved by the Board of Directors.





On
      September 2, 2003, the Board of Directors of the Company received and accepted
      the resignation of Gerald R. Hendricks & Company, P.C. as the Company's
      independent public accountants. The Company retained the services of Malone
      & Bailey, PLLC as independent public accountants to audit the Company's
      consolidated financial statements for the year ending December 31, 2003. The
      Company filed a Form 8-K on September 8, 2003, which was amended on September
      22, 2003 reporting this event.




**ITEM
      8A. CONTROLS AND PROCEDURES**





In
      accordance with the Exchange Act, the Company carried out an evaluation, under
      the supervision and with the participation of management, including its Chief
      Executive Officer and Principal Accounting Officer, of the effectiveness of
      its
      disclosure controls and procedures as of the end of the period covered by this
      report. Based on this evaluation, the Company's Chief Executive Officer and
      Principal Accounting Officer concluded that the Company's disclosure controls
      and procedures were effective as of December 31, 2004, to provide reasonable
      assurance that information required to be disclosed in its reports filed or
      submitted under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in the Securities and Exchange Commission's
      rules and forms. There has been no change in the Company's internal controls
      over financial reporting that occurred during the year ended December 31, 2004,
      that has materially affected, or is reasonably likely to materially affect,
      its
      internal controls over financial reporting.




As
          explained in Note 3 to the financial statements included herein, in order
          to
          correct the financial statements so that they comply with U.S. generally
          accepted accounting principles, the Company has restated its consolidated
          financial statements as of and for the year ended December 31, 2004, to
          reflect
          a reclassification from equity to liabilities of the warrants and compounded
          embedded derivatives that it issued in February 2004, to reflect the
          related change in fair value of the derivatives, and to record a loss on
          early
          extinguishment of debt as described further in Notes 3., 6., and 9. to
          the
          financial statements. Notwithstanding this restatement, the Company's management
          continues to believe that its disclosure controls and procedures were effective
          at a reasonable assurance level as of December 31, 2004. The Company believes
          the restatements are a one-time occurrence and are due to the high complexity
          of
          the financing transactions and related judgmental accounting issues. The
          Company
          does not anticipate entering into any additional complex financing transactions
          involving embedded derivatives in the future and has hired a Chief Financial
          Officer.


**ITEM
      8B. OTHER INFORMATION**





In
      December 2004, the Company issued 319,248 shares of common stock to certain
      investors as forgiveness of penalties of $353,224 associated with the delay
      in
      obtaining effectiveness of a company registration statement.











PART
      III




**ITEM
      13. EXHIBITS**





Exhibit
      No.  Description






2.1
            Agreement
                and Plan of Merger, dated October 11, 1999, between Registrant, eLinear
                Corporation and Imagenuity, Inc. (incorporated by reference to Exhibit
                A-1
                to Registrant's Current Report on Form 8-K, dated October 25,
                1999)




2.2
            Agreement
                and Plan of Merger, dated April 15, 2003, between Registrant, NetView
                Acquisition Corp. and NetView Technologies, Inc. (incorporated by
                reference to Exhibit 2.2 to Registrant's Annual Report on form 10-KSB,
                dated April 15, 2002)




3.1
            Articles
                of Incorporation of Registrant (incorporated by reference to Registrant's
                Form 10-KSB for the period ended December 31,
                1995)




3.2
            Bylaws
                of Registrant (incorporated by reference to Registrant's Form 10-KSB
                for
                the period ended December 31, 1995)





3.3
            Amended
                and Restated Certificate of Incorporation of Registrant (incorporated
                by
                reference to Registrant's Form 10-QSB for the period ended June 30,
                2000)





4.1
            Specimen
                of Registrant's Common Stock Certificate (incorporated by reference
                to
                Registrant's Form 10-KSB for the period ended December 31,
                1995)10.2
            2000
                Stock Option Plan (incorporated by reference to Exhibit 4.1 to
                Registrant's Definitive Proxy Statement on Schedule 14A, dated June
                30,
                2000) *





10.2
            2000
                Stock Option Plan (incorporated by reference to Exhibit 4.1 to
                Registrant's Definitive Proxy Statement on Schedule 14A, dated June
                30,
                2000) *





10.3
            Amendment
                No. 1 to Registrant's 2000 Stock Option Plan (incorporated by reference
                to
                Exhibit 4.2 to Registrant's Form S-8, dated July 31, 2001)
                *





10.4
            Amended
                and Restated 2003 Stock Option Plan (incorporated by reference to
                Exhibit
                10.1 to Registrant's Form S-8, dated January 14, 2003)
                *





10.5
            Form
                of Indemnification Agreement for all officers and directors of Registrant
                (incorporated by reference to Registrant's Form 10-QSB filed with
                the
                Commission on October 24, 2000)





10.6
            Securities
                Purchase Agreement dated as of January 12, 2004 between eLinear,
                Inc. and
                the Investors named therein (incorporated by reference to Exhibit
                10.1 to
                Registrant's Form 8-K, dated January 28,
                2004)





10.7
            Form
                of Class A Warrant issued to each of the Investors in the Securities
                Purchase Agreements dated as of January 12, 2004 (incorporated by
                reference to Exhibit 10.2 to Registrant's Form 8-K, dated January
                28,
                2004)





10.8
            Form
                of Class B Warrant issued to each of the Investors in the Securities
                Purchase Agreements dated as of January 12, 2004 (incorporated by
                reference to Exhibit 10.3 to Registrant's Form 8-K, dated January
                28,
                2004)





10.9
            Registration
                Rights Agreement issued to each of the Investors in the Securities
                Purchase Agreements dated as of January 12, 2004 (incorporated by
                reference to Exhibit 10.4 to Registrant's Form 8-K, dated January
                28,
                2004)





10.10
            Employment
                Agreement with Ramzi Milad Nassar (incorporated by reference to Exhibit
                10.12 to Registrant's Annual Report on Form 10-KSB, dated February
                13,
                2004) *





10.11
            Securities
                Purchase Agreement dated as of February 4, 2004 between eLinear,
                Inc. and
                the Investors named therein (incorporated by reference to Exhibit
                10.13 to
                Registrant's Annual Report on Form 10-KSB, dated February 13,
                2004)





10.12
            Form
                of Class A Warrant issued to each of the Investors in the Securities
                Purchase Agreements dated as of February 4, 2004 (incorporated by
                reference to Exhibit 10.14 to Registrant's Annual Report on Form
                10-KSB,
                dated February 13, 2004)





10.13
            Form
                of Class B Warrant issued to each of the Investors in the Securities
                Purchase Agreements dated as of February 4, 2004 (incorporated by
                reference to Exhibit 10.15 to Registrant's Annual Report on Form
                10-KSB,
                dated February 13, 2004)





10.14
            Registration
                Rights Agreement issued to each of the Investors in the Securities
                Purchase Agreements dated as of February 4, 2004 (incorporated by
                reference to Exhibit 10.16 to Registrant's Annual Report on Form
                10-KSB,
                dated February 13, 2004)





10.15
            Common
                Stock Purchase Warrant Agreement dated as of February 23, 2004 by
                and
                between eLinear, Inc. and Laurus Master Fund, LLC (incorporated by
                reference to Exhibit 10.18 to Registrant's Form 8-K, dated February
                26,
                2004)





10.16
            Secured
                Revolving Note Agreement dated as of February 23, 2004 by and between
                eLinear, Inc., NetView Technologies, Inc. and NewBridge Technologies,
                Inc.
                and Laurus Master Fund, LLC (incorporated by reference to Exhibit
                10.19 to
                Registrant's Form 8-K, dated February 26,
                2004)





10.17
            Secured
                Convertible Minimum Borrowing Note Agreement dated as of February
                23, 2004
                by and between eLinear, Inc., NetView Technologies, Inc. and NewBridge
                Technologies, Inc. and Laurus Master Fund, LLC (incorporated by reference
                to Exhibit 10.20 to Registrant's Form 8-K, dated February 26,
                2004)





10.18
            Minimum
                Borrowing Note Registration Rights Agreement dated as of February
                23, 2004
                by and between eLinear, Inc. and Laurus Master Fund, LLC (incorporated
                by
                reference to Exhibit 10.21 to Registrant's Form 8-K, dated February
                26,
                2004)





42


10.19
            Funds
                Escrow Agreement dated as of February 23, 2004 by and between eLinear,
                Inc., NetView Technologies, Inc. and NewBridge Technologies, Inc.
                and
                Laurus Master Fund, LLC (incorporated by reference to Exhibit 10.22
                to
                Registrant's Form 8-K, dated February 26,
                2004)




10.20
            eLinear,
                Inc. 2004 Stock Option Plan (incorporated by reference to Exhibit
                A to
                Registrant's Definitive Information Statement, dated October 15,
                2004)
                *10.21
            Employment
              Agreement dated January 15, 2005, with Michael Lewis
              *




10.22
            Amendment
                to the Security Agreement and Ancillary Agreement with Laurus Master
                Funs,
                LLC (incorporated by reference to Exhibit 10.24 to Registrant's Form
                SB-2
                dated November 5, 2004)





10.23
            Stock
                Purchase Agreement of TanSeco Systems, Inc. (incorporated by reference
                to
                Exhibit 10.25 to Registrant's Form SB-2 dated November 5,
                2004)





10.24
            Service
                Agreement with RadioShack Corporation (incorporated by reference
                to
                Exhibit 10.26 to Registrant's Form SB-2 dated November 5,
                2004)





10.25
            Form
                of Master Security Agreement, dated as of February 28, 2005, by and
                between eLinear, Inc., NetView Technologies, Inc., NewBridge Technologies,
                Inc., TanSeco Systems, Inc. and Investor (incorporated by reference
                to
                Exhibit 10.1 to Registrant's Form 8-K dated March 3,
                2005)





10.26
            Form
                of Common Stock Purchase Warrant Agreement, dated as of February
                28, 2005,
                by and between eLinear, Inc. and Investor (incorporated by reference
                to
                Exhibit 10.2 to Registrant's Form 8-K dated March 3,
                2005)





10.27
            Form
                of Secured Convertible Term Note, dated as of February 28, 2005,
                by and
                between eLinear, Inc. and Investor (incorporated by reference to
                Exhibit
                10.3 to Registrant's Form 8-K dated March 3,
                2005)





10.28
            Form
                of Restricted Account Agreement, dated as of February 28, 2005, by
                and
                between eLinear, Inc., the bank and Investor (incorporated by reference
                to
                Exhibit 10.4 to Registrant's Form 8-K dated March 3,
                2005)





10.29
            Form
                of Registration Rights Agreement, dated as of February 28, 2005,
                by and
                between eLinear, Inc. and Investor (incorporated by reference to
                Exhibit
                10.5 to Registrant's Form 8-K dated March 3,
                2005)





10.30
            Form
                of Stock Purchase Agreement, dated as of February 28, 2005, by and
                between
                eLinear, Inc. and Investor (incorporated by reference to Exhibit
                10.6 to
                Registrant's Form 8-K dated March 3, 2005)10.31
            Consulting
              Agreement dated December 22, 2005 with Kevan Casey *14.1
            Code
              of Ethics (incorporated by reference to Exhibit 14.1 to Registrant's
              Annual Report on Form 10-KSB, dated February 13, 2004)21.1
            Sunsidiaries of Registrant
              (incorporated by reference to Exhibit 21.1 to Registrant's Form 10-QSB
              filed with the Commission on December 19, 2003)23.1
            Consent
              of Lopez, Blevins, Bork & Associates,
              LLP31.1
            Certification
              of Michael  Lewis31.2
            Certification
              of Phillip Michael Hardy32.1
            Certification
              for Sarbanes-Oxley Act of Michael  Lewis32.2
            Certification
              for Sarbanes-Oxley Act of Phillip Michael
              Hardy











* Indicates
      management contract or compensatory plan or arrangement.













**SIGNATURES**







Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized




**eLINEAR,
      INC.**


By: /s/
      Michael Lewis ___________


Michael
      Lewis, Chief Executive Officer


Date:
      April 6, 2005





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the Registrant and in the
      capacities and on the dates indicated.





/s/ Carl
              A.
              Chase
            
            
            /s/ Tommy
              AllenCarl
              A.
              ChaseChairman of the Board
            
            
            Tommy
              AllenVice Chairman, Director andExecutive Vice
              President








/s/ Michael
                Lewis
              
              
              /s/ J.
                Leonard IvinsMichael
                LewisChief Executive Officer andDirector
              
              
              J.
                Leonard IvinsCorporate Secretary
                andDirector


/s/ Phillip
                Michael Hardy
              
              
              /s/ Ryan
                CraveyPhillip
                Michael
                HardyPrincipal Financial and Accounting Officer
                andDirector
              
              
              Ryan
                CraveyDirector





Exhibit
        No.  Description
  2.1
              Agreement
                  and Plan of Merger, dated October 11, 1999, between Registrant,
                  eLinear
                  Corporation and Imagenuity, Inc. (incorporated by reference to
                  Exhibit A-1
                  to Registrant's Current Report on Form 8-K, dated October 25,
                  1999)
  2.2
              Agreement
                  and Plan of Merger, dated April 15, 2003, between Registrant, NetView
                  Acquisition Corp. and NetView Technologies, Inc. (incorporated
                  by
                  reference to Exhibit 2.2 to Registrant's Annual Report on form
                  10-KSB,
                  dated April 15, 2002)
  3.1
              Articles
                  of Incorporation of Registrant (incorporated by reference to Registrant's
                  Form 10-KSB for the period ended December 31,
                  1995)
  3.2
              Bylaws
                  of Registrant (incorporated by reference to Registrant's Form 10-KSB
                  for
                  the period ended December 31, 1995)
 
 3.3
              Amended
                  and Restated Certificate of Incorporation of Registrant (incorporated
                  by
                  reference to Registrant's Form 10-QSB for the period ended June
                  30,
                  2000)
 
 4.1
              Specimen
                  of Registrant's Common Stock Certificate (incorporated by reference
                  to
                  Registrant's Form 10-KSB for the period ended December 31,
                  1995)10.2
              2000
                  Stock Option Plan (incorporated by reference to Exhibit 4.1 to
                  Registrant's Definitive Proxy Statement on Schedule 14A, dated
                  June 30,
                  2000) *
 
 10.2
              2000
                  Stock Option Plan (incorporated by reference to Exhibit 4.1 to
                  Registrant's Definitive Proxy Statement on Schedule 14A, dated
                  June 30,
                  2000) *
 
 10.3
              Amendment
                  No. 1 to Registrant's 2000 Stock Option Plan (incorporated by reference
                  to
                  Exhibit 4.2 to Registrant's Form S-8, dated July 31, 2001)
                  *
 
 10.4
              Amended
                  and Restated 2003 Stock Option Plan (incorporated by reference
                  to Exhibit
                  10.1 to Registrant's Form S-8, dated January 14, 2003)
                  *
 
 10.5
              Form
                  of Indemnification Agreement for all officers and directors of
                  Registrant
                  (incorporated by reference to Registrant's Form 10-QSB filed with
                  the
                  Commission on October 24, 2000)
 
 10.6
              Securities
                  Purchase Agreement dated as of January 12, 2004 between eLinear,
                  Inc. and
                  the Investors named therein (incorporated by reference to Exhibit
                  10.1 to
                  Registrant's Form 8-K, dated January 28,
                  2004)
 
 10.7
              Form
                  of Class A Warrant issued to each of the Investors in the Securities
                  Purchase Agreements dated as of January 12, 2004 (incorporated
                  by
                  reference to Exhibit 10.2 to Registrant's Form 8-K, dated January
                  28,
                  2004)
 
 10.8
              Form
                  of Class B Warrant issued to each of the Investors in the Securities
                  Purchase Agreements dated as of January 12, 2004 (incorporated
                  by
                  reference to Exhibit 10.3 to Registrant's Form 8-K, dated January
                  28,
                  2004)
 
 10.9
              Registration
                  Rights Agreement issued to each of the Investors in the Securities
                  Purchase Agreements dated as of January 12, 2004 (incorporated
                  by
                  reference to Exhibit 10.4 to Registrant's Form 8-K, dated January
                  28,
                  2004)
 
 10.10
              Employment
                  Agreement with Ramzi Milad Nassar (incorporated by reference to
                  Exhibit
                  10.12 to Registrant's Annual Report on Form 10-KSB, dated February
                  13,
                  2004) *
 
 10.11
              Securities
                  Purchase Agreement dated as of February 4, 2004 between eLinear,
                  Inc. and
                  the Investors named therein (incorporated by reference to Exhibit
                  10.13 to
                  Registrant's Annual Report on Form 10-KSB, dated February 13,
                  2004)
 
 10.12
              Form
                  of Class A Warrant issued to each of the Investors in the Securities
                  Purchase Agreements dated as of February 4, 2004 (incorporated
                  by
                  reference to Exhibit 10.14 to Registrant's Annual Report on Form
                  10-KSB,
                  dated February 13, 2004)
 
 10.13
              Form
                  of Class B Warrant issued to each of the Investors in the Securities
                  Purchase Agreements dated as of February 4, 2004 (incorporated
                  by
                  reference to Exhibit 10.15 to Registrant's Annual Report on Form
                  10-KSB,
                  dated February 13, 2004)
 
 10.14
              Registration
                  Rights Agreement issued to each of the Investors in the Securities
                  Purchase Agreements dated as of February 4, 2004 (incorporated
                  by
                  reference to Exhibit 10.16 to Registrant's Annual Report on Form
                  10-KSB,
                  dated February 13, 2004)
 
 10.15
              Common
                  Stock Purchase Warrant Agreement dated as of February 23, 2004
                  by and
                  between eLinear, Inc. and Laurus Master Fund, LLC (incorporated
                  by
                  reference to Exhibit 10.18 to Registrant's Form 8-K, dated February
                  26,
                  2004)
 
 10.16
              Secured
                  Revolving Note Agreement dated as of February 23, 2004 by and between
                  eLinear, Inc., NetView Technologies, Inc. and NewBridge Technologies,
                  Inc.
                  and Laurus Master Fund, LLC (incorporated by reference to Exhibit
                  10.19 to
                  Registrant's Form 8-K, dated February 26,
                  2004)
 
 10.17
              Secured
                  Convertible Minimum Borrowing Note Agreement dated as of February
                  23, 2004
                  by and between eLinear, Inc., NetView Technologies, Inc. and NewBridge
                  Technologies, Inc. and Laurus Master Fund, LLC (incorporated by
                  reference
                  to Exhibit 10.20 to Registrant's Form 8-K, dated February 26,
                  2004)
 
 10.18
              Minimum
                  Borrowing Note Registration Rights Agreement dated as of February
                  23, 2004
                  by and between eLinear, Inc. and Laurus Master Fund, LLC (incorporated
                  by
                  reference to Exhibit 10.21 to Registrant's Form 8-K, dated February
                  26,
                  2004)
 
 45
 10.19
              Funds
                  Escrow Agreement dated as of February 23, 2004 by and between eLinear,
                  Inc., NetView Technologies, Inc. and NewBridge Technologies, Inc.
                  and
                  Laurus Master Fund, LLC (incorporated by reference to Exhibit 10.22
                  to
                  Registrant's Form 8-K, dated February 26,
                  2004)
  10.20
              eLinear,
                  Inc. 2004 Stock Option Plan (incorporated by reference to Exhibit
                  A to
                  Registrant's Definitive Information Statement, dated October 15,
                  2004)
                  *10.21
              Employment
                Agreement dated January 15, 2005, with Michael Lewis
                *
  10.22
              Amendment
                  to the Security Agreement and Ancillary Agreement with Laurus Master
                  Funs,
                  LLC (incorporated by reference to Exhibit 10.24 to Registrant's
                  Form SB-2
                  dated November 5, 2004)
 
 10.23
              Stock
                  Purchase Agreement of TanSeco Systems, Inc. (incorporated by reference
                  to
                  Exhibit 10.25 to Registrant's Form SB-2 dated November 5,
                  2004)
 
 10.24
              Service
                  Agreement with RadioShack Corporation (incorporated by reference
                  to
                  Exhibit 10.26 to Registrant's Form SB-2 dated November 5,
                  2004)
 
 10.25
              Form
                  of Master Security Agreement, dated as of February 28, 2005, by
                  and
                  between eLinear, Inc., NetView Technologies, Inc., NewBridge Technologies,
                  Inc., TanSeco Systems, Inc. and Investor (incorporated by reference
                  to
                  Exhibit 10.1 to Registrant's Form 8-K dated March 3,
                  2005)
 
 10.26
              Form
                  of Common Stock Purchase Warrant Agreement, dated as of February
                  28, 2005,
                  by and between eLinear, Inc. and Investor (incorporated by reference
                  to
                  Exhibit 10.2 to Registrant's Form 8-K dated March 3,
                  2005)
 
 10.27
              Form
                  of Secured Convertible Term Note, dated as of February 28, 2005,
                  by and
                  between eLinear, Inc. and Investor (incorporated by reference to
                  Exhibit
                  10.3 to Registrant's Form 8-K dated March 3,
                  2005)
 
 10.28
              Form
                  of Restricted Account Agreement, dated as of February 28, 2005,
                  by and
                  between eLinear, Inc., the bank and Investor (incorporated by reference
                  to
                  Exhibit 10.4 to Registrant's Form 8-K dated March 3,
                  2005)
 
 10.29
              Form
                  of Registration Rights Agreement, dated as of February 28, 2005,
                  by and
                  between eLinear, Inc. and Investor (incorporated by reference to
                  Exhibit
                  10.5 to Registrant's Form 8-K dated March 3,
                  2005)
 
 10.30
              Form
                  of Stock Purchase Agreement, dated as of February 28, 2005, by
                  and between
                  eLinear, Inc. and Investor (incorporated by reference to Exhibit
                  10.6 to
                  Registrant's Form 8-K dated March 3, 2005)10.31
              Consulting
                Agreement dated December 22, 2005 with Kevan Casey *14.1
              Code
                of Ethics (incorporated by reference to Exhibit 14.1 to Registrant's
                Annual Report on Form 10-KSB, dated February 13, 2004)21.1
              Sunsidiaries of Registrant
                (incorporated by reference to Exhibit 21.1 to Registrant's Form 10-QSB
                filed with the Commission on December 19, 2003)23.1
              Consent
                of Lopez, Blevins, Bork & Associates,
                LLP31.1
              Certification
                of Michael  Lewis31.2
              Certification
                of Phillip Michael Hardy32.1
              Certification
                for Sarbanes-Oxley Act of Michael  Lewis32.2
              Certification
                for Sarbanes-Oxley Act of Phillip Michael
                Hardy
 
 
 
 * Indicates
        management contract or compensatory plan or
        arrangement.