**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**





**WASHINGTON,
      D.C. 20549**





FORM
        10-QSB/A (FIRST AMENDMENT)





[X]
      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934


For
      the
      quarterly period ended September 30, 2004





[
      ]
      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934 for the transition period from


_________________
      to _______________





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)








(713)
      896-0500


(Issuer's
      telephone number)











Check
      whether the issuer has (1) filed all reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the past 12 months (or for such shorter
      period that the registrant was required to file such reports) and (2) has been
      subject to such filing requirements for the past 90 days.





Yes
      [X]  No [ ]





As
      of
      November 11, 2004 there were outstanding 20,943,267 shares of common stock,
      $.02
      par value per share.





Transitional
      Small Business Disclosure Format (Check one): Yes [ ] No [X]











**eLINEAR,
      INC.**


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


**September
      30, 2004**




Page
      No.


**Explanatory
                  Note                              3****Part
                  I**
              **Financial
                  Information**Item
                  1.
              Financial
                  Statements
              4Consolidated
                  Balance Sheets September 30, 2004 (unaudited) and December 31,
                  2003
              4Consolidated
                  Statements of Operations (unaudited) Three and Nine Months Ended
                  September 30, 2004 1nd 2003
              5Consolidated
                  Statements of Cash Flows (unaudited) Nine Months Ended September
                  30, 2004
                  and 2003
              6Notes
                  to Unaudited Consolidated Financial Statements
              7Item
                  2.
              Management’s
                  Discussion and Analysis of Results of Operations and Financial
                  Condition
              19Item
                  3.
              Controls
                  and Procedures
              23**Part
                  II**
              **Other
                  Information**Item
                  1.
              Legal
                  Proceedings
              23Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              23Item
                  3.
              Defaults
                  Upon Senior Securities
              23Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              23Item
                  5.
              Other
                  Information
              23Item
                  6.
              Exhibits
              24











2





**EXPLANATORY
        NOTE**





**This
        Amendment No. 1 on Form 10-QSB/A amends eLinear’s quarterly report on Form
        10-QSB for the quarter ended September 30, 2004, which was originally filed
        with
        SEC on November 15, 2004. 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-QSB
        filing, nor does it modify or update in any way the disclosures contained
        in the
        original Form 10-QSB filing. This Amendment No.1 continues to speak as of
        the
        date of the original Form 10-QSB 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-QSB filing, including any amendments to those
        filings.**


3


**PART
      I. FINANCIAL INFORMATION**





Item
      1. FINANCIAL STATEMENTS





**eLINEAR,
      INC.**


**CONSOLIDATED
      BALANCE SHEETS**





September
                  30,
              
              December
                  31,2004
              
              2003(Unaudited)
              
              (Restated)**ASSETS**
              
              (Restated)Current
                  assets:Cash
              
              $
              429,318
              
              $
              554,483Certificate of Deposit
              
              
              512,643
              
              
              --Cash in restricted accounts
              
              
              500,000
              
              
              --Accounts Receivable, net of allowance of $137,288 at September
                  30,
                  2004and $69,289 at December 31, 2003, respectively
              
              
              6,033,694
              
              
              1,637,217Inventory
              
              
              240,612
              
              
              190,555Other current assets
              
              
              197,778
              
              
              45,708Total current assets
              
              
              7,914,045
              
              
              2,427,963Property
                  and equipment, net
              
              
              598,215
              
              
              43,662Goodwill
              
              
              1,100,000
              
              
              1,943,022Deferred
                  financing costs, net
              
              
              147,619
              
              
              --Deposits
              
              
              28,208
              
              
              15,049Total
                  assets
              
              $
              9,788,087
              
              $
              4,429,696**LIABILITIES
                  AND SHAREHOLDERS’ EQUITY**Current
                  liabilities:Accounts
                  payable, trade
              
              $
              1,897,389
              
              $
              1,101,603Revolver
              
              
              1,629,002
              
              
              --Payable
                  to officers
              
              
              --
              
              
              36,336Accrued
                  liabilities
              
              
              531,881
              
              
              148,747Accrued
                  penalties
              
              
              473,528
              
              
              --Warrant
                  liabilities-current
              
              
              214,770
              
              
              --Notes
                  payable, officers
              
              
              --
              
              
              215,703Total current liabilities
              
              
              4,746,570
              
              
              1,502,389Long-term
                  debt (less unamortized discount of $1,366,114)
              
              
              633,886
              
              
              --Compounded
                  embedded derivative liability
              
              
              29,326
              
              
              --Warrant
                  liabilities - non current
              
              
              2,004,955
              
              
              --Total liabilities
              
              
              7,414,737
              
              
              1,502,389Shareholders’
                  equity:Preferred
                  stock, $.02 par value, 10,000,000 shares authorized,none
                  issued
              
              
              --
              
              
              --Common
                  stock, $.02 par value, 100,000,000 shares authorized,20,892,825
                  and 17,020,754 shares issued and outstanding at
                September 30, 2004 and December 31, 2003, respectively
              
              
              417,857
              
              
              340,415Additional
                  paid-in capital
              
              
              3,699,800
              
              
              3,982,631Accumulated
                  deficit
              
              
              (1,744,307
              )
              
              (1,395,739
              )Total shareholders’ equity
              
              
              2,373,350
              
              
              2,927,307Total
                  liabilities and shareholders’ equity
              
              $
              9,788,087
              
              $
              4,429,696





See
      accompanying notes to unaudited consolidated financial
      statements.













**eLINEAR,
      INC.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**FOR
      THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND
      2003**


**(UNAUDITED)**





For
                  the Three Months Ended
                September
                  30,
              
              For
                  the Nine Months Ended
                September
                  30,2004
              
              2003
              
              2004
              
              2003(Restated)
              
              (Restated)
              
              (Restated)
              
              (Restated)Revenue:Products
              
              $
              6,710,474
              
              $
              3,661,880
              
              $
              15,528,563
              
              $
              9,979,195Services
              
              
              689,054
              
              
              300,573
              
              
              1,377,052
              
              
              602,388Other
              
              
              54,760
              
              
              --
              
              
              54,760
              
              
              --Total revenue
              
              
              7,454,288
              
              
              3,962,453
              
              
              16,960,375
              
              
              10,581,583Cost
                  of Revenue:Products
              
              
              6,125,210
              
              
              3,124,499
              
              
              13,602,289
              
              
              8,421,835Services
              
              
              274,789
              
              
              238,043
              
              
              1,045,384
              
              
              382,365Total cost of revenue
              
              
              6,399,999
              
              
              3,362,542
              
              
              14,647,673
              
              
              8,804,200Gross
                  profit
              
              
              1,054,289
              
              
              599,911
              
              
              2,312,702
              
              
              1,777,383Operating
                  expenses:Selling,
                  general and administrative expenses:Payroll and related expenses
              
              
              1,438,460
              
              
              424,704
              
              
              3,021,572
              
              
              1,137,206Office administration
              
              
              602,427
              
              
              54,631
              
              
              1,322,672
              
              
              144,063Professional services
              
              
              275,153
              
              
              115,964
              
              
              666,357
              
              
              359,321Impairment of goodwill
              
              
              391,114
              
              
              --
              
              
              843,039
              
              
              --Other
              
              
              398,545
              
              
              260,865
              
              
              1,498,173
              
              
              402,222Depreciation
              
              
              40,487
              
              
              6,170
              
              
              71,171
              
              
              14,710Total
                  operating expenses
              
              
              3,146,186
              
              
              862,334
              
              
              7,422,984
              
              
              2,057,522Loss
                  from operations
              
              
              (2,091,897
              )
              
              (262,423
              )
              
              (5,110,282
              )
              
              (280,139
              )Other
                  income (expense):Interest,
                  net
              
              
              (136,199
              )
              
              (15,789
              )
              
              (756,763
              )
              
              (25,603
              )Change
                  in fair value of derivatives
              
              
              2,451,666
              
              
              --
              
              
              5,492,874
              
              
              --Other
              
              
              14,968
              
              
              44,850
              
              
              25,603
              
              
              48,476Net
                  income (loss)
              
              $
              238,538
              
              $
              (233,362
              )
              $
              (348,568
              )
              $
              (257,266
              )Net income (loss) per
                share:Basic
              
              $
              0.01
              
              $
              (0.02
              )
              $
              (0.02
              )
              $
              (0.02
              )Diluted
              
              $
              0.01
              
              $
              (0.02
              )
              $
              (0.03
              )
              $
              (0.02
              )Weighted
                  average number of common shares outstanding:Basic
              
              
              20,608,067
              
              
              14,999,307
              
              
              20,013,588
              
              
              14,557,361Diluted
              
              
              22,190,584
              
              
              14,999,307
              
              
              20,815,421
              
              
              14,557,361





See
      accompanying notes to unaudited consolidated financial statements.








**eLINEAR,
      INC.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003**


**(UNAUDITED)**


2004
              
              2003(Restated)
              
              (Restated)Cash
                  flows from operating activities:Net
                  loss
              
              $
              (348,568
              )
              $
              (257,266
              )Adjustments
                  to reconcile net loss to cash used in operating
                  activities:Depreciation
              
              
              71,171
              
              
              14,710Impairment
                  of goodwill
              
              
              843,039
              
              
              --Bad
                  debt expense
              
              
              65,560
              
              
              --Amortization
                  of debt discounts
              
              
              505,618
              
              
              --Change
                  in fair value of derivatives
              
              
              (5,492,874
              )
              
              --Stock
                  and stock option based compensation
              
              
              952,607
              
              
              --Changes
                  in assets and liabilities:Accounts
                  receivable
              
              
              (4,464,476
              )
              
              160,056Inventory
              
              
              (50,057
              )
              
              (84,892
              )Other
                  current assets
              
              
              (152,070
              )
              
              (23,568
              )Accounts
                  payable
              
              
              795,786
              
              
              101,072Payable
                  to Officers
              
              
              (36,336
              )
              
              --Accrued
                  Liabilities
              
              
              321,259
              
              
              126,752Accrued
                  penalties
              
              
              473,528
              
              
              --Net
                  cash provided by (used in) operating activities
              
              
              (6,515,813
              )
              
              36,864Cash
                  flows from investing activities:Purchase
                  of property and equipment
              
              
              (623,302
              )
              
              --Restricted
                  cash
              
              
              (500,000
              )
              
              --Purchase
                  certificate of deposit
              
              
              (512,643
              )
              
              --Deposits
              
              
              (13,159
              )
              
              --Net
                  cash used in investing activities
              
              
              (1,649,104
              )
              
              --Cash
                  flows from financing activities:Proceeds
                  from notes payable due to officers
              
              
              --
              
              
              159,538Repayment
                  on notes payable due to officers
              
              
              (215,703
              )
              
              (214,672
              )Proceeds
                  from revolver, net
              
              
              1,596,758
              
              
              --Proceeds
                  from long-term debt
              
              
              2,000,000
              
              
              --Payment
                  of upfront financing costs
              
              
              (273,000
              )
              
              --Proceeds
                  from exercise of stock options
              
              
              345,594
              
              
              --Proceeds
                  from sale of common stock, net
              
              
              4,586,103
              
              
              --Net
                  cash provided by (used in) financing activities
              
              
              8,039,752
              
              
              (55,134
              )Net
                  decrease in cash:
              
              
              (125,165
              )
              
              (18,270
              )Cash
                  and cash equivalents, beginning of period
              
              
              554,483
              
              
              133,233Cash
                  and cash equivalents, end of period
              
              $
              429,318
              
              $
              114,963Non-cash
                  transactions:Issuance
                  of stock for acquisition
              
              $
              --
              
              $
              1,195,601Issuance
                  of options for forgiveness of debt
              
              $
              --
              
              $
              13,188







See
      accompanying notes to unaudited consolidated financial statements.














**eLINEAR,
      INC.**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2004**








Note
      1.
      Organization and Nature of Business





STATEMENT
      OF INFORMATION FURNISHED





The
      accompanying unaudited consolidated financial statements of eLinear, Inc. and
      Subsidiaries (the "Company" or "eLinear") have been prepared pursuant to the
      rules and regulations for interim financial information and the instructions
      to
      Form 10-QSB and Regulation S-B. Accordingly, certain information and footnote
      disclosures normally included in financial statements prepared in accordance
      with generally accepted accounting principles in the United States have been
      omitted. In the opinion of management, the unaudited consolidated financial
      statements contain all adjustments (consisting of only normal recurring
      accruals) necessary to present fairly the financial position as of September
      30,
      2004, and the results of operations and cash flows for the three months and
      nine
      ended September 30, 2004 and 2003.





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      reported amounts of revenue and expenses during the reporting period. Operating
      results for interim periods are not necessarily indicative of the results that
      may be expected for the complete fiscal year. The accompanying unaudited
      consolidated financial statements should be read in conjunction with the audited
      consolidated financial statements and notes thereto included in the Company's
      Annual Report on Form 10-KSB/A (Third Amendment) for the year ended December
      31,
      2003, filed with the Securities and Exchange Commission.





Note
        2.
        Restatement of Previously Issued Unaudited 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 Settle In,
        a
        Company’s Own Stock)* ,
        the
        Company’s Unaudited Consolidated Balance Sheet, Unaudited Consolidated Statement
        of Operations and Unaudited Consolidated Statement of Cash Flow as of and
        for
        the three and nine months ended September 30, 2004, have been restated to
        reflect a reclassification from equity to liabilities of the warrants that
        the
        Company issued in January and February 2004, and to reflect the change in
        fair
        value of the warrants and compound embedded derivative since issuance, as
        described in Note 6 “Credit Facilities” and Note 7 “Common Stock”. As a result
        of this correction, the Company’s net loss for the nine months ended September
        30, 2004, decreased from $5,925,041 to $348,568 and the Company’s net loss per
        share decreased from $0.30 to $0.02, basic and diluted. For the three months
        ended September 30, 2004 the Company recorded net income of $238,538 rather
        than
        previously recorded net loss of $2,204,801 and net income per share of 
$0.01,basic and diluted, rather than previously recorded net loss per
        share of $0.11, basic and diluted.





Following
        are restated condensed balance sheet, statement of operations and statement
        of
        cash flow giving effect to the adjustments described in Note 6 “Credit
        Facilities” and Note 7 “Common Stock”.





**eLINEAR,
      INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(UNAUDITED)**





September
                  30,
              
              
              
              September
                  30,2004
              
              Adjustments
              
              2004(Restated)**ASSETS**Total
                  current assets
              
              $
              7,914,045
              
              
              
              
              $
              7,914,045Property
                  and equipment, net
              
              
              598,215
              
              
              
              
              
              598,215Goodwill
              
              
              1,100,000
              
              
              
              
              
              1,100,000Deferred
                  financing costs, net
              
              
              147,619
              
              
              
              
              
              147,619Deposits
              
              
              28,208
              
              
              
              
              
              28,208Total
                  assets
              
              $
              9,788,087
              
              
              
              
              $
              9,788,087**LIABILITIES
                  AND SHAREHOLDERS’ EQUITY**Current
                  liabilities:Accounts
                  payable, trade
              
              $
              1,897,389
              
              
              
              
              $
              1,897,389Revolver
              
              
              1,629,002
              
              
              
              
              
              1,629,002Accrued
                  liabilities
              
              
              531,881
              
              
              
              
              
              531,881Accrued
                  penalties
              
              
              473,528
              
              
              
              
              
              473,528Warrant
                  liability - current
              
              
              --
              
              
              214,770
              
              
              214,770Total current liabilities
              
              
              4,531,800
              
              
              214,770
              
              
              4,746,570Long-term
                  debt (less unamortized discount of $1,366,113)
              
              
              1,330,097
              
              
              (696,211
              )
              
              633,886Compound
                  embedded derivative liability
              
              
              --
              
              
              29,326
              
              
              29,326Warrant
                  liabilities - non-current
              
              
              --
              
              
              2,004,955
              
              
              2,004,955Total liabilities
              
              
              5,861,897
              
              
              1,552,840
              
              
              7,414,737Shareholders’
                  equity:Common
                  stock
              
              
              417,857
              
              
              
              
              
              417,857Additional
                  paid-in capital
              
              
              10,829,113
              
              
              (7,129,313
              )
              
              3,699,800Accumulated
                  deficit
              
              
              (7,320,780
              )
              
              5,576,473
              
              
              (1,744,307
              )Total
                  shareholders’ equity
              
              
              3,926,190
              
              
              (1,552,840
              )
              
              2,373,350Total
                  liabilities and shareholders’ equity
              
              $
              9,788,087
              
              $
              --
              
              $
              9,788,087








**eLINEAR,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**FOR
      THE THREE MONTHS ENDED SEPTEMBER 30, 2004**


**(UNAUDITED)**











September
                  30,
              
              
              
              September
                  302004
              
              Adjustments
              
              2004(Restated)Total
                  revenue
              
              $
              7,454,288
              
              
              
              
              $
              7,454,288Total
                  cost of revenue
              
              
              6,399,999
              
              
              
              
              
              6,399,999Gross profit
              
              
              1,054,289
              
              
              
              
              
              1,054,289Operating
                  expenses:Payroll
                  and related expenses
              
              
              1,438,460
              
              
              
              
              
              1,438,460Office
                  administration
              
              
              602,427
              
              
              
              
              
              602,427Professional
                  services
              
              
              275,153
              
              
              
              
              
              275,153Impairment
                  of goodwill
              
              
              391,114
              
              
              
              
              
              391,114Other
              
              
              398,545
              
              
              
              
              
              398,545Depreciation
              
              
              40,487
              
              
              
              
              
              40,487Total operating expenses
              
              
              3,146,186
              
              
              
              
              
              3,146,186Loss
                  from operations
              
              
              (2,091,897
              )
              
              
              
              
              (2,091,897
              )Interest,
                  net
              
              
              (127,872
              )
              
              (8,327
              )
              
              (136,199
              )Change
                  in fair value of derivative
              
              
              --
              
              
              2,451,666
              
              
              2,451,666Other
              
              
              14,968
              
              
              
              
              
              14,968Net
                  income (loss)
              
              $
              (2,204,801
              )
              $
              2,443,339
              
              $
              238,538Net income (loss) per
                share:Basic
              
              $
              (0.11
              )
              
              
              
              $
              0.01Diluted
              
              $
              (0.11
              )
              
              
              
              $
              0.01Weighted
                  average number of common shares outstanding:Basic
              
              
              20,608,067
              
              
              
              
              
              20,608,067Diluted
              
              
              20,608,067
              
              
              
              
              
              22,190,584








**eLINEAR,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2004**


**(UNAUDITED)**





September
                  30,
              
              
              
              September
                  302004
              
              Adjustments
              
              2004(Restated)Total
                  revenue
              
              $
              16,960,375
              
              
              
              
              $
              16,960,375Total
                  cost of revenue
              
              
              14,647,673
              
              
              
              
              
              14,647,073Gross profit
              
              
              2,312,702
              
              
              
              
              
              2,312,702Operating
                  expenses:Payroll
                  and related expenses
              
              
              3,021,572
              
              
              
              
              
              3,021,572Office
                  administration
              
              
              1,322,672
              
              
              
              
              
              1,322,672Professional
                  services
              
              
              666,357
              
              
              
              
              
              666,357Impairment
                  of goodwill
              
              
              843,039
              
              
              
              
              
              843,039Other
              
              
              1,498,173
              
              
              
              
              
              1,498,173Depreciation
              
              
              71,171
              
              
              
              
              
              71,171Total operating expenses
              
              
              7,422,984
              
              
              
              
              
              7,422,984Loss
                  from operations
              
              
              (5,110,282
              )
              
              
              
              
              (5,110,282
              )Interest,
                  net
              
              
              (840,362
              )
              
              83,599
              
              
              (756,763
              )Change
                  in fair value of derivatives
              
              
              --
              
              
              5,492,874
              
              
              5,492,874Other
              
              
              25,603
              
              
              
              
              
              25,603Net
                  loss
              
              $
              (5,925,041
              )
              $
              5,576,473
              
              $
              (348,568
              )Net loss per share:Basic
              
              $
              (0.30
              )
              
              
              
              $
              (0.02
              )Diluted
              
              $
              (0.30
              )
              
              
              
              $
              (0.03
              )Weighted
                  average number of common shares outstanding:Basic
              
              
              20,013,588
              
              
              
              
              
              20,013,588Diluted
              
              
              20,013,588
              
              
              
              
              
              20,815,421








**eLINEAR,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2004 and 2003**


**(UNAUDITED)**





2004
              
              Adjustments
              
              2004(Restated)Cash
                  flows used in operating activities:Net
                  loss
              
              $
              (5,925,041
              )
              $
              5,576,473
              
              $
              (348,568
              )Adjustments
                  to reconcile net loss to cash used in operating
                  activities:Depreciation
              
              
              71,171
              
              
              
              
              
              71,171Impairment
                  of goodwill
              
              
              843,039
              
              
              
              
              
              843,039Bad
                  debt expense
              
              
              65,560
              
              
              
              
              
              65,560Amortization
                  of debt discounts
              
              
              589,217
              
              
              (83,599
              )
              
              505,618Change
                  in fair value of derivatives
              
              
              --
              
              
              (5,492,874
              )
              
              (5,492,874
              )Stock
                  and stock option based compensation
              
              
              952,607
              
              
              
              
              
              952,607Changes
                  in assets and liabilities:Accounts
                  receivable
              
              
              (4,464,476
              )
              
              
              
              
              (4,464,476
              )Inventory
              
              
              (50,057
              )
              
              
              
              
              (50,057
              )Other
                  current assets
              
              
              (152,070
              )
              
              
              
              
              (152,070
              )Accounts
                  Payable
              
              
              795,786
              
              
              
              
              
              795,786Payable
                  to officers
              
              
              (36,336
              )
              
              
              
              
              (36,336
              )Accrued
                  liabilities
              
              
              321,259
              
              
              
              
              
              321,259Accrued
                  penalties
              
              
              473,528
              
              
              
              
              
              473,528Net
                  cash used in operating activities
              
              
              (6,515,813
              )
              
              
              
              
              (6,515,813
              )Net
                  cash used in investing activities
              
              
              (1,649,104
              )
              
              
              
              
              (1,649,104
              )Net
                  cash provided by financing activities
              
              
              8,039,752
              
              
              
              
              
              8,039,752Net
                  decrease in cash
              
              
              (125,165
              )
              
              
              
              
              (125,165
              )Cash
                  and cash equivalents, beginning of period
              
              
              554,483
              
              
              
              
              
              554,483Cash
                  and cash equivalents, end of period
              
              $
              429,318
              
              
              
              
              $
              429,318











Note
      3.
      Stock Options





At
      September 30, 2004, the Company had stock-based compensation plans, which are
      more fully described in Note 8 in the Company's Annual Report on Form 10-KSB/A
      (Third Amendment). In addition, 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 who are contributing to the Company's
      success. During the nine months ended September 30, 2004, the Company granted
      1,309,500 options to various employees under the 2003 Plan and 198,150 options
      to various consultants under the 2004 Plan. The 2004 Plan was approved by the
      shareholders on October 12, 2004.





The
      Company applies and intends to continue to apply the recognition and intrinsic
      value measurement principles of Accounting Principles Board, (APB) Opinion
      No.
      25, "Accounting for Stock Issued to Employees," and related Interpretations
      in
      accounting for those plans. The Company recorded $3,246 of stock-based
      compensation expense for stock options issued to employees which is reflected
      in
      the net loss for the nine month period ended September 30, 2004, because certain
      options granted under the 2003 Plan had exercised prices less than the market
      value of the underlying common stock on the date of the grant. In addition,
      the
      Company recorded stock based compensation expense totaling $344,239 related
      to
      the options issued to consultants. The consultant options vested immediately
      and
      were expensed based on the fair value calculated using the black Scholes pricing
      model using the following assumptions: 117% volatility four year life, 1.5%
      discount rate and 0% dividend yield.





The
      following table illustrates the effect on net income and earnings per share
      if
      eLinear had applied the fair value recognition provisions of FASB statement
      No.
      123, Accounting for Stock-Based Compensation, to stock-based employee
      compensation.





Nine
                  Months EndedSeptember
                  30,2004
              
              2003Restated
              
              RestatedNet
                  loss, as reported
              
              $
              (348,568
              )
              $
              (257,266
              )Stock
                  based compensation under fair value method
              
              
              (199,000
              )
              
              (46,000
              )Pro
                  forma net loss
              
              $
              (547,568
              )
              $
              (303,266
              )Net
                  loss per share:Basic loss per common share - as reported
              
              $
              (0.02
              )
              $
              (0.02
              )Basic loss per common share - pro forma
              
              $
              (0.03
              )
              $
              (0.02
              )Diluted
                loss per common share - as
                reported
              
              $
              (0.03
              )
              $
              (0.02
              )Diluted loss per common share - pro forma
              
              $
              (0.04
              )
              $
              (0.02
              )





The
      fair
      value of each option granted is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted average
      assumptions: dividend yield 0.0%, expected volatility of 117%, risk-free
      interest rate of 1.5%, and expected life of 48 months.





Note
        4.
        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 credit facilities in the quarterly
        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
        quarterly 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 credit facilities
        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 7 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 of September 30, 2004 were not designated
        as
        hedges.





12




Note
      5.
      Impairment





In
      March
      2004, the Company recorded impairment expense totaling $451,925 related to
      100%
      of the goodwill related to the 2003 eLinear acquisition. In March 2004, the
      consulting services reporting unit lost its largest consulting contract and
      the
      other operations that had been acquired in the eLinear purchase had declined
      due
      to the loss of key employees after the acquisition. During the nine months
      ended
      September 30, 2004, the Company recognized only $88,990 of revenue from the
      consulting services reporting segment. Based on projected estimated future
      cash
      flows from the reporting unit purchased in 2003, management determined a full
      impairment charge was required.





In
      September 2004, the Company recorded impairment expense totaling $391,114
      related to a portion of the goodwill related to the NewBridge Technologies,
      Inc.
      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.





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 revolving
      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 term 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. As of September 30, 2004, the Company has accrued
      $102,597 in liquidated damages due to Laurus. 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 filed a registration statement with the SEC to register the conversion
      shares and shares underlying the warrants on November 5, 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%.





The
      Company retired its $1,000,000 credit facility with Textron Financial
      Corporation with the proceeds from the Laurus credit facility and entered into
      a
      new $500,000 credit facility with Textron secured by a $500,000 letter 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 (4.75% as of September 30, 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 advances typically accrue interest
      at
      a rate of 1.5% per month, but until August 2004, the Company is 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 $3.32 per share. The Company has the ability to prepay
      any
      amounts owed under this credit facility at 115% of the principal amount. The
      revolving credit facility is secured by all of the assets of the Company. 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 September 30, 2004,
      the
      Company had $1,629,002 outstanding under the revolver.





13




**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 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 September 30, 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 440,000 shares of the
      Company’s common stock at prices ranging from $1.90 to $3.32 per share. The
      warrants, which are exercisable immediately, were valued at $653,807 using
      a
      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 will be
      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 Unaudited
        Consolidated Financial Statements to reclassify the Laurus warrants from
        additional paid in capital to non-current liabilities and change in fair
        value
        derivatives effective September 30, 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 follows as of February 23, 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
        (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.





The
        Company performed the same calculations as of September 30, 2004, to revalue
        the
        warrants as of that date. In using the Black Scholes option-pricing model,
        the
        Company used an expected life of 6.4 years; an underlying stock price of
        $1.04
        per share; no dividends; a risk free rate of 3.5%; and volatility of 117%.
        The
        resulting aggregate allocated value of the warrants as of September 30, 2004,
        equaled $238,839. The change in fair value of $179,440 and $414,968 for the
        three and nine months ended September 30, 2004 and is primarily due to the
        fair
        value of the underlying common stock from $2.71 per share to $1.04 per share
        from February 23 to September 30, 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 feature previously
        recorded of $510,282.





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.





14




Compound
        Embedded Derivative Liability





Using
        a
        layered discounted probability-weighted expected cash flow methodology, the
        fair
        value of the Derivative Liability with Compound Embedded Derivatives was
        computed at $998,425 and $29,326 at February 23, 2004 and September 30, 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
        Notes.


Probability-Weighted
        Expected Cash Flow Methodology





Compound
                  Embedded Derivative LiabilityFebruary
                  23,
                2004
              
              September
                  30,
                2004Assumptions
              
              (Inception)Risk
                  Free interest rate
              
              
              2.21
              %
              
              2.89
              %Prime
                  RateIncreasing .25% each quarter of first year
              
              
              4.00
              %
              
              4.75
              %Timely
                  registrationIncreasing by 1% monthly up to 99%
              
              
              95.00
              %
              
              99.00
              %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
              %
              
              2.00
              %Annual
                  growth rate of stock price
              
              
              31.80
              %
              
              31.8
              %Future
                  projected volatility
              
              
              102.00
              %
              
              117.00
              %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 derivative liability of $118,832 and $969,099
        was recorded for the three and nine months ended September 30,
        2004.





During
        the quarter ended September 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 three and nine months ended September 30,
        2004
        was $79,106 and $505,618, respectively.





As
          a
          result of these contract provisions, the Notes at inception (February 23,
          2004)
          and September 30, 2004 was adjusted as follows:


February
                  23, 2004
              
              September
                  30, 2004Notional
                  balance
              
              $
              3,000,000
              
              $
              3,629,002Adjustments:Discount for compound embedded derivatives
              
              
              (998,425
              )
              
              (590,737
              )Discount for Laurus warrants
              
              
              (653,807
              )
              
              (580,491
              )Discount for loan costs paid to Laurus
              
              
              (219,500
              )
              
              (194,886
              )Balance, net of unamortized discount
              
              
              1,128,268
              
              
              2,262,888Less current portion (revolver)
              
              
              --
              
              
              (1,629,002
              )Balance,
                  net of current portion and unamortized discount
              
              $
              1,128,268
              
              $
              633,886





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.





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.





15




Note
      7.
      Common Stock





During
      the three months ended September 30, 2004, the Company issued 338,558 shares
      of
      common stock for services valued at $349,000 using the stock price on the date
      issued.





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 a 61,500 class A Warrants and 61,500 Class B Warrants to vSource as
      a
      finders fee.





All
      of
      the warrants 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 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 Unaudited Financial
        Statements as of September 30, 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 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 as of September
        30, 2004, by $6,089,693, increased common stock warrant liability as of
        September 30, 2004 by $1,980,886. The decrease in fair value of the warrant
        liability was $2,153,394 and $4,108,807 for the three and nine months ended
        September 30, 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: and 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 Treasury bonds at constant (or fixed) maturity; and volatility of 102%.
        Under
        these 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 September 30, 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 $1.04 per share; a risk free rate
        of
        3.5%; an expected life equal to the remaining contractual term of the warrants;
        no dividends; and volatility of 117%. The resulting aggregate allocated value
        of
        the warrants as of September 30, 2004 equaled $1,980,886. The change in fair
        value of $4,108,807 is primarily due to the fair value of the underlying
        common
        stock from $2.02 per share to $1.04 per share from January 12 to September
        30,
        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 120th 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 of September 30, 2004, the
      Company has incurred fees totaling $370,931.





16




Note
      8.
      Common Stock Warrants





In
      connection with the equity (Note 7) and debt (Note 6) fundings, the Company
      issued warrants to acquire common stock at various prices. The following table
      summarizes the warrants outstanding as of September 30, 2004:





Exercise
                Price
            
            Financing
              Date
            
            Outstanding
              Warrants
            
            Expiration
                Date0.70
            
            
            December
                2003
            
            
            26,166
            
            
            December
                20051.55
            
            
            January
                2004
            
            
            1,199,155
            
            
            March
                20051.89
            
            
            January
                2004
            
            
            1,296,388
            
            
            January
                20092.50
            
            
            February
                2004
            
            
            676,500
            
            
            February
                20063.00
            
            
            February
                2004
            
            
            676,500
            
            
            February
                20091.90*
            
            
            October
                2004
            
            
            150,000
            
            
            October
                20113.50*
            
            
            February
                2004
            
            
            200,000
            
            
            February
                20113.19*
            
            
            February
                2004
            
            
            50,000
            
            
            February
                20113.22*
            
            
            February
                2004
            
            
            40,000
            
            
            February
                2011Total
            
            
            
            
            
            4,314,709





All
      warrants are exercisable at September 30, 2004. The Company has not filed and
      is
      not required to file a registration statement for the warrants issued for its
      December 2003 financing.





*  Warrants
      issued to Laurus Master Fund Ltd. of which require the Company to file a
      registration statement on November 5, 2004.




Note
        9.  Net Income (Loss) Per Share




Basic
          and
          diluted net income (loss) per share is presented in accordance with SFAS
          No.128 *Earnings
          Per Share* .
          Basic
          net income (loss) per share has been computed using the weighted-average
          number
          of shares of common stock outstanding during the period. Diluted net income
          (loss) per share has been computed using the weighted-average number of
          shares
          of common stock and dilutive potential common shares from options and warrants
          (under the treasury stock method) and convertible notes (on an as-if-converted
          basis) outstanding during the period. For the three and nine months ended
          September 30, 2004, shares of 6,900,130 resulting from the assumed exercise
          of
          outstanding options and warrants were excluded from the computation of
          earnings
          per common share, because the inclusion thereof would be anti-dilutive.
          The
          corresponding three and six months ended September 30, 2003 have been excluded
          as the Company incurred a net loss in those periods, and therefore potential
          dilutive effects would be anti-dilutive.
  
 The
          following
          table presents the calculation of basic and diluted net income (loss) per
          share
          for the three and six months ended September 30, 2004:




Three
                    Months Ended
                
                
                Nine
                    Months EndedSeptember
                    30, 2004
                
                
                September
                    30, 2004Numerator:Net
                  income (loss)
                
                $
                238,538
                
                $
                (348,568
                )Adjustments:Interest
                  expense, including
                  amortization of debt discout and debt issuance costs
                
                
                136,199
                
                
                756,763Change
                  in fair value of derivatives
                  embedded within convertible debt
                
                
                (111,832
                )
                
                (969,099
                )$
                262,905
                
                $
                (560,904
                )Denominator
                  for basic net income per share:Weighted
                  average shares outstanding -
                  basic
                
                
                20,608,067
                
                
                20,013,588Effect
                  of dilutive securities:Stock
                  options
                
                
                551,589
                
                
                --Convertible
                  note
                
                
                1,030,928
                
                
                801,833Weighted
                  average shares outstanding - diluted
                
                
                22,190,584
                
                
                20,815,421Basic
                  net income (loss) per share
                
                $
                0.01
                
                $
                (0.02
                )Diluted
                  net income (loss) per share
                
                $
                0.01
                
                $
                (0.03
                )





Note
      10.
      Significant Concentration





One
      customer accounted for approximately 21% of sales for the nine months ended
      September 30, 2004. No other customers represented more than 10% of sales of
      the
      Company for that period. The Company had one customer which had in excess of
      10%
      of the Company’s accounts receivable balance at September 30, 2004. This
      customer had 13% of the Company’s accounts receivable balance.





Note
      11.
      Restricted Cash





In
      conjunction with the Company’s credit facility with Textron Financial
      Corporation (“Textron”), the Company was required to deposit $500,000 in a
      restrictive cash account and issue Textron a $500,000 letter of
      credit.





17




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 September 30, 2004, the Company's three business
      units, NetView (network and storage solutions), NewBridge (communications
      deployment) and eLinear (consulting services), have separate management teams
      and infrastructures that offer different products and services.





FOR
      THE
      THREE MONTHS ENDED SEPTEMBER 30, 2004


(Restated)





Dollars
                  $
              
              Consulting
                  Services
              
              Network
                  and Storage Solutions
              
              Communications
                  Deployment
              
              ConsolidatedRevenue
              
              
              41,825
              
              
              6,685,880
              
              
              726,583
              
              
              7,454,288Segment
                  income(loss)
              
              
              1,119,096
              
              
              (322,970
              )
              
              (557,588
              )
              
              238,538Total
                  assets
              
              
              3,115,915
              
              
              5,752,326
              
              
              919,846
              
              
              9,788,087Capital
                  expenditures
              
              
              196,386
              
              
              105,953
              
              
              10,169
              
              
              312,508Depreciation
              
              
              18,530
              
              
              20,548
              
              
              1,409
              
              
              40,487





FOR
      THE
      NINE MONTHS ENDED SEPTEMBER 30, 2004


(Restated)




Dollars
                  $
              
              Consulting
                  Services
              
              Network
                  and Storage Solutions
              
              Communications
                  Deployment
              
              ConsolidatedRevenue
              
              
              88,990
              
              
              15,416,359
              
              
              1,455,026
              
              
              16,960,375Segment
                  loss
              
              
              (1,109,369
              )
              
              (770,000
              )
              
              (687,937
              )
              
              (348,568
              )Total
                  assets
              
              
              3,115,915
              
              
              5,752,326
              
              
              919,846
              
              
              9,788,087Capital
                  expenditures
              
              
              348,605
              
              
              263,411
              
              
              11,286
              
              
              623,302Depreciation
              
              
              29,927
              
              
              38,017
              
              
              3,227
              
              
              71,171




FOR
      THE
      THREE MONTHS ENDED SEPTEMBER 30, 2003


(Restated)




Dollars
                $
            
            Consulting
                Services
            
            Network
                and Storage Solutions
            
            Communications
                Deployment
            
            ConsolidatedRevenue
            
            
            216,003
            
            
            3,658,006
            
            
            88,444
            
            
            3,962,453Segment
                loss
            
            
            (97,642
            )
            
            (133,354
            )
            
            (2,366
            )
            
            (233,362
            )Total
                assets
            
            
            114,939
            
            
            2,016,309
            
            
            1,744,950
            
            
            3,876,198Capital
                expenditures
            
            
            --
            
            
            2,500
            
            
            --
            
            
            2,500Depreciation
            
            
            1,258
            
            
            4,098
            
            
            814
            
            
            6,170




FOR
      THE
      NINE MONTHS ENDED SEPTEMBER 30, 2003


(Restated)




Dollars
                $
            
            Consulting
                Services
            
            Network
                and Storage Solutions
            
            Communications
                Deployment
            
            ConsolidatedRevenue
            
            
            513,944
            
            
            9,979,195
            
            
            88,444
            
            
            10,581,583Segment
                loss
            
            
            (254,164
            )
            
            (736
            )
            
            (2,366
            )
            
            (257,266
            )Total
                assets
            
            
            114,939
            
            
            2,016,309
            
            
            1,744,950
            
            
            3,876,198Capital
                expenditures
            
            
            --
            
            
            10,969
            
            
            --
            
            
            8,469Depreciation
            
            
            2,515
            
            
            11,381
            
            
            814
            
            
            14,710





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.
      Subsequent Event





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 (“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 service 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) either independently or 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.


Item
      2.MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS ANDFINANCIAL
      CONDITION





*The
      following discussion and analysis of the Company's financial condition as of
      September 30, 2004, and its results of operations for the nine month periods
      ended September 30, 2004 and 2003, should be read in conjunction with the
      audited consolidated financial statements and notes included in eLinear's Form
      10-KSB/A (Fourth Amendment) filed with the Securities and Exchange
      Commission.*





**OVERVIEW**





The
      Company's business currently consists of three operating segments:





·
            Product
                fulfillment and network and storage solutions. Through its wholly
                owned
                subsidiary, NetView Technologies, Inc.("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 its wholly owned subsidiary, NewBridge Technologies,
                Inc. ("NewBridge"), the Company provides: (a) structured cabling,
                which is
                a set of cabling and connectivity products that integrate the voice,
                data,
                video and various management systems of a structure,(b)cabling
                infrastructure design and implementation, which is the design and
                implementation of the structured cabling systems,(c)security installation
                and monitoring, and (d) digital services of voice, data and video
                over
                fiber optic networks to residential and commercial
                customers.





·
            Consulting
                services. The Company offers: (a) consulting services,(b)creative
                web site
                design,(c)web site content management software, and (d) technical
                project
                management and development
                services.





The
      Company has operated as a technology consulting business since December 1999.
      It
      acquired its Internet consulting business as a result of a reverse merger with
      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 six months ended June 30, 2004, the consulting segment
      contributed less than 1% of the Company’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,
      it
      changed its name to eLinear, Inc.





The
      Company completed the acquisitions of NetView and NewBridge during the last
      fiscal year. In April 2003, eLinear 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 its 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. In March 2004, the Company recorded impairment expense
      totaling $451,920 related to 100% of the goodwill related to the 2003 eLinear
      acquisition. In March 2004, the consulting services reporting unit lost its
      largest consulting contract and the other operations that had been acquired
      in
      the eLinear purchase had declined due to the loss of key employees after the
      acquisition. During the three months ended June 30, 2004, the Company recognized
      only $220 of revenue from the consulting services business segment. Based on
      projected estimated future cash flows from the reporting unit purchased in
      2003,
      management determined a full impairment charge was required. NetView contributed
      92% of eLinear’s revenue for the nine months ended September 30,
      2004.





In
      July
      2003, eLinear completed the acquisition of all the outstanding shares of
      NewBridge. Pursuant to the transaction, eLinear issued 850,000 shares of common
      stock valued at $1,062,500, using the average of the bid and asked prices on
      July 31, 2003, and options to purchase 300,000 shares of common stock valued
      at
      $274,000, using Black-Scholes, 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 September 2004, the Company recorded impairment
      expense totaling $391,114 related to a portion of the goodwill related to the
      NewBridge acquisition. 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. NewBridge
      contributed 9% of eLinear's revenue for nine months ended September 30,
      2004.





The
      financial information for the nine months ended September 30, 2003 is
      information derived from the consolidated financial statements of NetView for
      the nine months ended September 20, 2003, eLinear for the six months ended
      September 30, 2003 , and NewBridge for the three months ended September 30,
      2003.




The
      Company's
      strategy is to expand its operations along the above three reporting segments
      through internal growth and through acquisitions. Whereas the Company has added
      two distinct reporting segments through the above listed acquisitions, it
      intends to expand its operations from all three reporting segments through
      the
      addition of personnel to increase sales. The changes in its business strategy
      have not affected its relationship with any of its customers. eLinear intends
      to
      utilize the proceeds from its recent offerings discussed below, as well as
      through additional offerings, to finance its internal growth and for any
      acquisitions. The Company does not have any commitments to raise additional
      funds, and it may be unable to do so in the future. If it does raise additional
      funds, it may do so at below market prices, which would cause dilution to its
      shareholders.





19




**RECENT
      DEVELOPMENTS**





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 (“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 service 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) either independently or 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





In
      January 2004, the Company completed a private offering in which it raised gross
      proceeds of $2,533,850. In February 2004, the Company completed a private
      offering in which it raised gross proceeds of $2,460,000. Both of these
      agreements included warrants, which if exercised would bring in an additional
      $8,029,621. In each of these offerings the Company issued its common stock
      at
      prices below the then market price.





The
      Company has filed a registration statement with the Securities and Exchange
      Commission which is registering the resale of 3,194,225 shares of the Company’s
      common stock and 3,944,737 shares of the Company’s common stock underlying the
      warrants pursuant to the above listed financings. The registration statement
      was
      declared effective on September 10, 2004.





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 revolving
      note totaling $2,000,000 and a revolving credit facility totaling $3,000,000
      based on eligible accounts receivable. See Note 3 to the unaudited financial
      statements included herein.





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. 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 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 $3.32 per share. Laurus is limited to owing 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 nor. The
      Company is not obligated at any time to repurchase any portion of the Laurus
      conversion shares nor the shares underlying the warrants. The Company filed
      a
      registration statement to register the aforementioned shares and shares
      underlying the warrants with the SEC on November 5, 2004





**CRITICAL
      ACCOUNTING POLICIES**





General





The
      consolidated financial statements and notes included in this Form10-QSB/A (First
      Amendment) 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 the Company to make estimates and assumptions that affect the reported
      amounts of its assets and liabilities, and affect the disclosure of any
      contingent assets and liabilities. The Company 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.
      The significant accounting policies are described in its financial statements
      and notes included in its Form 10-KSB/A (Fourth Amendment) filed with the
      Securities and Exchange Commission.





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 underlying 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 future delivery of products or services or subject
      to
      customer-specified return of 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.





Goodwill





As
      of
      September 30, 2004, the Company had $1,100,000 of goodwill resulting from the
      acquisition of NewBridge Technologies, Inc. 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. Due to the newness
      of the NewBridge acquisition, the Company has not performed an impairment
      assessment of the NewBridge acquisition. Due to the large amount of goodwill
      presently included in its financial reports, if impairment is required, its
      financial condition and results would be negatively affected.





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." These rules 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 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 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 financial position. The Company recorded
      $3,246 of stock-based compensation expense for employee stock options which
      was
      reflected in the net loss for the nine-month period ended September 30,
      2004.





20


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 its 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 its 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 its consolidated results of operations or financial position. As
      of
      September 30, 2004, the Company maintained an allowance for doubtful accounts
      of
      $137,288, which allowance was 2% of total accounts receivable as of that
      date.





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 credit facilities in the quarterly
        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
        quarterly 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 credit facilities
        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 7 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 September 30, 2004 were not
        designated.





**RESULTS
      OF OPERATIONS AND FINANCIAL CONDITION**




eLinear's
      primary business focus is on solving well-defined customer problems or providing
      a need-proven service. The Company 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 three
      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 and NewBridge, eLinear 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 information technology outsourcing
      and consulting industry in which the Company operates has declined drastically
      with substantial overall reductions in information technology investments.
      This
      has resulted in a dramatic reduction in spending for information technology
      services overall, and a significant decrease in the amount of services the
      Company is able to sell. In order to reduce costs the Company closed its offices
      in Denver during 2002 and has concentrated its marketing efforts in the Houston
      market. However, due to the failure of Enron Corp. and weakening financial
      conditions of companies such as Dynegy Energy and Reliant Resources, the Houston
      market for information technology services in 2003 and 2004 has been hit
      particularly hard.





In
      order
      to diversify its business plan, eLinear began seeking merger candidates. It
      selected NetView due to its list of customers and management with the view
      toward cross-selling its consulting services with its network and storage
      solutions customers. The Company's 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. In addition to consulting services the Company
      previously provided, eLinear 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. eLinear intends
      to expand its business in all three segments of which it operates.





*Revenue* Total
      revenue for the nine months ended September 30, 2004 was $16,960,375 which
      was
      an increase of 60% over the prior year period of $10,581,583. Revenue from
      the
      consulting services business segment for the nine months ended September 30,
      2004 was $88,990 which was less than 1% of total revenue. The consulting
      services business segment has seen a significant decline in customer utilization
      during 2004 and 2003. Due to the significant reduction in customers in
      consulting services business segment, the Company significantly reduced its
      number of full-time employees and contract personnel during the 2004 period
      in
      order to reduce costs and conserve its limited resources. In addition, the
      former CEO and primary consultant of the Company resigned in May 2003 and the
      Company lost its primary consulting customer in March 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 and,
      if successful, add additional personnel to increase its 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 the nine
      months ended September 30, 2004 was $15,416,359, which was an increase of
      $5,437,164 or 54% over the prior year period. The network and storage solutions
      business segment contributed 91% of total revenue for the current nine month
      period. 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 has 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 products sold and was not affected
      by an
      increase in pricing. The Company intends to focus on adding additional customers
      and personnel to service these customers. Revenue from the communications
      deployment business segment for the nine months ended September 30, 2004 was
      $1,455,026 which was 9% of total revenue. As the acquisition of NewBridge did
      not occur until July 31, 2003, there was only $88,444 of revenue from the
      communications deployment segment recognized in the 2003 period.





Of
      the
      revenue generated for the three and nine months period ended September 30,
      2004,
      one customer provided in excess of 10% of the Company's revenue with The
      Methodist Hospital contributing 21% of the revenue. No other customer provided
      more than 10% of the Company’s revenue for the 2004 period. If the Company were
      to lose any of these customers, its financial results may be negatively
      affected.





*Cost
      of sales* .
      Total
      cost of sales for the and nine months ended September 30, 2004 was $14,647,673
      an increase of $5,843,473 or 66%, over the prior year period of $8,804,200.
      The
      Company hired a consulting manager to replace its former CEO and added several
      consulting engineers during the quarter ended March 31, 2004 to begin growing
      its business through selling these services to its existing client base.
      Additionally for the network and storage solutions business segment, the cost
      of
      hardware and software as a percent of revenue increased from 84% fro the 2003
      period to 90% for the 2004 period which 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 it
      vendors, resulting in a decrease in its gross margin. This customer became
      a
      customer of the Company during the three months ended June 30, 2003. The Company
      does not anticipate the favorable pricing it has granted this customer will
      change in the future.





For
      the
      network and storage solutions business segment, cost of sales is comprised
      of
      the costs associated with acquiring hardware and software to fill customer
      orders. For the consulting services business segment, cost of sales consists
      of
      full-time personnel and contract employee costs associated with projects eLinear
      provides to its customers for a fee. For the communications deployment business
      segment, cost of sales consists of materials and personnel to build the customer
      infrastructure. The increase in cost of sales was due to the cost of procuring
      hardware and software to fill an expanded number of customer orders. The
      Company’s principal suppliers of hardware and software products are Hewlett
      Packard and Cisco Systems. The Company anticipates they will continue to be
      its
      principal suppliers in the future. Total hardware and software costs amounted
      to
      $13,602,289 for the nine months ended September 30, 2004. The Company
      anticipates that cost of sales will increase as revenues increases.





*Gross
      profit.* Total
      gross profit increased from $1,177,383 for the nine months ended September
      30,
      2003, to $2,312,702 for the nine month ended September 30, 2004. Total gross
      profit as a percentage of revenue decreased from 16.8% for the nine months
      and
      ended September 30, 2004 to 13.6% for the current year period. As previously
      described, the Company has hired additional personnel in its consulting services
      business segment in order to market those services to its existing customer
      base
      and granted favorable pricing to a major customer which resulted in the decrease
      in gross profit as a percent of revenue. The Company had not experienced any
      significant increase in revenue associated with the increased staffing costs
      during the nine months ended September 30, 2004, but anticipates its revenue
      and
      profit margin will improve in the future from this business segment.


21





*Operating
      expenses.* Total
      operating expenses for the nine month ended September 30, 2004 were $7,422,984,
      an increase of $5,365,462 or 261% over the prior year period of $2,057,522.
      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 September 30, 2003, the Company employed 18
      which
      had increased to 70 as of September 30, 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 $1,884,366 which costs are composed of payroll, payroll taxes and
      health insurance.





•  Office
      administration expenses increased from $144,063 for the 2003 period to
      $1,322,672 for the nine months ended September 30, 2004. The components of
      office administration are office rent expense, office expenses, staff
      development and dues and subscriptions. The Company incurred start-up costs
      when
      opening its sales office in Dallas, Austin and Oklahoma City and relocated
      its
      corporate headquarters in Houston, Texas. The Company does not anticipate these
      cost will be incurred in the future.





•  Professional
      services, which is comprised of legal, accounting and consulting fees, increased
      from $359,321 for the previous year period to $666,357 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.


.


•  In
      March
      2004 the consulting services reporting unit lost its largest consulting contract
      and the other operations that had been acquired in the eLinear purchase had
      declined due to the loss of key employees 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 $391,114 related to a portion
      of the goodwill related to the NewBridge Technologies, Inc. acquisition in
      July
      2003. The Company performed a valuation analysis of the discounted projected
      estimated future cash flow 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 $402,222 for prior year period to $1,498,173 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 “eLINEAR” name brand for future
      business. This program consists of investor conferences, electronic media
      distribution, newspaper coverage, third party representation through
      introduction to institutional entries and radio coverage. The program was
      designed by in-house eLinear employees. The cost of this program during the
      nine
      months ended September 30, 2004 approximated $927,000. The Company has incurred
      penalties in association with Laurus Master Fund 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
      was
      the Company’s listing fee to the American Stock Exchange.





*Interest
        Expense* .
        Interest expense for the nine months ended September 30, 2004 increased to
        $756,763 from $25,603 for the prior year period. Of this amount $505,618
        was
        attributable to amortization of debt discounts associated with the Laurus
        credit
        facility and the balance was attributable to the interest charges associated
        the
        Laurus credit facility.





*Change
        in fair value of derivative.* Derivative
        liabilities in connection with the Laurus credit facility and common stock
        warrants resulted in income of $5,492,874 for the nine months ended September
        30, 2004.





*Net
        Loss* .
        The net
        loss for the nine month ended September 30, 2004,was $348,568 or $0.02 per
        share
        basic and diluted, compared to net loss of $257,266 or $0.02 per share basic
        and
        diluted, for the previous year period.





**LIQUIDITY
      AND CAPITAL RESOURCES**





Changes
        in cash flow. Net cash used in operating activities for the nine months ended
        September 30, 2004, was $6,515,813 compared to net cash provided in operating
        activities of $36,864 for the prior year period. This was an increase of
        $6,552,677 over the prior year period. The primary components of net cash
        used
        in operating in activities for fiscal 2004 were a net loss of $348,568 increases
        in accounts receivable resulting from increased sales when compared to the
        prior
        fiscal period and increased purchases of inventory associated with the increase
        in sales. The cash used in operating activities also included non-cash charges
        totaling $3,054,878 an increase in accrued liabilities and accrued penalties
        of
        $794,787 which was comprised of accrued fees due to Laurus and investors
        in the
        January and February 2004 fundings and accrued payroll. Cash used in investing
        activities increased to $1,649,104 for the current fiscal period. The Company
        utilized a portion of the cash received from its sales of common stock to
        purchase a certificate of deposit in the amount of $500,000 and to place
        $500,000 in a restrictive account. The Company purchased computer hardware,
        office equipment and furniture during the current period for its new office
        and
        employees totaling $623,302. The Company does not believe it will incur
        significant purchases in the future. Cash provided by financing activities
        increased from a use of $55,134 for the prior year fiscal period to $8,039,752
        for the current fiscal period. This increase was attributable to sales of
        common
        stock of $4,586,103, net proceeds from the Laurus financing agreement of
        $3,323,758 and the exercise of stock options of $345,594. 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, 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 $4,586,103. During the nine months ended September 30, 2004, the
      Company received $345,594 through the exercise of stock options. 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, and entered into a new $500,000 credit facility secured by $500,000
      letter of credit to Textron and entered into a new credit facility with Laurus
      Master Fund discussed below.





*Liquidity.* As of
      September 30, 2004, the Company had cash balances in non-restricted accounts
      of
      $924,024 and positive working capital of $3,382,245. In January 2004, the
      Company completed a private offering and raised gross proceeds of $2,533,850.
      In
      February 2004, the Company completed a private offering and raised gross
      proceeds of $2,460,000. Both of these agreements include warrants, which, if
      exercised, would raise an additional $8,029,621.





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 revolving
      note totaling $2,000,000 and a revolving credit facility totaling $3,000,000
      based on eligible accounts receivable. At September 30, 2004, the Company had
      drawn down $2,000,000 under the term note and $1,629,002 under the
      revolver.





The
      Company believes it has sufficient capital to implement its business plan and
      to
      seek out acquisitions in order to more quickly grow its business. The Company
      believes it will begin to generate positive cash flow from operations during
      fiscal 2005 and believes that sufficient cash flow from operations will be
      available during the next twelve months to satisfy its short-term obligations.
      If expenses are in excess of its estimates or if revenues decline, 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.





22


**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
      3. Controls and Procedures





In
      accordance with the Securities Exchange Act of 1934 (Exchange Act”) the Company
      carried out an evaluation, under supervision and with the participation of
      management, including its Chief Financial 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
      September 30, 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.





As
        explained in Note 2 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 unaudited
        consolidated financial statements as of and for the three months ended September
        30, 2004, to reflect a reclassification from equity to liabilities of the
        warrants and compounded embedded derivatives that the Company issued in February
        2004, and to reflect the related change in fair value of the derivatives,
        as
        described further in notes 2., 6., and 7. 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 September 30, 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.





**PART
      II OTHER INFORMATION**


Item
      1. 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 our 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
      March
      27, 2003, the Company filed a motion to dismiss for failure to prosecute, since
      the plaintiff has failed to file any "record activity" in the case for a period
      of more than one year. On June 13, 2003, the motion to dismiss was denied and
      the case is moving forward. The Company intends to vigorously contest all claims
      in this case which is currently in the discovery phase.





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. As of June 30, 2004, the Company has
      not
      requested a specific damage amount. Discovery in this case is at the beginning
      stages. Ipath, a direct competitor of the Company and the current employer
      of
      defendant Ludwig, was added as an additional defendant. The Company has claimed
      against Ipath for its complicity with Ludwig in the latter's breach of fiduciary
      duty.





Item
      2. Changes in Securities and Use of
      Proceeds.





RECENT
      SALES OF UNREGISTERED SECURITIES





All
      of
      the following 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 offer for
      sale
      in connection with any distribution thereof and appropriate legends were affixed
      to the share certificates and other instruments issued in such
      transactions.





During
      September 2004, the Company issued 179,558 shares to two companies for
      consulting services valued at $190,000.





During
      the quarter ended September 30, 2004, the Company did not make any repurchases
      of its common stock.





Item
      3. Defaults Upon Senior Securities - None





Item
      4. Submission of Matters to a Vote of Security Holders -
      None





On
      October 12, 2004, with a written consent to action without a meeting of the
      majority of the shareholders of eLinear, Inc., the following resolutions were
      deemed to be adopted to the same extent and to have the same force and effect
      as
      if adopted by a formal meeting of shareholders of the Company duly called and
      held for the purpose of adopting and acting upon such resolutions.





RESOLVED,
      that the Majority Shareholders hereby elect Kevan M. Casey, Tommy Allen, J.
      Leonard Ivins, Carl A. Chase and Ryan Cravey as directors to serve until their
      successors are elected, appointed and duly qualified; and that the Majority
      Shareholders direct the officers to implement this resolution.





RESOLVED,
      that the Majority Shareholders hereby adopt the 2004 Stock Option Plan and
      accept the recommendation of the audit committee to appoint and retain Lopez,
      Blevins, Bork & Associates LLP as the Company’s independent auditors for its
      current fiscal year; and that the Majority Shareholders direct the officers
      to
      implement this resolution.





Item
      5. Other Information - None





Item
      6. Exhibits and Reports on Form 8-K





(a)
      Exhibits. The following exhibits of the Company are included
      herein.





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)


10.1  Employment
      Agreement with Kevan M. Casey (incorporated by reference to Exhibit 10.2 to
      Registrant's Annual Report on Form 10-KSB, dated April 15, 2003)


10.2  Employment
      Agreement with Tommy Allen (incorporated by reference to Exhibit 10.3 to
      Registrant’s Annual Report on Form 10-KSB, dated April 15, 2003)


10.3  2000
      Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registrant's
      Definitive Proxy Statement on Schedule 14A, dated June 30, 2000)


10.4  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)


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


10.6  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)


10.7 Agreement
      between eLinear, Inc. and J. Leonard Ivins dated April 15, 2003 (incorporated
      by
      reference to Exhibit 10.10 to Registrant’s Annual Report on Form 10-KSB, dated
      April 15, 2003)


10..8  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)


10.9  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)


10.10  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)


10.11  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)


10.12  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)


10.13  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)


10.14  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)


10.15  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)


10.16  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)


10.17 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)


10.18 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)


10.19
            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)


10.20
            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)


10.21
            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)


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
            Subsidiaries
                of Registrant (incorporated by reference to Exhibit 21.1 to Registrant’s
                Form 10-QSB filed with the Commission on December 19,
                2003)


31.1Certification
      of Michael Lewis


31.2Certification
      of Phillip Michael Hardy


32.1Certification
      for Sarbanes-Oxley Act of Michael Lewis


32.2Certification
      for Sarbanes-Oxley Act of Phillip Michael Hardy








(b)
      Reports on Form 8-K.





Registrant
      filed a report on form 8-K on February 26, 2004, disclosing events pursuant
      to
      Item 5 (Other Events). Included within the report were a Securities Purchase
      Agreement and exhibits for the sale of 1,964,225 shares of eLinear’s common
      stock for an aggregate purchase price of $2,533,850, including warrants to
      purchase additional common stock.





As
      part
      of Exhibit 99.1 to such report, the Company announced a $2.5 million private
      placement.











Signatures





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereto duly
      authorized.




**eLINEAR,
              INC.**Date: April
              3, 2006
            By:
            /s/ Michael
              LewisMichael LewisChief
              Executive Officer




**eLinear,
              Inc.**Date: April
              3, 2006
            By:
            /s/ Phillip
              Michael HardyPhillip Michael HardyPrincipal
              Financial and Accounting Officer