UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
[ ]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.
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(Exact name of small business issuer as specified in its charter)
Delaware 76-0478045
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7240 Brittmoore, Suite 118, Houston, Texas 77041
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(Address of principal executive offices)
(713) 896-0500
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(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 August 12, 2003, there were outstanding 14,870,490 shares of common
stock, $.02 par value per share.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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ELINEAR, INC.
INDEX TO FORM 10-QSB
JUNE 30, 2003
Page No.
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
June 30, 2003 (unaudited) and December 31, 2002 pro forma
unaudited
Condensed Consolidated Statements of Operations (unaudited) 4
Three Months and Six Months Ended June 30, 2003 and 2002
Condensed Consolidated Statement of Changes in Shareholders' 5
Equity (Deficit) Six Months Ended June 30, 2003 (unaudited) and
Year Ended December 31, 2002 pro forma unaudited
Condensed Consolidated Statements of Cash Flows (unaudited) 6
Six Months Ended June 30, 2003 and 2002
Notes to Unaudited Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Results of 12
Operations and Financial Condition
Item 3. Controls and Procedures 16
PART II OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
2
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ELINEAR, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2003 2002
---------------------------
ASSETS (Unaudited) (See Note 1)
(Unaudited)
Current assets:
Cash $ 223,044 $ 140,834
Accounts receivable, net of allowance of $59,200 at June 30, 2003
and December 31, 2002 1,569,034 1,653,441
Note receivable 51,500 --
Stock subscription receivable 135,300 --
Inventory 66,195 16,947
Unbilled services 13,055 13,748
Other current assets 26,623 22,082
---------------------------
Total current assets 2,084,751 1,847,052
---------------------------
Property and equipment 87,177 81,261
Less accumulated depreciation (47,655) (35,145)
---------------------------
Net property and equipment 39,522 46,116
Other assets 13,429 10,180
---------------------------
Total assets $ 2,137,702 $1,903,348
===========================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable, trade $ 1,427,699 $1,495,034
Accrued liabilities 99,632 195,684
Accrued liabilities due to officers -- 64,000
Deferred revenue 5,000 10,000
---------------------------
Total current liabilities 1,532,331 1,764,718
---------------------------
Long-term debt due to officers 369,479 239,900
---------------------------
Commitments and contingencies (Note 5)
Shareholders' equity (deficit):
Preferred stock, $.02 par value, 10,000,000 shares authorized,
none issued -- --
Common stock, $.02 par value, 100,000,000 shares authorized,
14,040,010 shares issued and outstanding at June 30, 2003
and 14,030,260 at December 31, 2002 280,801 280,606
Additional paid-in capital 213,443 --
Accumulated deficit (258,352) (381,876)
---------------------------
Total shareholders' equity (deficit) 235,892 (101,270)
---------------------------
Total liabilities and shareholders' equity (deficit) $ 2,137,702 $1,903,348
===========================
See accompanying notes to unaudited condensed consolidated financial statements.
3
ELINEAR, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-----------------------------------------------------
2003 2002 2003 2002
-----------------------------------------------------
(See Note 1) (See Note 1)
Revenue $ 3,464,114 $ 1,802,564 $6,833,711 $2,706,842
Cost of sales 2,874,382 1,498,456 5,574,756 2,367,069
-----------------------------------------------------
Gross profit 589,732 304,108 1,258,955 339,773
-----------------------------------------------------
Operating expenses:
Selling, general and administrative expenses:
Payroll and related expenses 291,743 138,480 575,915 263,862
Office administration 71,284 45,846 139,471 110,615
Professional services 157,261 120,113 326,887 185,882
Other 48,164 14,701 76,343 83,852
-----------------------------------------------------
Total selling, general and administrative 568,452 319,140 1,118,616 644,211
Depreciation 5,146 10,636 10,628 15,033
-----------------------------------------------------
Total operating expenses 573,598 329,776 1,129,244 659,244
-----------------------------------------------------
Income (loss) from operations 16,134 (25,668) 129,711 (319,471)
Other income (expense):
Interest, net (5,419) (3,576) (9,813) (5,412)
Other 3,626 (16,745) 3,626 (26,706)
-----------------------------------------------------
Income (loss) before income taxes 14,341 (45,989) 123,524 (351,589)
Pro forma income tax expense 5,000 -- 42,000 --
-----------------------------------------------------
Pro forma net income (loss) $ 9,341 $ (45,989) $ 81,524 $ (351,589)
=====================================================
Pro forma net income (loss) per share:
Basic $ 0.00 ($0.00) $ 0.01 ($0.03)
=====================================================
Diluted $ 0.00 ($0.00) $ 0.01 ($0.03)
=====================================================
Weighted average number of common shares outstanding:
Basic 14,030,260 13,904,757 14,030,260 13,904,757
=====================================================
Diluted 14,030,260 13,904,757 14,030,260 13,904,757
=====================================================
See accompanying notes to unaudited consolidated financial statements.
4
ELINEAR, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(DEFICIT)
FOR THE YEAR ENDED DECEMBER 31, 2002 AND SIX MONTHS ENDED JUNE 30, 2003
Common Stock Additional Total
----------------------
Paid-in Accumulated Shareholders'
Shares Amount Capital Deficit Equity (Deficit)
-------------------------------------------------------------------
Balances January 1, 2002, 905,000 $ 18,100 $ 1,205,509 $(909,781) $ 313,828
as previously reported
Exercise of stock options 29,500 590 42,870 -- 43,460
Stock issued for cash, net of costs 33,000 660 59,045 -- 59,705
Stock issued for compensation 95,781 1,916 24,880 -- 26,796
Re-issuance of common stock 5,000 100 (100) -- --
Stock issued in reorganization 12,961,979 259,240 (1,332,204) 759,233 (313,731)
Net loss -- -- -- (231,328) (231,328)
-------------------------------------------------------------------
Balances, December 31, 2002, restated 14,030,260 280,606 -- (381,876) (101,270)
Issuance of options for forgiveness of debt -- -- 13,188 -- 13,188
Stock issued for cancellation of warrants 134,750 2,695 51,205 -- 53,900
Exercise of stock options 150,000 3,000 132,300 -- 135,300
Stock cancelled (300,000) (6,000) 6,000 -- --
Stock issued for services 25,000 500 10,750 -- 11,250
Net income for period -- -- -- 123,524 123,524
-------------------------------------------------------------------
Balances, June 30, 2003 (unaudited) 14,040,010 $280,801 $ 213,443 $(258,352) $ 235,892
===================================================================
See accompanying notes to unaudited condensed consolidated financial statements.
5
eLINEAR, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
2003 2002
----------------------
(See Note 1)
Cash flows used by operating activities:
Net income (loss) $ 123,524 $(351,589)
Adjustments to reconcile net income (loss) to cash
used by operating activities:
Depreciation 12,510 15,033
Stock issued for compensation 65,150 8,000
Loss on disposal of property and equipment -- 10,059
Loss on adjustment of assets held for sale to
net realizable value -- 16,749
Changes in assets and liabilities:
Accounts receivable 84,407 (377,181)
Stock subscription receivable (135,300) --
Note receivable (51,500) --
Inventory (49,249) (6,375)
Unbilled services 692 (1,887)
Other current assets (4,541) 5,037
Accounts payable (67,335) 317,364
Accrued liabilities (82,862) 65,238
Accrued liabilities due to officers (64,000) --
Deferred revenue (5,000) (14,562)
----------------------
Net cash used by operating activities (173,504) (314,114)
----------------------
Cash flows from investing activities:
Purchase of property and equipment (5,916) (44,154)
Deposits (3,249) (4,142)
----------------------
Net cash used by investing activities (9,165) (48,296)
----------------------
Cash flows from financing activities:
Proceeds from notes payable due to officers 159,538 200,700
Repayment of notes payable due to officers (29,959) (7,200)
Exercise of stock options 135,300 47,150
Stock issued for cash -- 73,590
Cancel stock subscription -- (7,800)
----------------------
Net cash provided by financing activities 264,879 306,440
----------------------
Net increase (decrease) in cash 82,210 (55,970)
Cash and cash equivalents, beginning of period 140,834 111,545
----------------------
Cash and cash equivalents, end of period $ 223,044 $ 55,575
======================
Non-cash transactions:
Issuance of options for forgiveness of debt $ 13,188 $ --
======================
See accompanying notes to unaudited condensed consolidated financial statements.
6
ELINEAR, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
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
June 30, 2003, and the results of operations and cash flows for the period ended
June 30, 2003 and 2002.
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 condensed 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 for the year ended
December 31, 2002, previously filed with the Securities and Exchange Commission.
Reclassifications - Amounts in the prior period's financial statements have
been reclassified as necessary to conform to the current period's presentation.
BUSINESS
Effective March 31, 2003, eLinear completed the acquisition of all of the
issued and outstanding shares of NetView Technologies, Inc. ("NetView").
Pursuant to the transaction, eLinear issued an aggregate of 12,961,979 shares to
the five shareholders of NetView. The merger was completed by NetView
Acquisition Corporation, a wholly-owned subsidiary of eLinear, merging with and
into NetView, with NetView as the surviving corporation. The merger became
effective at the time of filing of the certificate of merger with the Texas
Secretary of State, which occurred on April 15, 2003 (the "Effective Date"). As
of the Effective Date, NetView became a wholly-owned subsidiary of eLinear and
NetView Acquisition Corporation ceased its existence. As of April 16, 2003, (a)
Tommy Allen and Carl A. Chase joined the Board of Directors of eLinear, and (b)
the officers of eLinear were as follows: Jon V. Ludwig - chief executive
officer; Kevan M. Casey - president and treasurer, Tommy Allen - executive vice
president of sales and assistant treasurer and J. Leonard Ivins - secretary.
Effective May 26, 2003, Mr. Ludwig resigned his position of chairman of the
board and chief executive officer of the Company. Subsequent to Mr. Ludwig's
resignation, Mr. Casey was elected to the Board of Directors, was elected
chairman of the board and chief executive officer and Mr. Allen was elected
president of the Company The accompanying financial statements for the year
ended December 31, 2002 and for the six months ended June 30, 2003 have been
restated to present the financial condition and results of operations of the
merged companies as if the merger had occurred at January 1, 2002.
eLinear, Inc. is a technology consulting services firm providing strategic
consulting solutions, creative web site design, web site content management
software, and technical project management and development services to companies
seeking to increase productivity or reduce costs through investing in
technology. The Company's current customers are based in the United States. The
Company has operated a technology consulting business since December of 1999.
The Company acquired its Internet consulting business as a result of a reverse
merger with Imagenuity, Inc. ("Imagenuity") in 1999. Immediately prior to
acquiring the business of Imagenuity, the Company, which at the time was named
Kinetiks.com, Inc. ("Kinetiks.com") did not engage in any business activities
except for negotiating and compromising debt and searching for merger
candidates. While Kinetics.com was the survivor
7
in the merger, from an accounting standpoint the transaction was accounted for
as though it was a recapitalization of Imagenuity and a sale of shares by
Imagenuity in exchange for the net assets of Kinetics.com. On July 31, 2000, the
Company changed its name to eLinear, Inc.
NetView was incorporated in the State of Texas in December 2001 as an
S-Corporation and commenced operations on January 1, 2002. Upon the completion
of the merger, NetView terminated its S-Corporation status for income tax
purposes.
NetView is an advanced information technology solutions company that
provides its customers with network and storage solutions infrastructure and
related services. NetView's focus is on creating long-term recurring revenue
streams from a diverse client base. NetView markets its products and services
through its own direct sales and marketing team, direct mail and trade shows.
NetView sells to entities throughout the United States, however a majority
of its revenue is earned from sales in the State of Texas.
Note 2. Property and Equipment
Property and equipment consist of the following at June 30, 2003 and
December 31, 2002:
June 30, December 31,
2003 2002
--------------------------
Automobile $ 12,806 $ 12,806
Leasehold improvements 2,350 2,350
Computer equipment 51,96 46,030
Furniture and equipment 20,075 20,075
--------------------------
87,177 81,261
Accumulated depreciation (47,655) (35,145)
--------------------------
Net property and equipment $ 39,522 $ 46,116
==========================
Note 3. Related Party Transactions
Notes payable and accrued liabilities due to officers of the Company
consist of the following at June 30, 2003 and December 31, 2002:
June 30, December 31,
2003 2002
------------------------
Note payable to an officer with interest at 7% per annum and
principal and interest due July 1, 2004, without collateral. $ 217,579 $ 89,000
Note payable to an officer with interest at 7% per annum and
principal and interest due July 1, 2004, without collateral. 151,900 150,900
Accrued liabilities due to officers 64,000
------------------------
Total $ 369,479 $ 303,900
========================
Note 4. Credit Facilities
From time to time, NetView purchases goods distributed by various
manufacturers for resale to customers. To facilitate the purchase of these
goods, NetView has entered into supply purchase agreements with certain vendors.
These agreements generally provide for a dollar threshold for purchases and
repayment terms. Certain of the agreements are collateralized by essentially
all of the assets of NetView and are personally guaranteed by two of the
officers of the Company and their wives. The amount available to the Company
pursuant to these agreements approximate $1,500,000 and the amounts due to these
vendors at June 30, 2003 approximated $1,200,000. These agreements are
subordinate to the Textron agreement discussed below.
8
During the year ended December 31, 2002, NetView entered into a Financing
Agreement with Deutsche Financial Services ("DFS") whereby DFS would extend
credit to NetView to purchase inventory available for resale to its customers.
NetView pays a finance charge equal to the principal amount financed times the
applicable rates for each transaction. This agreement is personally guaranteed
by two of the officers of the Company. As of March 31, 2003, NetView has no
borrowings under this agreement and does not anticipate borrowing under this
agreement as a result of the Textron agreement discussed below. NetView
incurred minimal finance charges pursuant to this agreement for the year ended
December 31, 2002.
On March 25, 2003, NetView entered into a financing agreement with Textron
Financial ("Textron") whereby Textron will finance up to $1 million of inventory
purchases. The agreement calls for interest at prime rate, as quoted in the
Wall Street Journal, plus six percent (6%) and is secured by essentially all the
assets of NetView and the personal guarantees of two officers and their wives.
The agreement requires NetView to maintain certain financial ratios. NetView
was in compliance with these covenants as of June 30, 2003.
Note 5. Commitments and Contingent Liabilities
The Company's executive and administrative offices are located at 7240
Brittmoore, Suite 118, Houston, Texas 77041, which facilities are leased by the
Company from an unaffiliated third party. The Company's lease on these premises
covers approximately 8,100 square feet and expires on October 31, 2004. The
Company is required to make monthly payments of $4,388 for the months of January
and February 2003 and monthly payments of $5,103 for the remainder of the lease.
The Company has no present intent to invest in real estate, real estate
mortgages or persons primarily engaged in real estate activities, however, the
Company may change this policy at any time. Furthermore, the Company believes
that suitable additional or replacement space will be available when required on
terms acceptable to the Company.
The Company will attempt to sublease its previous office space located at
8800 Jameel Road, Suite 170, Houston, Texas 77040. There can be no assurance
that the Company will be successful in subleasing its previous office
facilities.
Future minimum lease payments under the non-cancelable operating leases are as
follows:
Twelve Months Ending June 30,
-----------------------------
2004 $ 84,036
2005 33,712
-----------
Total $117,748
===========
Note 6. Common Stock Options and Warrants
Stock Option Plans
In August 1995, the Company approved a stock option plan under which up to
50,000 shares of the Company's common stock could be issued. In June 1996, the
shareholders approved an amendment to the plan and increased the number of
shares available under the plan to 80,000. Incentive and nonqualified stock
options may be granted to employees, directors and consultants of the Company.
Incentive stock options are granted at an exercise price not less than 100%
(110% for individuals owning 10% or more of the Company's common stock at the
time of grant) of the common stock's fair market value at the date of grant.
Nonqualified stock options may be granted at an exercise price determined by the
Company. As of June 30, 2003, incentive stock options to purchase 355,000 shares
exercisable at prices ranging from $0.32 to $2.90 per share that vest over a
three-year period were outstanding. As of June 30, 2003, non-qualified stock
options to purchase 638,333 shares exercisable at prices ranging from $.32 to
$39.38 per share and immediately exercisable were outstanding.
On March 31, 2000, the directors of the Company approved the 2000 Stock
Option Plan (the "2000 Plan") under which up to 1,000,000 shares of the
Company's common stock may be issued. The 2000 Plan was approved by the
Company's shareholders at its annual shareholder meeting. Under the 2000 Plan,
incentive and nonqualified stock options may be granted to employees, directors
and consultants of the Company. Awards under the 2000 Plan will be granted as
determined by the Company's Board of Directors. The options that may be granted
pursuant to the 2000 Plan may be either incentive stock options qualifying for
beneficial tax treatment for the recipient or
9
nonqualified stock options. The term of the options granted under the 2000 Plan
will be fixed by the Company, provided the maximum option term may not exceed
ten years from the grant date (Incentive stock options are granted at an
exercise price of not less than 100% (110% for individuals owning 10% or more of
the Company's common stock at the time of grant) of the common stock's fair
market value at the date of grant. Nonqualified stock options may be granted at
an exercise price determined by the Company's Board of Directors. Vesting rights
will be fixed by the Company's Board of Directors provided, however, that an
outside director not have the right to exercise more than 50% of the shares
granted until six months after the grant date.
On April 16, 2003, the Board of Directors adopted the 2003 Stock Option
Plan (the "2003 Plan"), which allows for the issuance of up to 2,000,000 stock
options to directors, executive officers, employees and consultants of the
Company who are contributing to the Company's success. The 2003 Plan was
approved by the shareholders on August 18, 2003. On April 16, 2003, the Company
issued incentive stock options to purchase 100,000 shares of common stock,
exercisable at $0.55 per share that are immediately exercisable to Kevan M.
Casey and issued incentive stock options to purchase 100,000 shares of common
stock, exercisable at $0.55 per share that are immediately exercisable to Tommy
Allen. Also on April 16, 2003, the Company issued nonqualified stock options to
Carl A. Chase to purchase 250,000 shares of common stock, exercisable at $0.50
per share, of which 83,335 vested immediately with the remaining vesting over a
three-year period.
In April 2003, the Company issued 300,000 restricted shares of its common
stock to an employee pursuant to an employment agreement. On June 30, 2003, the
Company cancelled the 300,000 shares and replaced them with 300,000 incentive
stock options exercisable at $0.01 per share and vesting over the next fifteen
months. In addition, the Company issued 50,000 incentive stock options
exercisable at $0.67 per share and exercisable over the next fifteen months.
These option issuances were pursuant to the 2003 Plan.
Common Stock Warrants
Effective April 15, 2003, certain warrant holders agreed to terminate their
warrant agreements and were issued 134,750 shares of restricted common stock
valued at $0.40 per share and compensation expense in the amount of $53,900 was
recorded. In exchange for the issuance of these shares, the warrant holders
agreed to forgo their rights to register these shares.
10
Note 7. Industry Segments
The Company has adopted the provisions of Statements of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" ("SFAS 131"). At March 31, 2003, the Company's two
business units have separate management teams and infrastructures that offer
different products and services.
eLinear, Inc. is a technology consulting services firm providing strategic
consulting solutions, creative web site design, web site content management
software, and technical project management and development services to
companies seeking to increase productivity or reduce costs through investing in
technology.
NetView is an advanced information technology solutions company that
provides its customers with network and storage solutions infrastructure and
related services.
FOR THE THREE MONTHS ENDED JUNE 30, 2003
Dollars ($) eLinear NetView Elimination Consolidated
-------------------------------------------------
Revenue 297,941 3,166,173 -- 3,464,114
Segment profit (33,222) 47,563 -- 14,341
Total assets 412,690 1,788,512 (63,500) 2,137,702
Capital expenditures -- 5,916 -- 5,916
Depreciation 1,259 3,887 -- 5,146
FOR THE THREE MONTHS ENDED JUNE 30, 2002
Dollars ($) eLinear NetView Elimination Consolidated
-------------------------------------------------
Revenue 269,625 1,532,939 -- 1,802,564
Segment profit (loss) (80,280) 34,291 -- (45,989)
Total assets 213,827 729,771 -- 943,598
Capital expenditures -- -- -- --
Depreciation 9,169 1,467 -- 10,636
FOR THE SIX MONTHS ENDED JUNE 30, 2003
Dollars ($) eLinear NetView Elimination Consolidated
-------------------------------------------------
Revenue 516,396 6,317,315 -- 6,833,711
Segment profit (loss) (8,594) 132,618 -- 123,524
Total assets 412,690 1,788,512 (63,500) 2,137,702
Capital expenditures -- 5,916 -- 5,916
Depreciation 3,346 7,282 -- 10,628
FOR THE SIX MONTHS ENDED JUNE 30, 2002
Dollars ($) eLinear NetView Elimination Consolidated
-------------------------------------------------
Revenue 461,718 2,245,124 -- 2,706,842
Segment profit (loss) (390,393) 38,804 -- (351,589)
Total assets 213,827 729,771 -- 943,598
Capital expenditures 10,058 34,096 -- 44,154
Depreciation 12,099 2,934 -- 15,033
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 8. Litigation
From time to time, the Company may become involved in litigation arising in
the ordinary course of its business. The Company is not presently subject to
any material legal proceedings outside of the ordinary course of business except
as set forth below:
11
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 twenty percent (20%)
of eLinear's common stock received by the sole shareholder of Imagenuity in
connection with the merger of Imagenuity with and into eLinear's subsidiary.
After the filing of the complaint, eLinear's subsidiary, eLinear Corporation,
was added as a Defendant. Management 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 eLinear 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.
Note 9. Significant Concentration
Three clients accounted for approximately 12%, 13% and 14% of sales for the
six months ended June 30, 2003. No other clients represented more than 10% of
sales of the Company for the six months ended June 30, 2003. At June 30, 2003,
two clients accounted for approximately 10% and 10% of the Company's accounts
receivable balances. No other clients represented more than 10% of the accounts
receivable balances at June 30, 2003.
Note 10. Subsequent Events.
Effective July 31,, 2003, the Company acquired all of the issued and
outstanding stock of NewBridge Technologies, Inc. (formerly MMGD,Inc.), a Texas
corporation. NewBridge is a digital provider of voice, data, video and security
services to residential and commercial developments. The Company issued 850,000
shares of its restricted common stock and 300,000 incentive stock options to
purchase the Company's common stock at exercise prices ranging from $0.75 to
$1.20 per share that that are immediately vested.
12
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
FORWARD-LOOKING STATEMENTS
The following discussion and analysis of the Company's financial condition as of
June 30, 2003, and the Company's results of operations for the three-month and
six-month periods ended June 30, 2003 and 2002, should be read in conjunction
with the Company's Annual Report on Form 10-KSB for the year ended December 31,
2002, filed with the Securities and Exchange Commission on April 15, 2003.
OVERVIEW
eLinear, Inc. (the "Company" or "eLinear") is a technology consulting
services firm providing strategic consulting solutions, creative web site
design, web site content management software, and technical project management
and development services to companies seeking to increase productivity or reduce
costs through investing in technology. The Company's current customers are
based in the United States. The Company has operated a technology consulting
business since December of 1999. The Company's Internet address is
http://www.elinear.com. Information contained on the Company's web site is not
----------------------
a part of this report. The Company's stock is traded on the OTC Bulletin Board
under the symbol "ELIN."
Effective April 15, 2003, eLinear completed the acquisition of all of the
issued and outstanding shares of NetView Technologies, Inc. ("NetView").
Pursuant to the transaction, eLinear issued an aggregate of 12,961,979 shares to
the five shareholders of NetView. The merger was completed by NetView
Acquisition Corporation, a wholly owned subsidiary of eLinear, merging with and
into NetView, with NetView as the surviving corporation. The merger became
effective at the time of filing of the certificate of merger with the Texas
Secretary of State, which occurred on April 15, 2003 (the "Effective Date"). As
of the Effective Date, NetView became a wholly owned subsidiary of eLinear and
NetView Acquisition Corporation ceased its existence. As of April 16, 2003, (a)
Tommy Allen and Carl A. Chase joined the Board of Directors of eLinear, and (b)
the officers of eLinear were be as follows: Jon V. Ludwig - chief executive
officer and secretary; Kevan M. Casey - president and treasurer and Tommy Allen
- executive vice president of sales and assistant treasurer. Effective May 26,
2003, Mr. Ludwig resigned his position of chairman of the board and chief
executive officer of the Company. Subsequent to Mr. Ludwig's resignation, Mr.
Casey was elected to the Board of Directors, was elected chairman of the board
and chief executive officer and Mr. Allen was elected president of the Company.
NetView is a proven Information Technology solutions provider for the
commercial and institutional market. In its first year of operation it
generated $7.7 million in revenue. eLinear has a customer base that includes
small, medium and large corporate and institutional customers in Houston, Texas
and Denver, Colorado. NetView has a customer base that includes medium to large
companies primarily in Houston. Management believes there are opportunities for
the cross-selling of Information Technology services to NetView customers.
It is expected that the merger with NetView will provide the Company the
opportunity to expand its product and service offerings. The Company's Board of
Directors approved the acquisition of NetView through a reverse merger with
NetView, with eLinear as the survivor in the merger and NetView as a wholly
owned subsidiary of eLinear. From an accounting standpoint, the transaction was
accounted for as though it was a recapitalization of NetView and a sale of
shares by NetView in exchange for the net assets of eLinear. The combined
company will be a diversified provider of complete Information Technology
solutions.
13
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following table sets forth certain operating information regarding the
Company for the three an six months ended June 30, 2003 and 2002:
June 30,
------------------------
2003 2002
------------------------
Revenue $6,833,711 $2,706,842
Cost of sales 5,574,756 2,367,069
------------------------
Gross profit 1,258,955 339,773
Operating expenses 1,129,244 659,244
------------------------
Income (loss) from operations 129,711 (319,471)
Other income (expense) (6,187) (32,118)
------------------------
Income (loss) before income taxes 123,524 (351,589)
Pro forma income tax expense 42,000 --
------------------------
Pro forma net income (loss) $ 81,524 $ (351,589)
========================
Pro forma net income (loss) per share - basic and diluted $ 0.01 $ (0.03)
========================
Revenue. Revenue includes all amounts that are billable to customers. For
eLinear's services contracts, revenue is recognized on a time and materials
basis for a time and materials contract, or on a percent to completion basis for
fixed fee contracts. For the Company's network and storage solutions business
through its NetView subsidiary, revenue is recognized when products are shipped
to the customer. Revenue from time and material service contracts is recognized
as the services are provided. Revenue from fixed price contracts is recognized
over the contract term based on the percentage of services provided during the
period compared to the total estimated services to be provided over the entire
contract. Losses on contracts are recognized during the period in which the
loss first becomes probable and reasonably estimable. Losses recognized during
the three-month and six-month periods ended June 30, 2003 and 2002 were
insignificant. Revenue recognized in excess of billings is recorded as unbilled
services. Billings in excess of revenue recognized are recorded as deferred
revenue until the above revenue recognition criteria are met.
Total revenue for the month ended June 30, 2003 was $6,833,711 which was an
increase of $4,126,869, or 152%, over the prior year period of $2,706,842.
Revenue from the consulting services business segment for the six month period
of 2003 was $516,396, which was an improvement of $54,678 over the 2002 period
of $461,718. Revenue generated from the network and storage solutions business
segment through the Company's NetView subsidiary for the six months ended June
30, 2003 was $6,317,315 to $2,245,124 for the 2002 period. NetView initially
began its operations during the first quarter of 2002. The increase in revenue
was a result of a full six months of sales by NetView during the 2003 period, as
well as an increase in the number of customers and orders that NetView procured
during the period.
Of the revenue generated for the period ended June 30, 2003, three
customers each provided in excess of 10% of the Company's revenue. The loss of
any of these customers may have a material adverse financial impact on the on
the Company should the Company not be able to replace the lost revenue.
Cost of sales. Total cost of sales for the six-month period ended June 30,
2003 were $5,574,756, an increase of $3,207,687 over the 2002 period. For the
network and storage solutions business segment, cost of sales is comprised
primarily of the costs associated with acquiring hardware to fill customer
orders and payroll for support personnel. For the consulting services business
segment, cost of sales consists primarily of full-time personnel and contract
employee costs associated with projects the Company provides to its clients for
a fee. The primary component of the increase was the cost of procuring hardware
to fill an expanded number of customer orders. This amounted to $5,231,869 for
the 2003 period. The Company anticipates that cost of sales will increase as
revenue increases.
Gross profit. Total gross profit increased from $339,773 for the six
months ended June 30, 2002, to $1,258,955 for the six months ended June 30,
2003. The increase in gross profit was a result of an increase in
14
revenue from both the consulting services and network and storage solutions
business segments. Total gross profit as a percentage of revenue increased from
13% for the 2002 period to 18% for the 2003 period.
Operating expenses. Total operating expenses for the six-month period
ended June 30, 2003, were $1,129,244, an increase of $470,000 over the 2002
period of $659,244. The Company has added additional personnel in its network
and storage solutions business segment to facilitate the rapid increase in
customer orders and has reduced personnel in its consulting services business
segment, reflecting an increase in the use of subcontractors to execute on
projects as opposed to full-time employees. The net effect was an increase in
payroll and related costs of $312,053. Professional services, which is
comprised of legal, accounting and consulting fees, increased from $185,882 for
2002 to $326,887 for the 2003 period. Of this 2003 amount, $93,500 was invoiced
to the Company as consulting fees from two officers of the Company. The Company
does not anticipate incurring such fees from the officers in the future. The
Company also incurred increased legal and accounting fees associated with the
merger of NetView. The Company does not anticipate these fees to increase in
the future. Other expenses decreased from $83,852 for the six-month period
ended June 30, 2002, to $76,343 for the 2003 period. The primary reason for the
decrease was due to a reduction in the amount of business travel expense
incurred by the Company in the 2002 period. The Company is continuing to
identify areas whereby it may continue to reduce its overhead costs during 2003.
Pro forma net income. Pro forma net income for the six months ended June
30, 2003, after giving effect to the pro forma income tax adjustment, was
$81,524 compared to a pro forma net loss of $351,589 for the 2002 period.
LIQUIDITY AND CAPITAL RESOURCES
The following summary table presents comparative cash flows of the Company
for the six-month period ended June 30, 2003 and 2002:
June 30,
----------------------
2003 2002
----------------------
Net cash used by operating activities $(173,504) $(314,114)
Net cash used by investing activities $ (9,165) $ (48,296)
Net cash provided by financing activities $ 264,879 $ 306,440
Changes in cash flow. The Company currently manages the payment of its
current liabilities and other obligations on a monthly basis, as cash becomes
available. Due to its shortage of cash, the Company reserves all of its
liquidity in order to have the capability to pay its employees and/or
contractors who are generating revenue for the Company at its clients' sites and
to purchase product for its network and storage solutions business segment. Net
cash used by operating activities for the six-month period ended June 30,2003,
was $173,504 compared to $314,114 for the 2002 period. This was an improvement
of $140,610 over the prior year period. The primary components of net cash used
by operating activities for the 2003 period were increases in stock subscription
receivables, notes receivable and inventory, and decreases in accounts payable,
accrued liabilities and amounts due to officers, which were partially offset by
net income non-cash charges and collection of accounts receivable.
Cash used by investing activities decreased from $48,296 for the six-month
period of 2002 to $9,165 for the 2003 period. NetView began its operations
during the first quarter of 2002 and incurred capital expenditures to establish
its office.
The company began the period January 1, 2003 to June 30, 2003 with a cash
balance of $140,834 and ended the period with a cash balance of $223,044,
representing a net increase in cash provision of $82,210 for the period. This
is primarily attributable to the rapid growth in both the number of customers
and the size of customer orders. The rapid growth that the Company experienced
in the aforementioned period and in the subsequent months, has lead to cash
shortages. The Company has been able to borrow funds from its officers to meet
these short-term obligations to date. In order to fund the Company's growth and
expansion, management of the Company is seeking outside investors to secure
working capital such that the Company is able to meet its current obligations on
a consistent basis. There can be no assurances, however, that the Company will
be able to continue to borrow from its officers, or from third parties, at terms
that are acceptable to the Company.
15
Capital Resources. The Company has funded its operations through the sale
of common stock and the exercise of employee stock options. During the six
months ended June 30, 2002, the Company raised $73,590 from the sale of common
stock and $47,150 from the exercise of stock options. During the six months
ended June 30, 2003, a consultant exercised 150,000 stock options and he Company
recorded a stock subscription receivable in the amount of $135,300, which
receivable was subsequently collected during July 2003.
NetView has funded its operations by way of loans from two of its officers.
During the six-month period ended June 30, 2003, NetView borrowed $159,538 from
these officers and repaid $29,959. The amount due these officers at June 30,
2003, was $369,479. These notes are due July 1, 2004 and accrue interest at a
rate of 7% per annum. These notes are unsecured. NetView has funded its
purchases of network and storage solutions products primarily through vendor
provided financing arrangements. On March 25, 2003, NetView was able to obtain
a $1 million line of credit to fund purchases of network and storage solutions
product for delivery to customers. This was secured by essentially all of
NetView's assets, as well as by personal guarantees delivered by two of the
Company's officers and their wives.
Liquidity. NetView has various vendor financing arrangements with its
suppliers for the purchase of network and storage solutions product. In
addition, as previously discussed, NetView obtained a $1 million line of credit
from Textron to finance purchases of network and storage solutions products.
Under the terms of the agreement, NetView has 45 days to pay for product
financed by Textron at no interest. After 45 days, NetView must pay interest to
Textron at the annual rate of prime plus six percent (6%.)
From time to time, the Company experiences cash flow shortages due to its
rapid rate of growth, and the lack of capital resources. Although management of
the Company has been able to manage these shortfalls without interruption to the
business to date, there can be no assurances that this will continue to occur.
Accordingly, the Company is seeking additional working capital to satisfy its
daily operating requirements. There can be no assurances, however, that such
capital will be available on terms that are acceptable to the Company.
At June 30, 2003, the Company had available cash of $223,044 and positive
working capital of $552,420. Management believes it will begin to generate
positive cash flow from operations during its third fiscal quarter 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 management's estimates or if revenues decline, the Company may need to raise
additional financing to fund operations. If the Company is required to raise
additional financing it will be required to do so on a best efforts basis, as it
currently has no commitments for such funding.
NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") approved
for issuance SFAS 143 "Asset Retirement Obligations" ("SFAS 143"). SFAS 143
establishes accounting requirements for retirement obligations associated with
intangible long-lived assets, including 1) the timing of the liability
recognition, 2) initial measurement of the liability, 3) allocation of asset
retirement cost to expense, 4) subsequent measurement of the liability and 5)
financial statement disclosures. SFAS 143 requires that an asset retirement
cost should be capitalized as part of the cost of the related long-lived asset
and subsequently allocated to expense using the systematic and rational method.
The adoption of this statement did not have a material effect on the Company's
financial position, results of operations or cash flows.
In October 2001, the FASB approved SFAS 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 replaces SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." The new accounting model for long-lived assets to be disposed
of by sale applies to all long-lived assets, including discontinued operations,
and replaces the provisions of APB Opinion No. 30, "Reporting Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business'" for
the disposal of segments of a business. SFAS 144 requires that those long-lived
assets be measured at the lower of carrying amount or fair value less cost to
sell, whether reported in continuing operations or in discontinued operations.
Therefore, discontinued operations will no longer be measured at net realizable
value or include amounts for operating losses that have not yet occurred. SFAS
144 also broadens the reporting of discontinued operations to include all
components of an entity with operations that can be distinguished from the rest
of the entity and that will be eliminated from the ongoing operations of the
entity in a disposal transaction. The provisions of SFAS 144 are effective for
financial statements issued for fiscal years beginning after December 15, 2001,
and,
16
generally, are to be applied prospectively. The adoption of this statement did
not have a material effect on the Company's financial position, results of
operations or cash flows.
In April 2002, the FASB approved for issuance SFAS No. 145, "Rescission of
FASB Statements No. 4, 44 and 64, Amendment of SFAS 13, and Technical
Corrections" ("SFAS 145"). SFAS 145 rescinds previous accounting guidance,
which required all gains and losses from extinguishment of debt be classified as
an extraordinary item. Under SFAS 145 classification of debt extinguishment
depends on facts and circumstances of the transaction. SFAS 145 is effective
for fiscal years beginning after May 15, 2002 and adoption did not have a
material effect on the Company's financial position or results of operations.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan. Examples of costs covered by SFAS 146 include lease termination costs and
certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing or other disposal activities initiated
after December 31, 2002. The adoption of this statement did not have a material
effect on the Company's financial position, results of operations or cash flows.
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.
Item 3. Controls and Procedures
In accordance with the Exchange Act, we carried out an evaluation, under
the supervision and with the participation of management, including our Chief
Executive Officer and Principal Accounting Officer, of the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
report. Based on that evaluation, our Chief Executive Officer and Principal
Accounting Officer concluded that our disclosure controls and procedures were
effective as of June 30, 2003, to provide reasonable assurance that information
required to be disclosed in our reports filed or submitted under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms. There
has been no change in our internal controls over financial reporting that
occurred during the three months ended June 30, 2003, that has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
17
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. Kinetiks.com, 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 Plaintiff,
Chris Sweeney, and Imagenuity and alleged breaches by eLinear and Imagenuity of
fiduciary obligations that the Plaintiff claims were owed to him. Plaintiff is
seeking as damages twenty percent (20%) of eLinear's common stock received by
the sole shareholder of Imagenuity in connection with the merger of Imagenuity
with and into eLinear's subsidiary. After the filing of the Complaint,
eLinear's subsidiary, eLinear Corporation, was added as a Defendant. Management
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, eLinear Corporation 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
determination of the rights of the parties with respect to the termination of
Chris Sweeney's employment agreement with Imagenuity. This 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 as a result of the fact that 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.
Item 2. Changes in Securities and Use of Proceeds.
RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is certain information concerning all issuances of
securities by the Company during the fiscal quarter ended June 30, 2003, that
were not registered under the Securities Act.
On April 15, 2003, pursuant to the exemption provided by Rule 506 of
Regulation D of the Securities Act, the Company issued 6,201,371 shares to Nancy
Allen in exchange for 478.4277 shares of NetView Technologies, Inc. in
accordance with the merger agreement dated April 15, 2003.
On April 15, 2003, pursuant to the exemption provided by Rule 506 of
Regulation D of the Securities Act, the Company issued 129,619 shares to Tommy
Allen in exchange for 10 shares of NetView Technologies, Inc. in accordance with
the merger agreement dated April 15, 2003.
On April 15, 2003, pursuant to the exemption provided by Rule 506 of
Regulation D of the Securities Act, the Company issued 300,000 shares to William
Blocher in exchange for 23.1446 shares of NetView Technologies, Inc. in
accordance with the merger agreement dated April 15, 2003. On June 30, 2003,
Mr. Blocher's shares were cancelled and he was issued 350,000 incentive stock
options.
On April 15, 2003, pursuant to the exemption provided by Rule 506 of
Regulation D of the Securities Act, the Company issued 6,201,370 shares to
Tabitha Casey in exchange for 478.4277 shares of NetView Technologies, Inc. in
accordance with the merger agreement dated April 15, 2003.
On April 15, 2003, pursuant to the exemption provided by Rule 506 of
Regulation D of the Securities Act, the Company issued 129,619 shares to Kevan
M. Casey in exchange for 10 shares of NetView Technologies, Inc. in accordance
with the merger agreement dated April 15, 2003.
18
On April 15, 2003, pursuant to Section 4(2) of the Securities Act, the
Company issued 25,000 shares for legal services valued at $11,250.
On April 15, 2003, pursuant to Section 4(2) of the Securities Act, the
Company issued 134,750 shares to certain warrant holders in consideration of
termination of their warrant agreements valued at $53,900.
The above transactions were completed pursuant to either Section 4(2) of
the Securities Act or Rule 506 of Regulation D 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.
With respect to issuances made pursuant to Rule 506 of Regulation D of the
Securities Act, the Company determined that each purchaser was an "accredited
investor" as defined in Rule 501(a) under the Securities Act.
All sales of the Company's securities were made by officers of the Company
who received no commission or other remuneration for the solicitation of any
person in connection with the respective sales of securities described above.
The recipients of securities represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions.
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders
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 Jon V. Ludwig (incorporated by reference to Exhibit 10.1 to Registrant's
Annual Report on Form 10-KSB, dated April 15, 2003)
10.2 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)
10.3 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)
10.4 2000 Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registrant's Definitive Proxy
Statement on Schedule 14A, dated June 30, 2000)
19
10.5 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)
10.6 Asset Purchase Agreement dated August 31, 2000, among eLinear, Inc., eLinear Corporation, Innobar,
LLC, Jay Vickers and John Kaercher (incorporated by reference to Registrant's Form 10-QSB filed with the
Commission on October 24, 2000)
10.7 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)
10.8 Agreement between eLinear, Inc. and Jon Ludwig dated April 15, 2003 (incorporated by reference to
Exhibit 10.9 to Registrant's Annual Report on Form 10-KSB, dated April 15, 2003)
10.9 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)
21.1 Subsidiaries of Registrant (incorporated by reference to Exhibit 21.1 to Registrant's Annual Report on
Form 10-KSB, dated April 15, 2003)
31.1 Certification of Kevan M. Casey, Chief Executive Officer and Principal Accounting Officer
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
(b) Reports on Form 8-K. - Registrant filed a report on Form 8-K on June
13, 2003, disclosing events pursuant to Item 9 (Regulation FD
Disclosure) and Item 12 (Results of Operations and Financial
Condition) of Form 8-K. As part of Exhibit 99.1 to such report, the
Company released condensed financial statements for the three months
ended March 31, 2003
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.
Signature Title Date
--------- ----- -----
/s/ Kevan M. Casey Chief Executive Officer, August 21, 2003
--------------------
Kevan M. Casey Principal Accounting Officer and Director
/s/ Tommy Allen President and Director August 21, 2003
--------------------
Tommy Allen
/s/ J. Leonard Ivins Director August 21, 2003
--------------------
J. Leonard Ivins
/s/ Carl A. Chase Director August 21, 2003
--------------------
Carl A. Chase
20