Room 4561
August 11, 2005
Doyal G. Bryant
President
Market Central, Inc.
6701 Carmel Road
Suite 205
Charlotte, NC 28226
Re: Market Central, Inc.
Form 10-KSB for Fiscal Year Ended August 31, 2004
Filed December 14, 2004
Form 10-QSB for Fiscal Quarter Ended May 31, 2005
Filed July 20, 2005
File No. 000-22969
Dear Mr. Bryant:
We have reviewed the above referenced filing and have the
following comments. Please note that we have limited the scope of
our review to the financial statements and related disclosures.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-KSB for Fiscal Year Ended August 31, 2004
Item 1. Description of Business, page 2
1. We note that in April 2004 you signed a letter of intent to
acquire Convey Systems, Inc. You disclose that you are currently
providing day-to-day management services to Convey, receiving the
net
proceeds from sales of Convey products and you have entered into
an
agreement with Ariel Way, Inc. to license one of Convey`s
products.
Please explain to us how you are accounting for these transactions
and refer to the authoritative literature that supports your
accounting. As part of your response, tell us how you concluded
that
consolidating Convey was not appropriate.
Item 7. Financial Statements
Independent Auditor`s Report, page F-3
2. We note that your principal offices were located in
Jacksonville,
Florida and that you have recently relocated to Charlotte, North
Carolina. In view of this, explain to us why you engaged an audit
firm located in McLean, Virginia. Separately, tell us where the
audit was performed and whether your auditors are licensed to
practice in that state.
Consolidated Statement of Cash Flows, page F-8
3. Please address the following related to your statement of cash
flows:
* Explain to us how reconciling "net loss for the period from
continuing operations" to "net cash provided by/used in operating
activities" complies with paragraph 28 of SFAS 95 that requires
the
use of "net income" in the reconciliation;
* Explain to us how the classification of your preferred stock
divided as an operating cash flow complies with paragraph 20(a) of
SFAS 95;
* Clarify for us the meaning of "cash dispersed in excess of
available funds" and explain why you consider these amounts to be
operating cash flows; and
* Explain to us why cash flows related to your long-term
restricted
cash balances are not considered investing cash flows.
Note B - Business Combinations and Discontinued Operations, page
F-15
4. Please tell us why you believe that the "certain assets"
acquired
from Pliant represented a business. Explain how you have
considered
the criteria provided in EITF 98-3 in your response.
5. We note that you recorded a $4.1 million impairment charge in
February 2004 related to the goodwill that was recorded in the
Convergion acquisition. Please tell us more about the events and
circumstances surrounding this charge and address why such a
write-
off was necessary within twelve months of the acquisition. In
addition, describe the events and circumstances that led to the
$2.8
million gain recorded upon sale of this business approximately 90
days after the impairment charge.
6. Please explain to us how the $500,000 promissory note and
$3,000,000 security interest affected your accounting for the
Convergion sale. As part of your response, explain why it was
appropriate to recognize the gain on disposal considering your
continuing obligations under the sale agreement as evidenced by
the
note and the security interest. Provide reference to the
authoritative literature that supports your accounting treatment.
As
part of your response, explain how you have considered SAB Topic
5:E.
Note H - Due From Factor, page F-21
7. Please explain to us how your accounting for factoring of
receivables has been affected by your inability to comply with the
covenants of the underlying agreement.
Note K - Related Party Transactions, page F-26
8. Please describe to us the material provisions of the settlement
agreement entered into with your former CEO and the impact on your
financial statements. Describe the accounting journal entries
recorded in connection with this agreement and refer to the
authoritative literature that supports your accounting treatment.
Certifications
9. Please explain to us how you determined that your Section 302
certifications conform to the format provided in Item 601(b)(31)
of
Regulation S-B. In this regard, we note that you refer to the
evaluation of disclosure controls and procedures being performed
within 90 days prior to the filing of the annual report.
Form 10-QSB for the Fiscal Quarter Ended May 31, 2005
Note G - Convertible Notes Payable
10. We note that you issued convertible debentures and warrants to
purchase common stock to investors. Please explain to us how you
allocated the proceeds of these transactions to the debt and
warrants
based on the relative fair values in accordance with paragraph 16
of
APB 14. In addition, provide us with your calculations related to
the
beneficial conversion features and explain how you applied EITF
98-5
and EITF 00-27 to these transactions.
As appropriate, please amend your filing and respond to these
comments within 10 business days or tell us when you will provide
us
with a response. Please submit all correspondence and
supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T. You
may wish to provide us with marked copies of any amendment to
expedite our review. Please furnish a cover letter with any
amendment that keys your responses to our comments and provides
any
requested information. Detailed cover letters greatly facilitate
our
review. Please understand that we may have additional comments
after
reviewing any amendment and your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of Enforcement
has
access to all information you provide to the staff of the Division
of
Corporation Finance in our review of your filing or in response to
our comments on your filing.
You may contact Christine Davis, Staff Accountant, at (202)
551-
3408, Mark Kronforst, Senior Staff Accountant, (202) 551-3451 or
me
at (202) 551-3489 if you have questions regarding these comments.
Sincerely,
Brad Skinner
Accounting Branch Chief
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Doyal G. Bryant
Market Central, Inc.
August 11, 2005
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