8-K 1 v019265_8-k.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 6, 2005 (May 23, 2005) Market Central, Inc. Delaware 0-22969 59-3562953 (State or other jurisdiction (Commission File ID No.) (IRS Employer No.) of incorporation) 7810 Ballantyne Commons Parkway Suite 300 Charlotte, NC 28277 (Address of principal executive offices) (704) 319-2250 (Registrant's telephone number, including area code) (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS Item 1.01 Entry into a Material Definitive Agreement On May 23, 2005, E-Commerce Support Centers, Inc., a North Carolina corporation ("E-Commerce") and wholly-owned subsidiary of the Company entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Customerlinx of North Carolina, Inc., a North Carolina corporation ("Customerlinx NC") and wholly-owned subsidiary of Customerlinx Corp., a Delaware corporation ("Customerlinx"), pursuant to which Customerlinx NC agreed to purchase substantially all of the assets of E-Commerce. The Purchase Price for the assets is the sum of $1,100,000, and the assumption of $85,233.90 of net liabilities of E-Commerce (the "Liabilities"). As of the Closing, the E-Commerce owed Customerlinx the sum of $129,000 in management fess pursuant to a management agreement. Therefore, the parties agreed that, at the Closing, Customerlinx NC shall deliver a promissory note (the "Note") to E-Commerce in the amount of $971,000, and Customerlinx shall credit the sum of $129,000 to the unpaid management fees. The Note has a maturity date of 39 months, pays simple interest at five percent (5%), and is secured by certain assets of Customerlinx NC. In the event that Customerlinx NC has not pre-paid the Note in full by May 31, 2006, then Customerlinx NC shall also pay to E-Commerce on or before July 31, 2006 an amount equal to (I) 0.75 multiplied by (II) the amount by which (A) the net income (which calculation shall only include expenses directly attributable to Customerlinx NC's operation of the Business in North Carolina and Allocable Corporate Expenses) that Customerlinx NC generates from its operation of the Business in North Carolina during the 12 months ending May 31, 2006 (i.e., the period commencing June 1, 2005 and ending May 31, 2006) exceeds (B) the greater of (i) zero or (ii) the net income or loss generated from the operation of the Business in North Carolina by E-Commerce and Customerlinx NC in the calendar year ending December 31, 2005. In addition, pursuant to the Asset Purchase Agreement, Customerlinx agreed to guaranty the obligations of Customerlinx NC thereunder. SECTION 2 - FINANCIAL INFORMATION Item 2.01 Completion of Acquisition or Disposition of Assets On May 23, 2005, E-Commerce completed the sale of substantially all of its assets pursuant to the Asset Purchase Agreement as described in Item 1.01. E-Commerce was engaged in the business of operating a contact call center and related services and its assets consisted of contracts, leases, service agreements, vendor agreements, employment agreements, websites, URLs, intellectual property and other agreements. SECTION 8 - OTHER EVENTS Item 8.01 Other Events On May 24, 2005, Market Central, Inc. issued a press release announcing that it has completed its previously announced sale of substantially all of the assets of E-Commerce, its contact call center located in Jacksonville, North Carolina. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. -2- SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits (a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED Not applicable. (b) PRO FORMA FINANCIAL INFORMATION. Condensed Consolidated Pro Forma Unaudited Balance Sheet as of February 28, 2005 Condensed Consolidated Pro Forma Unaudited Statement of Operations for the Six Month Ended February 28, 2005 Condensed Consolidated Pro Forma Unaudited Statement of Operations for the Year Ended August 31, 2004 Notes to Condensed Consolidated Pro Forma Unaudited Financial Statements UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION On May 23, 2005, the Company consummated the sale of its call center business segment in exchange for $1,180,000, comprised of a deferred purchase promissory note in the amount of $971,000 and the assumption of $209,000 of liabilities, net of transaction costs. The promissory note is payable at the rate of $25,000 per month including interest at 5% per annum on the unpaid balance until paid in full. The call center was the Company's principal revenue producing business segment. This sale results in the Company's principal assets and operations being its suite of software products and its intellectual property. The Proforma Unaudited Financial Statements have been prepared by management of the Company in order to present consolidated financial position and results of operations of the Company as if the disposition had occurred as of February 28, 2005 for the pro forma condensed balance sheet and to give effect to the disposition of the call center segment, as if the transaction had taken place at September 1, 2003 for the pro forma condensed consolidated statement of operations for the six months ended February 28, 2005 and the year ended August 31, 2004. The unaudited pro forma financial information is not necessarily indicative of the actual results of operations or the financial position which would have been attained had the disposition been consummated at either of the foregoing dates or which may be attained in the future. -3-

-4- Notes to unaudited Pro Forma Condensed Consolidated Financial Information The pro forma unaudited condensed consolidated balance sheet was prepared assuming the disposition occurred as of September 1, 2004 and include pro forma adjustments as follows: (a) To record transaction with Customer Linx of N.C., Inc for purchase of certain assets and assumption of certain liabilities of Ecom Support Centers, Inc. as follows: Promissory note $ 971,000 Liabilities assumed 209,000 Total consideration 1,180,000 Less: Net book value of assets sold (699,705) Pre-tax and after tax gain on sale $ 480,295 (b) To accrue for estimated transaction costs as follows: Professional fees $ 64,000 Accrued transaction costs $ 64,000 -5-

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Notes to unaudited Pro Forma Condensed Consolidated Financial Information The pro forma unaudited condensed consolidated statements of loss for the six months ended February 28, 2005 and for the year ended August 31, 2004 have been presented assuming the disposition occurred as of September 1, 2003 and include pro forma adjustments as follows: (a) To remove the operations of the call center assets that was sold. Note that the discontinued operations shown in the statement of loss for the year ended August 31, 2004 relate to the sale of another subsidiary of the Company. -7- (c) Exhibits 10.1 Asset Purchase Agreement 99.1 Press Release on sale of substantially all of the assets of E-Commerce. -8- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. Market Central, Inc. (Registrant) Dated: July 6, 2005 By: /s/ Clifford Clark --------------------------------------- Clifford Clark, Chief Financial Officer -9-

MARKET CENTRAL INC 8-K