UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                   FORM 10-KSB
(Mark one)

[X]   Annual Report  Pursuant to Section 13 or 15(d) of the Securities  Exchange
      Act of 1934 for the fiscal year ended August 31, 2004
                                            ---------------

[ ]   Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
      of 1934

                         Commission File Number 0-22969

                              MARKET CENTRAL, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in its charter)

                 DELAWARE                                   59-3562953
     ---------------------------------                 -------------------
       (STATE OR OTHER JURISDICTION                       (IRS EMPLOYER
     OF INCORPORATION OR ORGANIZATION)                 IDENTIFICATION NO.)

           1650 A Gum Branch Road, Jacksonville, NC 28540 (Address of
                     principal executive offices) (zip code)

                 Issuer's telephone number:           (910) 478-0097

       Securities registered under Section 12(b) of the Exchange Act: None
                                                                      ----

         Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, par value $.001 per share
                     ---------------------------------------
                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed under
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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation SB contained in this form, and no disclosure will be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this form 10-KSB.

Yes  [ ]          No [X]

State the issuer's revenue for its most recent fiscal year: $7,732,021 State the
aggregate market value of the voting stock held by non-affiliates computed by
reference to the price at which the stock was sold, or the average bid and ask
prices of such stock as of November 29, 2004: $9,674,581

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

                                                           OUTSTANDING AS OF
                 CLASS                                     NOVEMBER 29, 2004
--------------------------------------------------------------------------------
Common Stock, par value $.001 per share                        6,861,405
--------------------------------------------------------------------------------

                    Documents Incorporated by Reference: None

          Transitional Small business Disclosure Format. Yes [ ] No [X]

<PAGE>

                              MARKET CENTRAL, INC.
                                   FORM 10-KSB

                                TABLE OF CONTENTS
                                                                            PAGE
                                     PART I                                 ----

ITEM 1         Description of Business........................................

ITEM 2.        Description of Property........................................

ITEM 3.        Legal Proceedings..............................................

ITEM 4.        Submission of Matters to a Vote of Security Holders............

                                     PART II

ITEM 5.        Market Price For Common Equity and Other Related Shareholder
               Matters...............................................

ITEM 6.        Management's Discussion and Analysis of Financial Condition
               and Results of Operations......................................

ITEM 7.        Financial Statements...........................................

ITEM 8         Change in and Disagreements with Accountants on Accounting
               and Financial Disclosure

ITEM 8a        Controls and Procedures

ITEM 8b        Other Information

                                    PART III

ITEM 9.        Directors, Executive Officers, Promoters and Control Persons;
                    Compliance with Section 16(a) of the Exchange Act.........

ITEM 10.       Executive Compensation.........................................

ITEM 11.       Security Ownership of Certain Beneficial Owners and Management.

ITEM 12.       Certain Relationships and Related Transactions.................

ITEM 13.       Exhibits.......................................................

ITEM 14.       Principal Accountant Fees and Services.........................

Signatures     ...............................................................


<PAGE>

RISK FACTORS AND CAUTIONARY STATEMENTS

Forward-looking statements in this report are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. Market
Central, Inc. ("Company") wishes to advise readers that actual results may
differ substantially from such forward-looking statements. Forward-looking
statements include statements concerning underlying assumptions and other
statements that are other than statements of historical facts. Forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from those expressed or implied by the statements, including,
but not limited to, the following: the ability of the Company to provide for its
obligations, to provide working capital needs from operating revenues, to obtain
additional financing needed for any future acquisitions, to meet competitive
challenges and technological changes, and other risks detailed in the Company's
periodic

PART I

ITEM 1.    DESCRIPTION OF BUSINESS

Market Central,  Inc.  (formerly  Paladyne Corp.) (the "Company") is a knowledge
management   company   specializing  in  solutions  that  enable  businesses  to
efficiently store, categorize and retrieve information with state of the art The
Company owns multiple patents and patent-pending  technologies and has developed
a  suite  of  solutions  that  include  software  for  next-generation   search,
intelligent  document  recognition,   data  capture,   cleansing,   mining,  and
integration.  The Company also operates one wholly-owned  subsidiary,  ecommerce
support centers, inc.("ECOM"). ECOM provides outsourced contact center solutions
and Customer  Relationship  Management  (CRM)  services.  ECOM provides  inbound
technical  support,  sales, and customer service;  outbound pre-sales and sales;
data mining;  campaign  management;  CRM  Integration  (contact  center  systems
design, sales, integration and life-cycle support).

The Company's executive offices are at 1650A Gum Branch Road, Jacksonville, NC
28540 and its telephone number is (910) 478-0097.

HISTORY

Market Central, Inc. (f/k/a Paladyne Corp) is the surviving Company from a March
1999 merger with Synaptx Worldwide, Inc., a Utah corporation.

In February 2001, the Company. through a wholly-owned subsidiary merged (the
"Merger") with ECOM, pursuant to an Agreement and Plan of Merger, dated as of
December 21, 2000, as amended (collectively, the "Merger Agreement"). Upon the
Merger, ECOM became a wholly-owned subsidiary of the Company.

In February 2003, at a special meeting of the stockholders, the Company's
shareholders approved the following items: 1) a change in the name of the
Company from Paladyne Corp. to Market Central, Inc., 2) a one-for-ten reverse
split of the Company's common stock and 3) sale of an aggregate of 8,880,740
post-split shares of common stock to three buyers. This resulted in a change in
control of the Company to these three buyers. In connection with this
transaction the Company converted all classes of its Preferred Stock to the
Company's Common Stock.

In April 2003, the Company consummated the acquisition of U.S. Convergion, Inc.
("Convergion") pursuant to a Stock Purchase Agreement dated April 3, 2003
entered into by and among the Company and each of the six shareholders of
Convergion. The Company acquired all of the outstanding capital stock of
Convergion in exchange for the issuance of 374,630 restricted shares of the
Company's Common Stock and assumption of certain liabilities. Market Central,
Inc. also acquired effective July 31, 2003, substantially all the assets of
Pliant Technologies, Inc. in exchange for the issuance of 228,351 restricted
shares of the Company's Common Stock and a warrant to purchase an additional
182,681 shares of the Company's Common Stock and assumption of certain
liabilities. These acquisitions resulted in a significant impact to many phases
of the Company as discussed below.

In May 2004, the Company disposed of the U.S. Convergion, Inc. subsidiary by
selling the capital stock of Convergion that had been acquired in April 2003.
This sale, to Sylvia Holdings, Inc. a New York based corporation, included costs
associated with the sale that exceeded any proceeds from the sale. The Company
wrote off approximately $4 million in goodwill, related to the Convergion
acquisition, in the second quarter of fiscal 2004 which coincided with
management's decision to divest itself of Convergion; during the third quarter
the sale to Sylvia Holdings, Inc. was recorded which resulted in a gain of
approximately $2.7 million. If the goodwill write off and sale had occurred in


                                       1
<PAGE>

the same quarter the financial statements would have reflected a $1.3 million
loss on the sale of U.S. Convergion, Inc.

In April 2004,  the  Company  signed a letter of intent to acquire the assets of
Convey  Systems,  Inc. a wholly  owned  subsidiary  of The TAG Group,  Inc.  The
acquisition  provides  for Market  Central,  Inc. to issue  2,000,000  shares of
common stock to the TAG Group, Inc. for the assets which include cash,  accounts
receivable and certain proprietary products in the areas of web conferencing and
collaboration  and web-based PC support tools.  This transaction is now expected
to be completed in February  2005.  Audit  issues and  stockholder  notification
requirements,  at The TAG Group,  Inc.  resulted in the  delays.  The TAG Group,
Inc.,  Convey Systems,  Inc. and the Company have executed an agreement  whereby
the Company is providing  day-to-day  management  for Convey  Systems,  Inc. The
Company will receive the net proceeds  from sales of Convey  products from April
15, 2004 through the February 2005 closing.

In September 2004, the Company reached an agreement with a private company,
Ariel Way, Inc. for the sale of licenses to the Convey Systems, Inc. software
products that consist of web conferencing and remote PC access products. In
addition to these licenses Ariel Way, Inc. engaged the Company to provide
executive consulting services during Ariel Way's acquisition and capital
sourcing period. The Company received 2,000,000 shares of Ariel Way, Inc. for
these licenses and services.

In November 2004, Market Central, Inc. announced that it was negotiating with a
privately owned, Atlanta Georgia based company, CustomerLinx, for the sale of
the Company's contact center operations which comprise the ECOM subsidiary. As
an interim step prior to the expected sale of the subsidiary, the Company
reached an agreement with CustomerLinx to provide management services for the
day to day operations and sales and marketing activities of ECOM.

In November 2004, the Company was notified by its two primary shareholders that
they were returning, to the Company's treasury, approximately 5,800,000 shares
of the Company's common stock, which was approximately 45% of the total common
shares outstanding at that time. The notification also provided that they, Glen
Hammer and Will Goldstein, were resigning from the Board of Directors and would
return to the Company for cancellation the warrant to purchase approximately
2,333,000 shares of the Company's common stock. In addition, these shareholders
were converting approximately $1,300,000 in current debt owed them by the
Company into shares of the Company's Series A Preferred Stock.

PRODUCTS AND SERVICES:

The Company's products and services were extended with the acquisition of the
assets of Pliant Technologies in July 2003. Pliant's patents and related
intellectual property provides the Company with certain significant market
opportunities. The Company holds multiple patents and patent-pending
technologies and has developed a suite of solutions that includes next
generation software for resolving complex knowledge management challenges,
next-generation knowledge management opportunities, including intelligent
document recognition ("IDR"), data capture, cleansing, mining, storage and
search. The Company's intellectual property, which currently includes five
patents represents opportunity product and OEM licensing revenue. To the extent
that others are violating any protected rights under these patents, the Company
intends to vigorously pursue its rights. The Company has also continued the
marketing of the Convey products that are part of the acquisition expected to
complete the transaction in February 2005.

The Company's ECOM subsidiary, which accounted for all of the revenue during the
fiscal year ended August 31, 2004 is engaged in the call center business. This
portion of the Company's operations will continue to be a significant component
of revenue for the Company during the next fiscal year because the sale will
occur no sooner than the second quarter of the 2005 fiscal year.

As a result of the market acceptance and significant market size for these
products, the Company has made a strategic decision to aggressively pursue its
opportunities within the Knowledge Management market. Market Central's patented
SourceWare(R) technology (acquired with the assets of Pliant Technologies) is a
powerful suite of Knowledge Management software;; Intelligent Document
Recognition (IDR), Deductive Search Engine (DSE), Integrated Content Manager
(ICM). These solutions are described in detail as follows:

INTELLIGENT DOCUMENT RECOGNITION (IDR)

Artificial Intelligence based data capture system that automatically reads
unlimited data from any document, media, or digital file without having to
manually create and maintain templates for each document type.
           Artificial Intelligence Processing of Data and Forms
           Semantic Processing is integrated
           Unlimited Validation Rules and Definition Sets
           Auto-Classification & Indexing of Documents


                                       2
<PAGE>

DEDUCTIVE SEARCH ENGINE (DSE)

Intent based search engine that search both unstructured and structured data
without the need to manually define variations (e.g., spelling, synonyms, stems,
language) or translate data in to a common format. DSE processes searches on
standard Windows systems and can search tens of millions of records in
milliseconds at a fraction of the cost of other systems. It reduces the
organization's technical resources to develop and maintain the databases and
search applications.
           Auto-Classification of Content - Multiple Domains
           Topification to Achieve highly Relevant Results
           Intent based searches - Literal & Semantic
           Projection Data Storage - Unequalled Response Time

INTEGRATED CONTENT MANAGER (ICM)

Manages and stores all types of documents and data in their neutral-form (as-is)
with automatic data integration, projection distributed data management and
terabyte scalability.
           All Data & Document Types in Same Repository
           Automated Data Integration & Workflow
           Zero Latency - Never Requires Re- Indexing
           Virtually Eliminates Data Cleansing/Fuzzy Key Meeting
           High Performance Scalability to 100TB

The Company is also currently managing the operations of Convey Systems, Inc.
and is receiving the net proceeds from sales of its products. The purchase of
Convey is expected to be completed in February 2005. Its technology offers
dynamic and interactive products and services that allow organizations to
provide virtual sales presentations, remote desktop support, distance-learning
sessions, spontaneous web conferences, and live customer service and desktop
support over the Internet. The Convey technology will also be integrated with
SoruceWare to further complete Market Central's knowledge management software
footprint.

Convey's proprietary technology provides e-commerce product support and customer
service using a live, video-based portal that supports real-time interactions,
and the ability to collaborate upon demand, the product includes text chat,
digital photo, encrypted VOIP, Data, full-motion two way video and voice share,
URL sharing features, as well as full collaboration and application-sharing
capabilities. The Convey solutions are described below:

      o     OnDemand - OnDemand(TM) provides digital video and photo voice over
            IP, application sharing and collaboration supported by text chat and
            co-browsing capabilities in a single, easy-to-use solution. OnDemand
            gives new meaning to the phrase "Instant Help" by allowing the
            request for assistance to be made by the one in need at the moment
            the need occurs, providing a powerful differentiator in the ability
            to address and resolve needs

      o     Snap - Snap Conferencing, built from OnDemand technology, is
            designed to be used in a corporate environment as a quick, easy, and
            inexpensive conferencing solution for multi-user video, voice, and
            application sharing. Snap has the most advanced application sharing
            capabilities on the market with the easiest user interface.

      o     Tech Umbrella, a part of the Convey product line, provides a
            Web-based package that encompasses leading edge technology for
            streamlining PC support and repair services. Tech Umbrella is
            offered to the IT marketplace, software and hardware developers,
            providers, integrators and supporters, as a comprehensive suite of
            online tools. Using Tech Umbrella, the IT technician can efficiently
            and easily diagnose and repair technical problems on remote
            terminals without the difficulty of licensing, installing, and
            pre-configuring a third-party software application. Tech Umbrella is
            working with Corporate Affiliate companies to penetrate the IT
            marketplace from the top down. This enables a quicker presence in
            the marketplace, as entire groups become armed with Tech Umbrella's
            product packages. The Company has identified over 100,000
            independent affiliates and an additional 3000 IT franchises.

BUSINESS DEVELOPMENT AND STRATEGY

During the fourth quarter of fiscal 2004, Market Central altered its strategic
focus to concentrate on marketing its knowledge management technology,
SourceWare. This marketing occurs through organic growth of the Company's sales
force and sales as well as additional acquisitions and strategic partnerships.
The Company believes its patented technologies and corresponding products
provide unique, efficient solutions to numerous significant market niches.
Examples of this include, configuring these technologies together we can produce
turn-key industry solutions so our patented technology is effective and valuable


                                       3
<PAGE>

"out of the box" in specific applications. For example, the combination of
SourceWare IDR and Search with OnDemand will provide a context based customer
service solution that provides a shopping site with the most current product
information available, the ability to quickly navigate to products of interest
regardless of site structure, and the ability to route a customer who clicks a
customer service request link to the most appropriate resource available based
on the content the shopper is evaluating. Another potential market solution
currently being evaluated is focused on the library market. We are working to
integrate SourceWare and Convey to provide effectively structured navigation and
search capabilities to all electronic data maintained or subscribed to by
libraries, with a professional librarian's help available at the click of a
button for difficult research challenges. By integrating the two products, we
will be able to ensure the librarian reached has significant subject matter
expertise based on the topics currently being viewed by the user.

The above are the stated future goals of the Company. However, there can be no
assurance that the Company will ever achieve its expressed goals.

POTENTIAL NEW ACQUISITIONS AND PRODUCT LINES

The Company intends to investigate, should opportunities arise, strategic
acquisitions or mergers that fit its long-term objectives as financing and
business conditions warrant, although there can be no assurance that the Company
will be able to finalize any future acquisitions. Although the Company
occasionally explores additional acquisition and merger opportunities, there can
be no assurances that financing for any future acquisitions will be available on
terms acceptable to the Company or at all, or that any future acquisitions or
mergers will be consummated.

SALES AND MARKETING

The Company markets and sells its products and services through its employees
and through the cooperative efforts of its business partners. The Company
employs an integrated marketing effort designed to establish market presence and
generate potential clients Current clients representing more than 5% of annual
revenue are: New Roads, representing 19.75% of revenue, Time Warner Cable
representing 17.2% of revenue, SmartBargains.com representing 9.4%, Showtime
Networks representing 8.8%, and Cox Communications representing 5.6%. Two
related companies, CheapSeats, Inc. and Ericson Publishing, Inc. (successor
company of Gibralter Publishing, Inc.) represented 6.9% and 15% of revenue for
the year ended August 31, 2004. Ericson Publishing, Inc. ceased being a client
in July 2004 and CheapSeats, Inc. has significantly reduced its volume since
August 31, 2004.

Lead generation and branding efforts are the responsibility of the Marketing
Department. Sales Department personnel engage prospects and develop new business
from existing clients. Both marketing and sales manage business partner
relationships.

COMPETITION

The industries to which the Company currently offers and intends to offer its
products and services are highly competitive and characterized by rapidly
changing technologies, evolving industry standards, frequent new product
introductions, and rapid changes in customer requirements. The Company's
competitors vary from market segment to market segment; however, there are
several which pursue a similar knowledge management market opportunities and
contact center services. The call center competition includes: Harte-Hanks,
Inc., Stream.com, Convergys Corporation, and Sykes Enterprises, Incorporated.

The Company is of the opinion that there are no significant competitors for its
integrated software platform; however, competitors exist for the various
component "modules" within the platform. These include:

            Search Capabilities: The principal competitors are Inktomi, Google,
            Autonomy and Verity.

            For paper to digital capture and retrieval, the principal
            competitors are: Captiva Software, SER, and MicroSystems

The US represents over 90% of the total North American Market in all categories.
Those active in such markets are well-placed to exploit local and regional
Government opportunities in particular. The capture market has been based on
'centralized' capture using high-speed scanners. We believe this will change in
the near future. It's believed that in the next 5 years, 70% of paper will be
converted to image at the point of first presentation rather than moving it to a
centralized scanning point. Overall, the Knowledge Managmement market is still
emerging and very fragmented. Technology sales in this space are often in
conjunction with consulting services to create proprietary solutions. As such,
competition for industry solutions is just emerging with few dominant
participants at this time.

                                       4
<PAGE>

EMPLOYEES

As of August 31, 2004, the Company employed 340 individuals, consisting of 10
executives, 48 professionals and sales representatives, office staff and 282
customer representatives. The Company believes that its relationship with its
employees is satisfactory.

BUSINESS SEGMENTS

The Company currently operates mainly in the call center solutions provider
segment.

ITEM 2.     DESCRIPTION OF PROPERTY

The Company's principal executive offices are located at 1650A Gum Branch Road,
Jacksonville, NC 28540, although the Company announced, in December 2004, plans
to relocate its administrative and executive offices to Charlotte, NC. The
current facility in Jacksonville is leased through May 31, 2008, covers
approximately 60,000 square feet at an approximate annual rental rate of
$218,000. The Company believes its current premises are adequate for current
purposes and if necessary would be able to obtain alternative or additional
space.

ITEM 3.     LEGAL PROCEEDINGS

In May 2002, Ronald Lynn Weindruch filed a complaint against the Company in the
Circuit Court of the Eighteenth Judicial Circuit in and for Seminole County,
Florida. The compliant alleges a breach of contract. There is a judgment entered
against the Company in the amount of $50,000, which remains unsatisfied.

In September 2004, the Honorable James C. Fox, U.S. District Court, Eastern
District of North Carolina in the United States District Court for the Eastern
District of North Carolina entered an order requesting the U.S. Attorney for
Eastern District of North Carolina to prosecute an alleged criminal contempt of
court by the Company, that occurred in the case of Tweddle Litho Corp.vs.
Gibralter Publishing, Inc. and Market Central, Inc., ("Tweddle Case"). The U.S.
Attorney for the Eastern District of North Carolina issued a criminal
information against Market Central, Inc. alleging contempt of court by virtue of
Market Central, Inc.'s violation of a court order entered on May 13, 2004 in the
Tweddle Case when Market Central, Inc. sold its wholly-owned subsidiary, US
Convergion, Inc. on June 2, 2004 in violation of the provisions of the order of
May 13, 2004 enjoining Market Central, Inc. from transferring any of its assets
out of the ordinary course of business. In October 2004, Market Central, Inc.
and the U.S. Attorney entered into a written plea agreement whereby Market
Central agreed to pay $50,000 for the alleged criminal contempt of court. The
matter is set for disposition in U.S. District Court for the Eastern District of
North Carolina on January 18, 2005. The U.S. States Attorney is supporting the
Plea Agreement and Market Central, Inc. expects that the Court will accept the
plea agreement.

In April 2004, iGate, Inc. filed a Complaint against Gibralter Publishing, Inc.
and Market Central, Inc. in the U.S. District of the Eastern District of North
Carolina, Southern Division claiming that Market Central, Inc. was liable to
iGate, Inc. in the amount of $724,161.44. iGate, Inc. asserts that Gibralter
Publishing, Inc. owed this sum to iGate, Inc. and by virtue of an alleged
fraudulent conveyance, iGate, Inc. asserts that a fraudulent conveyance occurred
when Gibralter Publishing, Inc. forgave $5,000,000 in liabilities of e-commerce
support center, inc., which were guaranteed by Market Central, Inc. in exchange
for Market Central, Inc. issuing to Gibralter Publishing, Inc. 1,000,000 shares
of Preferred Series D stock (which were converted into 1,000,000 shares of the
Company's commons stock) and warrants of 10,000,000 shares of Common Stock. On
May 2004, a default was entered against Market Central, Inc. On November 2004,
the Court vacated the default and granted Market Central, Inc. leave to file its
Answer to the Complaint. Market Central, Inc. filed its Answer and Affirmative


                                       5
<PAGE>

Defenses alleging absolute defenses to the claims of iGate, Inc. Market Central,
Inc. asserts that it has no liability to iGate, Inc. and will defeat all
liability asserted in the Complaint.

In the ordinary course of business the Company has become subject to additional
litigation and claims on various matters. These exists the possibility that the
Company will not prevail in all cases. However, barring unanticipated adverse
final determination in these litigation and claims, the Company does not believe
that such litigation and claims would have a material adverse effect on its
financial condition.

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

On January 21, 2004, at the annual meeting of the shareholders of the Company
was held to consider and vote on the following matters: (1) voting for the seven
nominated directors, T. Leifheit, G. Hammer, W. Goldstein, J. McGovern, C.
Clark, T. Gordy and H. Workman ("Proposal 1"); (2) ratification of appointment
of auditors, Russell Bedford Stefanou Mirchandani, LLP for fiscal 2004 and
("Proposal 2") and (3) approval and ratification of the Market Central, Inc.
Amended and Restated Stock Plan ("Proposal 3"). Set forth below are the results
of the shareholders vote on each proposal:

                             FOR             AGAINST              ABSTAIN
                        -------------     -------------     --------------------
Proposal 1                12,101,273           -0-                1,167,696
Proposal 2                12,144,050           -0-                1,124,919
Proposal 3                10,812,067           -0-                2,456,902



                                       6
<PAGE>

PART II

ITEM 5.   MARKET PRICE FOR COMMON EQUITY AND OTHER RELATED  SHAREHOLDER MATTERS

(a) The Company's Common Stock has been traded on a limited basis in the
over-the-counter market and quotations are published on the OTC Bulletin Board
under the symbol "MKTE", and in the National Quotation Bureau, Inc. "pink
sheets" under Market Central, Inc.

The following table sets forth the range of high and low bid prices of the
Common Stock for each fiscal quarterly period (1:10 split stock was effective in
February 4, 2003). Prices reported represent prices between dealers, do not
include retail markups, markdowns or commissions and do not represent actual
transactions.

                                               FISCAL YEAR
                         -------------------------------------------------------
                                   2004                           2003
                         ------------------------      -------------------------
                            HIGH           LOW            HIGH            LOW
                         ---------      ---------      ---------       ---------
First Quarter              $3.30          $1.91          $ .32          $ .04
Second Quarter              2.19           1.60           3.60            .17
Third Quarter               1.85           1.05           3.00           1.30
Fourth Quarter              1.96            .95           3.30           1.30

The ability of individual stockholders to trade their shares in a particular
state may be subject to various rules and regulations of that state. A number of
states require that an issuer's securities be registered in their state or
appropriately exempted from registration before the securities are permitted to
trade in that state. Presently, the Company has no plans to register its
securities in any particular state. Further, most likely the Company's shares
will be subject to the provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly
referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.

The Commission generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. Rule
3a51-1 provides that any equity security is considered to be a penny stock
unless that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on
The NASDAQ Stock Market; issued by a registered investment company; excluded
from the definition on the basis of price (at least $5.00 per share) or the
issuer's net tangible assets (at least $2 million); or exempted from the
definition by the Commission. If the Company's shares are deemed to be a penny
stock, trading in the shares will be subject to additional sales practice
requirements of broker-dealers who sell penny stocks to persons other than
established customers and accredited investors, generally persons with assets in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse.


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<PAGE>

For transactions covered by these rules, broker-dealers must make a special
suitability determination for the purchase of such securities and must have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the first transaction, of a
risk disclosure document relating to the penny stock market. A broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information for the
penny stocks held in the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of broker-dealers to
trade and/or maintain a market in the Company's Common Stock and may affect the
ability of stockholders to sell their shares.

As of November 29, 2004, there were 169 holders of record of the Company's
Common Stock. This amount does not take into account those stockholders whose
certificates are held in the name of broker-dealers or otherwise in street or
nominee name.

DIVIDEND POLICY

The Company has not declared or paid cash  dividends on its Common Stock or made
distributions  in the past, and the Company does not anticipate that it will pay
cash dividends in the foreseeable  future.  The Company has a retained  deficit,
which would restrict payment of cash dividends. The Company currently intends to
retain and invest  future  earnings  to finance  its  operations.  However,  the
Company has accrued  $61,067 of dividend for Series A Preferred Stock issued and
outstanding at August 31, 2004.

TRANSFER AGENT

The Company has designated American Stock Transfer and Trust Company, 59 Maiden
Lane, New York, NY, as its transfer agent for the Common Stock.

(b) During the fiscal year ended August 31, 2004, the Company issued 67,500
shares of common stock to consultants in exchange for options exercised.
Additionally, the Company authorized to issue 55,224 shares of common stock to
Directors in exchange for services. These shares were issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933 under
Sections 3 (a) (9) and 4(2) thereof.

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

Cautionary Statement Regarding Forward-Looking Information:

This document includes forward-looking statements. All statements other than
statements of historical fact included in this document, including, without
limitation, the statements under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Liquidity and Sources of
Capital" regarding the Company's strategies, plans, objectives, expectations,
and future operating results are forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable at this time, it can give no assurance that such
expectations will prove to have been correct. Actual results could differ
materially based upon a number of factors including, but not limited to, the
state of the economy,


                                       8
<PAGE>

competition, unanticipated business opportunities, availability of financing,
market acceptance, government regulation, dependence on key personnel, limited
public market and liquidity, shares eligible for future sale, and other risks
that may apply to the Company.

The following is a discussion of the financial condition and results of
operations of the Company as of the date of this Annual Report. This discussion
and analysis should be read in conjunction with the accompanying audited
Consolidated Financial Statements of the Company including the Notes thereto
which are included elsewhere in this Form 10-KSB.

General

Market Central, Inc. is a provider of proprietary, patented software for data
capture, cleansing, mining, integration, search, and intelligent document
recognition and a full service call center operator.


Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires us to
make estimates and judgments that affect our reported assets, liabilities,
revenues, and expenses, and the disclosure of contingent assets and liabilities.
We base our estimates and judgments on historical experience and on various
other assumptions we believe to be reasonable under the circumstances. Future
events, however, may differ markedly from our current expectations and
assumptions. While there are a number of significant accounting policies
affecting our consolidated financial statements; we believe the following
critical accounting policies involve the most complex, difficult and subjective
estimates and judgments:

      o     revenue recognition

      o     allowance for doubtful accounts

      o     business combinations

      o     goodwill and intangible asset impairment


                                       9
<PAGE>

      o     legal contingencies

      o     income taxes

      o     stock-based compensation.

Revenue Recognition

In accordance with generally accepted accounting principles ("GAAP") in the
United States, revenue is recognized only when the price is fixed or
determinable, persuasive evidence of an arrangement exists, the service is
performed, and collectibility of the resulting receivable is reasonably assured.
Noted below are brief descriptions of the product or service revenues that the
Company recognizes in the financial statements contained herein.

We recognize revenues from contracts in which the Company provides only
consulting services as the services are performed. The contractual terms of the
agreements dictate the recognition of revenue by the Company. Payments received
in advance are deferred until the service is provided.

We recognize revenues from equipment and implementation contracts on the
percentage-of-completion method, measured by the percentage of cost incurred to
date to the estimated total cost for each contract. This method is used because
management considers total job cost to be the best available measure of progress
on these contracts.

Contract costs include all direct equipment, material, and labor costs and those
indirect costs related to contract performance, such as indirect labor. Selling,
general and administrative costs are charged to expense as incurred. Provisions
for estimated losses on uncompleted contracts are made in the period in which
such losses are determined. Changes in contract performance, contract
conditions, and estimated profitability that may result in revisions to costs
and income are recognized in the period in which the revisions are determined.

Allowance for doubtful accounts

We maintain an allowance for doubtful accounts to reduce amounts to their
estimated realizable value. A considerable amount of judgment is required when
we assess the realization of accounts receivables, including assessing the
probability of collection and the current credit-worthiness of each customer. If
the financial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, an additional provision for
doubtful accounts could be required. We initially record a provision for
doubtful accounts based on our historical experience, and then adjust this
provision at the end of each reporting period based on a detailed assessment of
our accounts receivable and allowance for doubtful accounts. In estimating the
provision for doubtful accounts, we consider: (i) the aging of the accounts
receivable; (ii) trends within and ratios involving the age of the accounts
receivable; (iii) the customer mix in each of the aging categories and the
nature of the receivable; (iv) our historical provision for doubtful accounts;
(v) the credit worthiness of the customer; and (vi) the economic conditions of
the customer's industry as well as general economic conditions, among other
factors.


                                       10
<PAGE>

Business combinations

The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards ("SFAS") No. 141, Business Combinations, which established
accounting and reporting standards for business combinations and requires that
all business combinations be accounted for by the purchase method. Under the
purchase method of accounting, the cost, including transaction costs, is
allocated to the underlying net assets, based on their respective estimated fair
values. The excess of the purchase price over the estimated fair values of the
net assets acquired is recorded as goodwill.

The judgments made in determining the estimated fair values and expected useful
lives assigned to each class of assets and liabilities acquired can
significantly impact net income. For example, different classes of assets will
have useful lives that differ. Consequently, to the extent a longer-lived asset
is ascribed greater value under the purchase method than a shorter-lived asset,
there may be less amortization recorded in a given period.

Determining the fair value of certain assets and liabilities acquired is
subjective in nature and often involves the use of significant estimates and
assumptions. We use a one-year period following the consummation of acquisitions
to finalize estimates of the fair values of assets and liabilities acquired. Two
areas, in particular, that require significant judgment are estimating the fair
values and related useful lives of identifiable intangible assets. While there
are a number of different methods used in estimating the value of acquired
intangibles, there are two approaches primarily used: the discounted cash flow
and market comparison approaches. Some of the more significant estimates and
assumptions inherent in the two approaches include: projected future cash flows
(including timing); discount rate reflecting the risk inherent in the future
cash flows; perpetual growth rate; determination of appropriate market
comparables; and the determination of whether a premium or a discount should be
applied to comparables. Most of the foregoing assumptions are made based on
available historical information.


Goodwill and intangible asset impairment

We adopted Statement of Financial Accounting Standards No. 142-Goodwill and
Other Intangible Assets (SFAS 142) on April 1, 2001. Under SFAS 142, goodwill
and other intangible assets with indefinite useful lives are no longer
amortized, but are tested for impairment on an annual basis and between annual
tests if an event occurs or circumstances change that would more likely than not
reduce the fair value of the asset below its carrying value amount. Events or
circumstances which could trigger an impairment review include a significant
adverse change in the business climate, an adverse action or assessment by a
regulator, unanticipated competition, a loss of key personnel, significant
changes in the manner of our use of the acquired assets or the strategy for our
overall business, or significant negative industry or economic trends.


                                       11
<PAGE>

Our principal consideration in determining impairment includes the strategic
benefit to the Company of the particular assets as measured by undiscounted
current and future operating income of the specified group of assets and
expected undiscounted cash flows. Should impairment be identified, a loss would
be reported to the extent that the carrying value of the asset exceeds the fair
value as determined by discounted future cash flows.

In fiscal year 2003, the Company analyzed goodwill for impairment at the Company
level.  As a result of the ongoing  reorganization  of the  Company's  reporting
structure,  in fiscal  year 2004 the  Company  conducted  a goodwill  impairment
analysis  at the  reporting  unit  level.  This  change may  affect the  amounts
recorded for goodwill impairment in future periods.

Based on the impairment tests performed by management, the Company reported
$4,062,003 of impairment of goodwill in fiscal 2004.  The impairment loss was
included in the loss on discontinued operations. There can be no assurance that
future goodwill impairment tests will not result in a charge to earnings.

Purchased intangible assets are carried at cost less accumulated amortization.
Amortization is computed over the estimated useful lives of the respective
assets, generally two to five years.

Legal contingencies

We are currently involved in legal proceedings, certain of which are discussed
elsewhere in this Form 10-KSB. We record liabilities related to pending
litigation when an unfavorable outcome is probable and we can reasonably
estimate the amount of loss. We have not recorded liabilities for certain
pending litigation because of the uncertainties related to assessing both the
amount and the probable outcome of those claims. As additional information
becomes available, we continually assess the potential liability related to
pending litigation. While we currently believe that the liabilities recorded on
our balance sheet are sufficient to cover pending litigation for which an
unfavorable outcome is probable and the amount of loss can be reasonably
estimated, the outcome of litigation is inherently uncertain, and there can be
no assurance that such estimates will be accurate or that, in the future,
additional reserves will not be required.


                                       12
<PAGE>

Income taxes

The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes. SFAS 109 prescribes the use of the liability
method. Under this method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to temporary differences between
the financial statement carrying amounts and the tax basis of assets and
liabilities. Deferred tax assets and liabilities are measured using the enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. We then assess
the likelihood that our deferred tax assets will be recovered from future
taxable income and to the extent we believe that recovery is not likely, we
establish a valuation allowance. To the extent we establish a valuation
allowance, or increase or decrease this allowance in a period, we increase or
decrease our income tax provision in our statement of operations. If any of our
estimates of our prior period taxable income or loss prove to be incorrect,
material differences could impact the amount and timing of income tax benefits
or payments for any period. In addition, as a result of the significant change
in the Company's ownership, the Company's future use of its existing net
operating losses may be limited.

Stock-Based Compensation

In December 2002, the FASB issued SFAS No. 148 - Accounting for Stock-Based
Compensation - Transition and Disclosure. This statement amends SFAS No. 123 -
Accounting for Stock-Based Compensation, providing alternative methods of
voluntarily transitioning to the fair market value based method of accounting
for stock based employee compensation. FAS 148 also require disclosure of the
method used to account for stock-based employee compensation and the effect of
the method in both the annual and interim financial statements. The provisions
of this statement related to transition methods are effective for fiscal years
ending after December 15, 2002, while provisions related to disclosure
requirements are effective in financial reports for interim periods beginning
after December 31, 2002.

The Company elected to continue to account for stock-based compensation plans
using the intrinsic value-based method of accounting prescribed by APB No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. Under
the provisions of APB No. 25, compensation expense is measured at the grant date
for the difference between the fair value of the stock and the exercise price.



                                       13
<PAGE>

RESULTS OF OPERATIONS

The following selected financial information has been derived from the Company's
consolidated financial statements. The information set forth below is not
necessarily indicative of results of future operations and cash flows and should
be read in conjunction with the consolidated financial statements and notes
thereto appearing elsewhere in this Form 10-KSB.

The following table sets forth the percentage relationships to revenues of
principal items contained in the Company's Consolidated Statements of Operations
for the fiscal years ended August 31, 2004 and 2003. The percentages discussed
throughout this analysis are stated on an approximate basis.


                                              FISCAL YEAR           FISCAL YEAR
                                              ENDED                 ENDED
                                              AUGUST 31,            AUGUST 31,
                                              2004                  2003
                                              -----------           ------------
Revenues                                        100.0%                100.0%
Cost of revenues                                 71.4%                 63.7%
                                                 -----                 -----
Gross profit                                     28.6%                 36.3%
Operating expenses                               90.0%                 54.9%
Operating loss                                  (61.4%)               (18.6%)
Other expenses, net                              (6.6%)                (4.5%)
Loss from continuing operations                 (68.1%)               (23.1%)
Loss on discontinued operations                 (31.3%)               (18.4%)
Net loss                                        (99.4%)               (41.5%)

Revenues

The Company's revenues of $7,732,021 and $8,872,052, for the years ended August
31, 2004 and 2003, respectively reflect a decrease of $1,140,031 or 12.8%. This
decrease is due to the reduced revenue from the Ericson Publishing, Inc.
(successor of Gibralter Publishing, Inc.) from 2003 to 2004 of $2,310,182.
Ericson Publishing, Inc. was a related party and the Company ceased providing
services for Ericson in July 2004. This decrease was substantially offset by a
growth in numerous other call center customers, including another related party
CheapSeats, Inc. Revenue from CheapSeats increased approximately $405,000 from
2003 to 2004, revenue from Time Warner increased approximately $282,000 from
2003 to 2004 and Smart Bargains.com/New Roads increased approximately $585,000
from 2003 to 2004.

Cost of revenues

Cost of revenues decreased $132,143 or 2.3% from $5,651,220 in fiscal 2003 to
$5,519,077 in fiscal 2004. This decrease was due primarily to the reduction in
revenue discussed above. This decrease is not as great, on a percentage basis,
as the 12.8% drop in revenue as a result of cost of revenue not being a totally
variable item.

Selling, General and Administrative

Selling, general and administrative expenses ("SG&A") during the year ended
August 31, 2004 and 2003, including depreciation and amortization were
$6,693,605 and $4,871,786, respectively. This increase of $2,091,819 from 2003
to 2004 represents an increase from 54.9% to 90% in SG&A as a percentage of
total revenues. This increase was the result of several components including
personnel costs that increased approximately $740,000 from 2003 to 2004. The
personnel working on the Company's SourceWare products increased in 2004 and
this accounted for $470,000 of this increase; these employees were employed for
less than two months in 2003 and were included for the entire year in 2004.
Compensation growth in the other portion of the Company's operations was due to
the transition of management and other issues occurring in the fourth quarter of
2004. Financing costs related to the factoring arrangement entered into in 2004
included warrants issued that resulted in $318,000 in expenses in 2004 that had
no corresponding cost in 2003. Lawsuit settlement costs of $400,000 in 2004


                                       14
<PAGE>

compared to $80,000 in 2003  accounted for a portion of the  increase.  Board of
Director  compensation,  which was  entirely  stock  grants or  options  totaled
approximately   $190,000  in  2004  with  no   corresponding   amount  in  2003.
Professional  fees,  legal and  accounting  related  to the  defense  of certain
lawsuits,  issuance of Series A Preferred Stock and the increasing complexity of
2004 accounting and reporting issues resulted in an increase in these costs from
$432,293  to $646,203 in fiscal  2003 and 2004,  respectively.  Occupancy  costs
account for  $481,838  and $416,275 or 7.1% and 8.5% of SG&A for the years ended
August  31,  2004  and  2003,   respectively.   Depreciation  of  equipment  and
amortization of goodwill and  capitalized  Software Costs accounted for $576,115
and $1,001,467 In the fiscal year ended August 31, 2004 and 2003,  respectively.
This decline of $425,352 is due entirely to a significant  portion of the assets
acquired in the February  2001 merger  being fully  depreciated  after  February
2004.

Interest Expense

Interest expense of $513,343 and $396,260 during the years ended August 31, 2004
and 2003, respectively represents an increase of $117,083 or 29.5% from 2003 to
2004. The 2004 amounts include approximately $135,000 paid in fees relating to
the factoring arrangement that was new in 2004. This factoring agreement also
included cash fees that were amortized in 2004 of an additional $155,000, there
was no corresponding amount in 2003. The 2003 amount for interest included
$125,000 for interest related to the $5,000,000 in notes due to Gibralter
Publishing, Inc. that were repaid in December 2002.



                                       15
<PAGE>

NET OPERATING LOSS

The Company has accumulated approximately $8,600,000 of net operating loss carry
forwards as of August 31, 2004, which may be offset against taxable income and
income taxes in future years. The use of these losses to reduce future income
tax liabilities will depend on the generation of sufficient taxable income prior
to the expiration of the net operating loss carry forwards. The carry forwards
expire in the year 2025. The February 2003 transaction with the Company's new
controlling shareholders resulted in a change in control of the Company; there
will be an annual limitation on the amount of net operating loss carry forwards
that can be used.

ACQUISITIONS

U.S. CONVERGION, INC.

On April 3, 2003, the Company acquired all of the issued and outstanding common
shares of U.S. Convergion, Inc. ("Convergion"), through an Agreement and Plan of
Exchange ("Agreement"). Pursuant to the Agreement, the Company acquired
Convergion, in exchange for $671,899 consisting of 374,630 shares of the
Company's restricted common stock in a transaction accounted for using the
purchase method of accounting.

The following summarizes the acquisition of Convergion:

Assets Acquired                              $ 2,588,152
Liabilities Assumed                           (5,817,256)
Goodwill                                       4,062,003
Acquisition Costs                               (161,000)
                                             -----------
                                             $   671,899
                                             ===========

The Company valued the common stock issued to the Convergion shareholders at
$1.79 per share, which approximated the fair value of the Company's common stock
at the date of acquisition. The Company has recorded the carryover basis of the
net assets acquired, which did not differ materially from their fair value and
its operating results have been included in the Company's consolidated financial
statements since the date of purchase. This subsidiary was sold in June 2004.


PLIANT TECHNOLOGIES, INC.

In July 2003, the Company acquired certain assets from Pliant Technologies, Inc.
("Pliant") in a transaction accounted for using the purchase method of
accounting.

The following summarizes the asset purchase agreement with Pliant:

Assets Acquired                              $   128,358
Liabilities Assumed                             (872,408)
Goodwill                                         745,050
                                             -----------
Cash Paid                                    $    (1,000)
                                             ===========

The Company has recorded the carryover basis of the net assets acquired, which
did not differ materially from their fair value and its operating results have
been included in the Company's consolidated financial statements since the date
of purchase.


                                       16
<PAGE>

Pursuant to a separate agreement between the Company and the holders of Pliant's
previously incurred debt assumed by the Company, the Company issued an aggregate
of 228,351 shares of its restricted common stock and warrants to purchase an
aggregate of 182,681 shares of its common stock in exchange for the discharge
and cancellation of $830,150 of assumed liabilities. The remaining amount
($42,258) of the assumed debt remains outstanding and is secured by a lien on
the purchased assets.


LIQUIDITY AND CAPITAL RESOURCES

The Company failed to generate positive cash flow during the year ended August
31, 2004, and its cash resources on hand are insufficient for its long term
needs. As a result, certain debt, vendor payables, capital leases and other
obligations are in arrears and default. This situation has existed since 2001
and the Company has taken several significant steps to alleviate the problems.
During fiscal 2004 and subsequent to year end, the Board of Directors approved
the sale of up to $7,000,000 in Series A preferred Stock. During the year,
$3,000,000 of these shares were sold. The Board elected to sell additional
shares since August 31, 2004 in an effort to stabilize the capital needs of the
Company and to permit the Company to exploit its knowledge management assets.
The Company expects that after completion of the sale of the Series A Preferred
Stock, an additional capital raise of up to $10,000,000 will be necessary to
provide the stability needed to fully exploit the Company's opportunities in the
knowledge management markets. Management has been aggressively preparing for
this subsequent offering and they are optimistic that the subsequent offering
will be possible and that it will be accretive to existing shareholders. There
are no assurances the Company will be successful in raising the funds required.
The Company also expects that sales of its SourceWare products will begin in the
second quarter of fiscal 2005, although this cannot be predicted with certainty.

Much of the Company's cash requirements in fiscal 2004 arose from liabilities
assumed with the connection with the Company's acquisition of U.S. Convergion,
Inc in April, 2003. The sale, in May 2004, of the subsidiary has alleviated this
problem and management has announced plans to sell its call center subsidiary,
ECOM. ECOM continues to require working capital to operate as its level of sales
have failed to provide adequate volume to breakeven. Additional cash
requirements related to the SourceWare related operations will continue until
sales are made.

The Company's two principal shareholders (who took control of the Company in the
February 2003 transaction) have also consistently provided the Company with
additional capital in the form of loans throughout 2004 and 2003. Advances have
been in response to a pressing need to meet a critical obligation of the
Company. As of August 31, 2004, these shareholders had provided the Company with
advances of $1,090,474. The Company will no longer have access to these loan
facilities from these shareholders. The transaction in November 2004,
established a relationship whereby these shareholders will no longer be relied
upon to assist the Company on an as needed basis.

For the year ended August 31, 2004, cash and cash equivalents increased from a
balance of $115,763 to $453,716 (including restricted cash of $109,617) at
August 31, 2004.

Net cash provided by (used in) operating activities in the years ended August
31, 2004 and 2003, respectively was $(4,612,268) and $55,047 due to the net loss
from continuing and discontinued operation of $10,467,537 (excluding gain from
sale of discontinued operation of $2,784,370) and $3,679,290, respectively. This
was comprised of a net increase (decrease)in working capital items of
approximately $(271,317) and $1,975,369. The effect on cash from operating
activities caused by these losses were offset by non-cash write off of the
impaired goodwill relating to the Company's subsidiary that was sold of
$4,062,003 and $-0- and depreciation and amortization expenses of $576,115 and
$1,001,467 during fiscal 2004 and 2003, respectively and payment of certain
expenses with the issuance of the Company's capital stock. The total of expenses
paid with the issuance of capital stock and stock options and warrants was
$1,224,270 and $407,501 during fiscal 2004 and 2003, respectively.

Net cash (used in) investing activities in fiscal 2004 and 2003 was $(287,634)
and $(496,311), respectively. This use in 2004 and 2003 was due to the purchase
of certain fixed assets necessary to the operations of the business and fees
related to the business acquisitions and in 2004 cash provided was attributable
to a reduction in short-term investments as required by operating uses during
the year.

                                       17
<PAGE>

Cash provided by financing activities in fiscal 2004 and 2003 was $5,015,665 and
$779,217 due  primarily to proceeds of  $2,772,260  (net of costs and fees) from
sale of Series A Preferred  stock and proceeds of  $1,282,912  (net of costs and
fees) from sale of Series B Preferred Shares in 2004.  Proceeds from issuance of
notes  payable (net of  repayments)  were  $464,105 and $779,217 for fiscal year
2004 and 2003,  respectively.  The Company also entered into a factor  agreement
and advances from factor amounted $496,388 in fiscal 2004.

THE INDEPENDENT AUDITOR'S REPORT ON THE COMPANY'S AUGUST 31, 2004 FINANCIAL
STATEMENTS INCLUDED IN THIS ANNUAL REPORT STATES THAT THE COMPANY'S RECURRING
LOSSES RAISE SUBSTANTIAL DOUBTS ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A
GOING CONCERN.

EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities." Interpretation 46 changes the criteria by which one
company includes another entity in its consolidated financial statements.
Previously, the criteria were based on control through voting interest.
Interpretation 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity. The
consolidation requirements of Interpretation 46 apply immediately to variable
interest entities created after January 31, 2003. The consolidation requirements
apply to older entities in the first fiscal year or interim period beginning
after June 15, 2003. Certain of the disclosure requirements apply in all
financial statements issued after January 31, 2003, regardless of when the
variable interest entity was established. The Company does not expect the
adoption to have a material impact to the Company's financial position or
results of operations.

In April 2003, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 149, AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES. SFAS 149 amends SFAS No. 133 to provide clarification on the
financial accounting and reporting of derivative instruments and hedging
activities and requires that contracts with similar characteristics be accounted
for on a comparable basis. The provisions of SFAS 149 are effective for
contracts entered into or modified after June 30, 2003, and for hedging
relationships designated after June 30, 2003. The adoption of SFAS 149 will not
have a material impact on the Company's results of operations or financial
position.

In May 2003, the FASB issued SFAS No. 150, ACCOUNTING FOR CERTAIN FINANCIAL
INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY. SFAS 150
establishes standards on the classification and measurement of certain financial
instruments with characteristics of both liabilities and equity. The provisions
of SFAS 150 are effective for financial instruments entered into or modified
after May 31, 2003 and to all other instruments that exist as of the beginning
of the first interim financial reporting period beginning after June 15, 2003.
The adoption of SFAS 150 will not have a material impact on the Company's
results of operations or financial position.

In December 2003, the FASB issued SFAS No. 132 (revised), EMPLOYERS' DISCLOSURES
ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS - AN AMENDMENT OF FASB
STATEMENTS NO. 87, 88, AND 106. This statement retains the disclosure
requirements contained in FASB statement no. 132, Employers' Disclosures about
Pensions and Other Postretirement Benefits, which it replaces. It requires
additional disclosures to those in the original statement 132 about the assets,
obligations, cash flows, and net periodic benefit cost of defined benefit
pension plans and other defined benefit postretirement plans. The required
information should be provided separately for pension plans and for other
postretirement benefit plans. The revision applies for the first fiscal or
annual interim period ending after December 15, 2003 for domestic pension plans
and June 15, 2004 for foreign pension plans and requires certain new disclosures
related to such plans. The adoption of this statement will not have a material
impact on the Company's results of operations or financial positions.

                                       18
<PAGE>

INFLATION

In the opinion of management, inflation has not had a material effect on the
operations of the Company.

ITEM7.     FINANCIAL STATEMENTS

The consolidated financial statements for Market Central, Inc. as of and for the
fiscal years ended August 31, 2004 and 2003 are included herein in response to
Item 7 of this Form 10-KSB.



                                       19
<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                       FINANCIAL STATEMENTS AND SCHEDULES

                            AUGUST 31, 2004 AND 2003


                         FORMING A PART OF ANNUAL REPORT
                 PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934


                              MARKET CENTRAL, INC.
                            (FORMERLY PALADYNE CORP.)





                                       F-1

<PAGE>

                              MARKET CENTRAL, INC.
                          INDEX TO FINANCIAL STATEMENTS


                                                                       Page
                                                                       ----
Report of Registered Independent Certified Public Accountants           F-3
Consolidated Balance Sheet at August 31, 2004                           F-4
Consolidated Statements of Losses for The Years Ended                   F-5
  August 31,   2004 and 2003
Consolidated Statements of Deficiency in Stockholders' Equity          F-6 ~ F-7
  for The Years Ended August 31, 2004 and 2003
Consolidated Statements of Cash Flows for The Years Ended              F-8 ~ F-9
   August 31, 2004 and 2003
Notes to Consolidated Financial Statements                           F-10 ~ F-33


                                      F-2
<PAGE>

                    RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
                          CERTIFIED PUBLIC ACCOUNTANTS

--------------------------------------------------------------------------------

          REPORT OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
Market Central, Inc.
Jacksonville, NC


We have audited the accompanying  consolidated  balance sheet of Market Central,
Inc.  and  subsidiaries  (the  "Company")  as of August 31, 2004 and the related
consolidated statements of losses,  deficiency in stockholders' equity, and cash
flows  for  the  two  years  then  ended.  These  financial  statements  are the
responsibility of the company's management.  Our responsibility is to express an
opinion on these financial statements based upon our audits.

We conducted  our audits in  accordance  with  standards  of the Public  Company
Accounting  Oversight Board (United States of America).  Those standards require
that we plan and perform the audit to obtain reasonable  assurance about whether
the financial statements are free of material  misstatements.  An audit includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall financial statement  presentation.  We believe our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of the
Company  and  subsidiaries  as of  August  31,  2004,  and  the  results  of its
operations and its cash flows for the two years then ended,  in conformity  with
accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. As discussed in Note P, the Company is
experiencing   difficulty  in  generating   sufficient  cash  flow  to  meet  it
obligations and sustain its operations, which raises substantial doubt about its
ability to continue  as a going  concern.  Management's  plans in regard to this
matter are  described  in Note P. The  financial  statements  do not include any
adjustments that might result from the outcome of this uncertainty.



                                    /s/ RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
                                    --------------------------------------------
                                        Russell Bedford Stefanou Mirchandani LLP
                                        Certified Public Accountants

McLean, Virginia
October 29, 2004, except as to Note Q, which is as of
December 3, 2004


                                      F-3
<PAGE>

                              MARKET CENTRAL, INC.
                           CONSOLIDATED BALANCE SHEET
                                 AUGUST 31, 2004

 ASSETS
 Current Assets:
 Cash and cash equivalents                                         $    344,099
 Accounts receivable, net of allowance for doubtful accounts of $0      719,262
 Accounts receivable - related parties, net of allowance for
   doubtful accounts of $0  (Note K)                                    277,119
 Prepaid expenses and other current assets                              149,282
                                                                   ------------
 Total Current Assets                                                 1,489,762

 Property and Equipment: (Note D) :
 Furniture and fixtures                                               1,051,489
 Computers and software                                               1,877,877
 Leasehold improvements                                               1,243,278
                                                                   ------------
                                                                      4,172,644
 Less: accumulated depreciation                                       3,281,195
                                                                   ------------
 Property and Equipment, net                                            891,449

 Other Assets:
  Restricted cash (Note C)                                              109,617
 Goodwill (Note B)                                                      745,050

 Deposits and other                                                      25,308
 Patents and trademarks, net of accumulated amortization of
   $32,440 (Note E)                                                      89,879
                                                                   ------------
 Total Other Assets                                                     969,854

 Total Assets                                                      $  3,351,065
                                                                   ============

 LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
 Current Liabilities:
 Accounts payable and accrued liabilities (Note G)                 $  4,327,696
 Notes payable to related parties (Note F)                            1,210,474
 Notes payable, current portion (Note F)                              1,830,422
 Due to factor (Note H)                                                 483,590

 Accrued preferred stock dividend (Note 1)                               61,067
 Current portion of capital lease obligation (Note O)                   648,484
                                                                   ------------
 Total Current Liabilities                                            8,561,733

 Capital lease obligation - long-term portion (Note O)                   64,716

 Commitments and Contingencies (Note O)                                      --

 Deficiency in Stockholders' Equity:
 Preferred stock, par value $.001 per share; 10,000,000 shares
   authorized;

 Series A - 2,251,407 shares issued and outstanding  (Note I)             2,251

 Series B - 350,000 shares issued and outstanding (Note I)                  350
 Common stock, par value $.001 per share; 75,000,000 shares
   authorized; 13,391,693 shares issued and outstanding (Note I)         13,392
 Common stock receivable (Note I and K)                                    (800)
 Additional paid-In-capital                                          27,672,231
 Preferred stock dividend - Series B (Note I)                          (875,000)
 Accumulated deficit                                                (32,087,808)
                                                                   ------------
 Total Deficiency in Stockholders' Equity                            (5,275,384)
                                                                   ------------
 Total Liabilities and Deficiency in Stockholders' Equity          $  3,351,065
                                                                   ============

           See accompanying notes to consolidated financial statements

                                      F-4
<PAGE>

                              MARKET CENTRAL, INC.
                        CONSOLIDATED STATEMENTS OF LOSSES
                  FOR THE YEARS ENDED AUGUST 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                            2004                2003
                                                                        ------------    ------------
<S>                                                                     <C>             <C>
Revenues, net                                                           $  7,732,021    $  8,872,052
Cost of sales                                                              5,519,077       5,651,220
                                                                        ------------    ------------

Gross profit                                                               2,212,944       3,220,832

Operating expenses:
Selling, general and administrative                                        6,387,490       3,870,319
Depreciation and amortization (Note D and E)                                 576,115       1,001,467
                                                                        ------------    ------------
Total operating expenses                                                   6,963,605       4,871,786

Loss from operations                                                      (4,750,661)     (1,650,954)

Other income (expenses):

Interest income (expenses)                                                  (513,343)       (396,260)
                                                                        ------------    ------------
Total other expenses                                                        (513,343)       (396,260)

Loss from continuing operations, before income taxes and
discontinued operations                                                   (5,264,004)     (2,047,214)

Provision for income taxes                                                        --              --
                                                                        ------------    ------------

Loss from continuing operations, before discontinued operations           (5,264,004)     (2,047,214)

Loss on discontinued operations (Note B)                                  (2,419,163)     (1,632,076)
                                                                        ------------    ------------

Net (loss)                                                              $ (7,683,167)   $ (3,679,290)
                                                                        ============    ============

Preferred stock dividend - beneficial conversion feature (Note I)           (875,000)             --
Cumulative convertible preferred stock dividend requirements (Note I)        (61,067)             --
                                                                        ------------    ------------

Net loss attributable to common shareholders                            $ (8,619,234)   $ (3,679,290)
                                                                        ============    ============

Net (loss) per common share (basic and assumed diluted) (Note M)        $      (0.65)   $      (0.45)
                                                                        ============    ============

Continuing operations:                                                         (0.47)          (0.25)
                                                                        ============    ============

Discontinued operations:                                                       (0.18)          (0.20)
                                                                        ============    ============
Weighted Average Shares Outstanding
Basic and assumed diluted                                                 13,293,655       8,090,736
                                                                        ============    ============
</TABLE>

         See accompanying notes to the consolidated financial statements

                                      F-5
<PAGE>

                              MARKET CENTRAL, INC.
          CONSOLIDATED STATEMENTS OF DEFICIENCY IN STOCKHOLDERS' EQUITY
                  FOR THE YEARS ENDED AUGUST 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                                    Preferred Stock
                                           Common Stock          -------------------------------------------------------------
                                     -------------------------                 Series                  Series
                                        Common         Stock     Series A      A Par      Series B     B Par       Series C
                                        Shares         Amount     Shares       Value      Shares       Value        Shares
                                     ------------    ---------   --------    ---------    --------   ---------   ------------
<S>                                     <C>          <C>          <C>        <C>                     <C>         <C>
BALANCE AT AUGUST 31, 2002              1,670,935    $   1,671    137,143    $     137          --   $      --   $  1,000,101
                                     ============    =========   ========    =========    ========   =========   ============
Issuance of Series D Preferred
Stock in exchange for notes payable            --           --         --           --          --          --             --
Issuance of Common Stock in
exchange for previously incurred
debt                                    8,880,739        8,881         --           --          --          --             --
Conversion of Series D Preferred
Stock to Common Stock                   1,000,000        1,000         --           --          --          --             --
Conversion of Series C Preferred
Stock to Common Stock                   1,080,101        1,080         --           --          --          --     (1,000,101)
Conversion of Series A Preferred
Stock to Common Stock                       9,238            9   (137,143)        (137)         --          --             --
Reversal of Series A Preferred
Stock dividend accrual                         --           --         --           --          --          --             --
Issuance of Common Stock in
exchange for services rendered             25,000           25         --           --          --          --             --
Issuance of Common Stock in
connection with acquisition of U.S.
Convergion, Inc. (Note B)                 374,630          375         --           --          --          --             --

Fractional shares                             (25)          --         --           --          --          --             --
Issuance of Common Stock in
connection with acquisition of
Pliant Technologies, Inc. (Note B)        228,351          228         --           --          --          --             --
Stock options and warrants issued
to consultants in exchange for
services rendered (Note J)                     --           --         --           --          --          --             --

Net loss                                       --           --         --           --          --          --             --
                                     ------------    ---------   --------    ---------    --------   ---------   ------------
BALANCE AT AUGUST 31, 2003             13,268,969    $  13,269         --    $      --          --   $      --             --
                                     ============    =========   ========    =========    ========   =========   ============


<CAPTION>
                                        Preferred Stock
                                     ----------------------
                                                                  Series
                                     Series C      Series D       D Par       Additional      Accumulated
                                     Par Value      Shares        Value     Paid-In-Capital     Deficit          Total
                                     ---------    ----------    ---------    ------------    ------------    ------------
<S>                                  <C>                        <C>          <C>             <C>             <C>
BALANCE AT AUGUST 31, 2002           $   1,000            --    $      --    $ 14,361,015    $(20,664,284)   $ (6,300,461)
                                     =========    ==========    =========    ============    ============    ============
Issuance of Series D Preferred
Stock in exchange for notes payable         --     1,000,000        1,000       4,999,000              --       5,000,000
Issuance of Common Stock in
exchange for previously incurred
debt                                        --            --           --         741,119              --         750,000
Conversion of Series D Preferred
Stock to Common Stock                       --    (1,000,000)      (1,000)             --              --              --
Conversion of Series C Preferred
Stock to Common Stock                   (1,000)           --           --             (80)             --              --
Conversion of Series A Preferred
Stock to Common Stock                       --            --           --             128              --              --
Reversal of Series A Preferred
Stock dividend accrual                      --            --           --         190,400              --         190,400
Issuance of Common Stock in
exchange for services rendered              --            --           --          44,975              --          45,000
Issuance of Common Stock in
connection with acquisition of U.S.
Convergion, Inc. (Note B)                   --            --           --         671,524              --         671,899

Fractional shares                           --            --           --              --              --              --
Issuance of Common Stock in
connection with acquisition of
Pliant Technologies, Inc. (Note B)          --            --           --         829,922              --         830,150
Stock options and warrants issued
to consultants in exchange for
services rendered (Note J)                  --            --           --          38,844              --          38,844

Net loss                                    --            --           --              --      (3,679,290)     (3,679,290)
                                     ---------    ----------    ---------    ------------    ------------    ------------
BALANCE AT AUGUST 31, 2003           $      --            --    $      --    $ 21,876,847    $(24,343,574)   $ (2,453,458)
                                     =========    ==========    =========    ============    ============    ============
</TABLE>

         See accompanying notes to the consolidated financial statements

                                      F-6
<PAGE>

                              MARKET CENTRAL, INC.
    CONSOLIDATED STATEMENTS OF DEFICIENCY IN STOCKHOLDERS' EQUITY (CONTINUED)
                  FOR THE YEARS ENDED AUGUST 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                         Series                                        Series
                                   Common       Stock      Series A      A Par      Series     Series B    Series      C Par
                                   Shares       Amount      Shares       Value     B Shares   Par Value   C Shares     Value
                                 ----------   ---------   ----------   ---------   --------   ---------   --------   --------
<S>                              <C>          <C>         <C>          <C>         <C>        <C>         <C>        <C>
Balance forward                  13,268,969   $  13,269           --   $      --         --   $      --         --   $     --
                                 ==========   =========   ==========   =========   ========   =========   ========   ========
Issuance of Series A Preferred
Stock in connection with a
private placement, net of
costs and fees (Note I)                  --          --    2,251,407       2,251         --          --         --         --
 Issuance of common stock to
consultants in exchange for
options exercised at $.01 per
share (Note J)                       67,500          68           --          --         --          --         --         --
Issuance of Series B Preferred
Stock in connection with a
private placement, net of
costs and fees (Note I)                  --          --           --          --    350,000         350         --         --
Warrants issued to consultants
in exchange financing costs
(Note J)                                 --          --           --          --         --          --         --         --
Stock options and warrants
issued to consultants in
exchange for services rendered
(Note J)                                 --          --           --          --         --          --         --         --
Beneficial conversion feature
of Series B Preferred Stock
(Note I)                                 --          --           --          --         --          --         --         --
Common stock issued to
Directors in exchange for
compensation (Note I)                55,224          55           --          --         --          --         --         --
Common stock to be canceled in
connection with Settlement
Agreement and Mutual Release
with the Company's former CEO
(Note K)                                 --          --           --          --         --          --         --         --
Series A preferred dividend
accrual (Note I)                         --          --           --          --         --          --         --         --


Net loss                                 --          --           --          --         --          --         --         --
                                 ----------   ---------   ----------   ---------   --------   ---------   --------   --------
Balance at August 31, 2004       13,391,693   $  13,392    2,251,407   $   2,251    350,000   $     350         --   $     --
                                 ==========   =========   ==========   =========   ========   =========   ========   ========


<CAPTION>
                                  Series     Series                       Common     Preferred
                                    D         D Par      Additional       Stock       Stock        Accumulated
                                  Shares      Value   Paid-In-Capital   Receivable   Dividend        Deficit          Total
                                 --------   ---------   ------------    ---------    ---------    ------------    ------------
<S>                              <C>        <C>         <C>             <C>          <C>          <C>             <C>
Balance forward                        --   $      --   $ 21,876,847    $      --    $      --    $(24,343,574)   $ (2,453,458)
                                 ========   =========   ============    =========    =========    ============    ============
Issuance of Series A Preferred
Stock in connection with a
private placement, net of
costs and fees (Note I)                --          --      2,770,009           --           --              --       2,772,260
 Issuance of common stock to
consultants in exchange for
options exercised at $.01 per
share (Note J)                         --          --         91,800           --           --              --          91,868
Issuance of Series B Preferred
Stock in connection with a
private placement, net of
costs and fees (Note I)                --          --      1,282,562           --           --              --       1,282,912
Warrants issued to consultants
in exchange financing costs
(Note J)                               --          --        383,579           --      383,579
Stock options and warrants
issued to consultants in
exchange for services rendered
(Note J)                               --          --        649,939           --           --              --         649,939
Beneficial conversion feature
of Series B Preferred Stock
(Note I)                               --          --        875,000           --     (875,000)             --              --
Common stock issued to
Directors in exchange for
compensation (Note I)                  --          --         98,829           --           --              --          98,884
Common stock to be canceled in
connection with Settlement
Agreement and Mutual Release
with the Company's former CEO
(Note K)                               --          --       (356,334)        (800)          --              --        (357,134)
Series A preferred dividend
accrual (Note I)                       --          --        (61,067)          --           --         (61,067)        (61,067)


Net loss                               --          --             --           --           --      (7,683,167)     (7,683,167)
                                 --------   ---------   ------------    ---------    ---------    ------------    ------------
Balance at August 31, 2004             --   $      --   $ 27,672,231    $    (800)   $(875,000)   $(32,087,808)   $ (5,275,384)
                                 ========   =========   ============    =========    =========    ============    ============
</TABLE>

         See accompanying notes to the consolidated financial statements

                                      F-7
<PAGE>

                              MARKET CENTRAL, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
                    THE YEARS ENDED AUGUST 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                    2004            2003
                                                                 -----------    -----------
<S>                                                              <C>            <C>
Cash flows from operating activities:
Net loss for the period from continuing operations               $(5,264,004)   $(2,047,214)

Net loss for the period from discontinued operations (Note B)     (5,203,533)    (1,632,076)

Preferred stock dividend (Note I)                                   (875,000)            --
  Adjustment to reconcile net income to net cash:

      Depreciation and amortization (Note D and E)                   576,115      1,001,467

      Impairment of goodwill (Note B)                              4,062,003             --
      Common stock issued in exchange for services rendered
(Note I)                                                             190,752         45,000
      Stock options and warrants issued in exchange for
services rendered (Note J)                                         1,033,518         38,844
      Common stock issued in exchange for expenses paid by
shareholders                                                              --        323,657

      Write-off of accounts receivable                                    --        350,000

      Write-off of inventory                                           9,678             --
      Beneficial conversion feature of Series B Preferred
Stock (Note I)                                                       875,000             --

      Write-off of Convergion fixed assets                           254,520             --
  Change in assets and liabilities:

      (Increase)/Decrease in accounts receivable                     266,344         80,638

      (Increase)/Decrease in costs in excess of billings              50,446             --

      (Increase)/Decrease in other assets                            (30,210)       334,672
      Increase/(Decrease) in cash disbursed in excess of
available funds                                                     (111,581)        72,725
      Increase/(Decrease) in accounts payable and accrued
expenses                                                            (215,257)     2,053,941

      Increase/(Decrease) in deferred revenue                       (231,059)      (566,607)
                                                                 -----------    -----------

Net cash provided by/(used in) operating activities:              (4,612,268)        55,047

Cash flows from investing activities:
   Cash paid in connection with acquisition of Pliant assets
(Note B)                                                                  --         (1,000)
   Acquisition costs paid in connection with acquisition of US
Convergion (Note B)                                                       --       (161,000)

  Purchase of property and equipment                                (287,634)      (334,311)
                                                                 -----------    -----------

Net cash (used in) investing activities                             (287,634)      (496,311)

Cash flows from financing activities:

  Proceeds from sale of Series A preferred stock, net of costs
and fees (Note I)                                                  2,772,260             --
  Proceeds from sale of Series B preferred stock, net of costs
and fees (Note I)                                                  1,282,912             --

  Proceeds from issuance of notes payable, net of repayments         464,105        779,217

  Due to factor                                                      496,388             --

                                                                 -----------    -----------

Net cash provided by financing activities                          5,015,665        779,217


Net increase (decrease) in cash and cash equivalents                 115,763        337,953

Cash and cash equivalents at beginning of year                       337,953             --
                                                                 -----------    -----------

Restricted cash (Note C)                                             109,617             --
Cash and cash equivalents at end of year                         $   344,099    $   337,953
                                                                 ===========    ===========
</TABLE>

         See accompanying notes to the consolidated financial statements


                                      F-8
<PAGE>

                              MARKET CENTRAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE YEARS ENDED AUGUST 31, 2004 AND 2003

<TABLE>
<CAPTION>
Supplemental Disclosures of Cash Flow Information:              2004            2003
                                                             -----------    -----------
<S>                                                          <C>            <C>
Cash paid during the period for interest                     $   156,390    $   188,329

Cash paid during the period for income taxes                          --             --

Common stock issued in exchange for services rendered            190,752         45,000
Stock options and warrants issued in exchange for services
rendered                                                       1,033,518         38,844

Common stock issued in exchange for notes payable                     --        426,343
Common stock issued in exchange for expenses paid by
shareholders                                                          --        323,657

Preferred stock issued in exchange for notes payable                  --      5,000,000

Accrued preferred stock dividend                                  61,067             --
Disposal of US Convergion, Inc.: (Note B)
  Sylvia common stock received                               $       500    $        --

  Assets disposed of                                             (68,211)            --

  Debts assumed by Sylvia                                      2,967,081             --

  Net gain on disposal of segment                             (2,784,370)            --
                                                             -----------    -----------
  Disposition costs                                          $   115,000    $        --
                                                             ===========    ===========
Acquisition of US Convergion, Inc. (Note B):
  Assets acquired                                            $        --    $ 2,588,152

  Goodwill                                                            --      4,062,003

  Liabilities assumed                                                 --     (5,817,256)

  Common stock issued                                                 --       (671,899)
                                                             -----------    -----------
  Net cash paid for acquisition                              $        --    $   161,000
                                                             ===========    ===========
Purchase Agreement with Pliant: (Note B):
  Assets acquired                                            $        --    $   128,358

  Goodwill                                                            --        745,050

  Liabilities assumed                                                 --       (872,408)
                                                             -----------    -----------
  Net cash paid for acquisition                              $        --    $     1,000
                                                             ===========    ===========
</TABLE>

         See accompanying notes to the consolidated financial statements


                                       F-9
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE A - SUMARY OF ACCOUNTING POLICIES

A summary of the significant  accounting  policies applied in the preparation of
the accompanying financial statements follows.

Business and Basis of Presentation

Market Central,  Inc. (the "Company") is a global technology  management company
specializing in solutions that connect people and businesses  with  information.
The company  holds  multiple  patents and  patent-pending  technologies  and has
developed a suite of solutions that include software for next-generation search,
intelligent  document  recognition,   data  capture,   cleansing,   mining,  and
integration.

The consolidated  financial  statements  include the accounts of the Company and
its wholly owned subsidiaries, ecommerce support centers, inc. ("ecom") and U.S.
Convergion, Inc. ("Convergion").  All significant inter-company transactions and
balances have been  eliminated in  consolidation.  In May 2004, the Company sold
Convergion to Sylvia  Holding Co., Inc.  ("Sylvia"),  a Nevada  Corporation,  in
exchange  for  500,000  shares of  Sylvia's  common  stock,  and other goods and
valuable  consideration.  The Convergion  business segment is accounted for as a
discontinued  operation,  and accordingly,  amounts in the financial statements,
and  related  notes  for  all  periods  shown  have  been  restated  to  reflect
discontinued  operations  accounting.  Summarized  results  of the  discontinued
business are further described in Note B.

The Company current  operations  consist of providing  outsourced contact center
solutions through ecom.

Revenue Recognition

The Company  recognizes  revenues from  contracts in which the Company  provides
only consulting services as the services are performed. The contractual terms of
the  agreements  dictate the  recognition  of revenue by the  Company.  Payments
received in advance are deferred until the service is provided.

Contract costs include all direct equipment, material, and labor costs and those
indirect costs related to contract performance, such as indirect labor. Selling,
general and administrative costs are charged to expense as incurred.  Provisions
for estimated  losses on  uncompleted  contracts are made in the period in which
such  losses  are  determined.   Changes  in  contract   performance,   contract
conditions,  and estimated  profitability  that may result in revisions to costs
and income are recognized in the period in which the revisions are determined.

The asset,  "costs in excess of  billings,"  represents  revenues  recognized in
excess of amounts billed. The liability,  "deferred revenue" represents billings
in excess of revenues recognized.

Advertising

The Company  follows the policy of charging the costs of advertising to expenses
incurred. The Company incurred no advertising costs during the year ended August
31, 2004 and 2003.


                                      F-10
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE A - SUMARY OF ACCOUNTING POLICIES (CONTINUED)

Research and Development

The Company  accounts for research and development  costs in accordance with the
Financial   Accounting  Standards  Board's  Statement  of  Financial  Accounting
Standards  No. 2 ("SFAS 2"),  "Accounting  for Research and  Development  Costs.
Under SFAS 2, all research and  development  costs must be charged to expense as
incurred.  Accordingly,  internal research and development costs are expensed as
incurred.  Third-party  research and  developments  costs are expensed  when the
contracted  work has been performed or as milestone  results have been achieved.
Company-sponsored  research and  development  costs  related to both present and
future  products are expensed in the period  incurred.  The Company  incurred no
research  and product  development  costs for the year ended August 31, 2004 and
2003.

Income Taxes

Income taxes are provided based on the liability method for financial  reporting
purposes in accordance with the provisions of Statements of Financial  Standards
No. 109,  "Accounting  for Income Taxes".  Under this method deferred tax assets
and liabilities are recognized for the future tax  consequences  attributable to
differences  between the financial statement carrying amounts of existing assets
and  liabilities  are  measured  using  enacted  tax rates  expected to apply to
taxable income in the years in which those temporary differences are expected to
be removed or settled.  The effect on deferred tax assets and  liabilities  of a
change in tax rates is  recognized  in the statement of operations in the period
that includes the enactment date.

Cash Equivalents

For purposes of the Statements of Cash Flows,  the Company  considers all highly
liquid debt  instruments  purchased with a maturity date of three months or less
to be cash equivalents.

Property and Equipment

Property and equipment are stated at cost and  depreciated  over their estimated
useful lives of 27 to 60 months using the straight-line method (Note D).

Long-Lived Assets

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 144
(SFAS  144).  The  Statement   requires  that  long-lived   assets  and  certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  Events relating to recoverability  may include
significant  unfavorable changes in business conditions,  recurring losses, or a
forecasted  inability to achieve  break-even  operating results over an extended
period. The Company evaluates the recoverability of long-lived assets based upon
forecasted  undercounted cash flows. Should an impairment in value be indicated,
the carrying value of intangible assets will be adjusted,  based on estimates of
future discounted cash flows resulting from the use and ultimate  disposition of
the asset.  SFAS No. 144 also  requires  assets to be disposed of be reported at
the lower of the carrying amount or the fair value less costs to sell.


                                      F-11
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE A - SUMARY OF ACCOUNTING POLICIES (CONTINUED)

Inventories

Inventories  are  stated  at the  lower  of cost  or  market  determined  by the
first-in, first-out (FIFO) method. Inventories consist of Internet applications,
routers and related  products  available for sale to distributors and retailers.
After  disposal of  Convergion  segment  (Note B), the Company has no longer has
inventories.

Capitalized Computer Hardware and Software

The Company  records the purchase of computer  hardware at  historical  cost and
amortizes  this cost  over a period  of three to five  years.  The  Company  has
adopted SOP 98-1,  "Accounting for the Costs of Computer  Software  Developed or
Obtained for Internal  Use." The Company  capitalizes  software  purchased  from
third  parties if the related  software  product under  development  has reached
technological  feasibility  or if  there  are  alternative  future  uses for the
purchased  software  provided that  capitalized  amounts will be realized over a
period not exceeding five years.

In addition, the company capitalizes costs of materials, consultants,  interest,
and payroll  and  payroll-related  costs for  employees  incurred in  developing
internal-use computer software once technological feasibility is attained. Costs
incurred prior to the establishment of technological  feasibility are charged to
general and administrative expense.

Concentrations of Credit Risk

Financial  instruments and related items, which potentially  subject the Company
to  concentrations  of credit risk,  consist primarily of cash, cash equivalents
and related party  receivables.  The Company  places its cash and temporary cash
investments with credit quality institutions.  At times, such investments may be
in excess of the FDIC  insurance  limit.  The Company  periodically  reviews its
trade  receivables  in  determining  its  allowance for doubtful  accounts.  The
allowance for doubtful accounts was $0 at August 31, 2004.

Stock Based Compensation

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
amends SFAS No.  123,  "Accounting  for  Stock-Based  Compensation,"  to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
statement  amends  the  disclosure  requirements  of  SFAS  No.  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  The Company has chosen to continue to account
for stock-based  compensation using the intrinsic value method prescribed in APB
Opinion No. 25 and related  interpretations.  Accordingly,  compensation expense
for stock options is measured as the excess, if any, of the fair market value of
the  Company's  stock at the date of the grant  over the  exercise  price of the
related option.


                                      F-12
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE A - SUMARY OF ACCOUNTING POLICIES (CONTINUED)

Stock Based Compensation (Continued)

The Company has adopted the annual disclosure  provisions of SFAS No. 148 in its
financial reports for the year ended August 31, 2003 and has adopted the interim
disclosure  provisions for its financial reports for the subsequent periods. Had
compensation  costs for the Company's stock options been determined based on the
fair value at the grant dates for the awards,  the Company's net loss and losses
per share  would  have been as follows  (transactions  involving  stock  options
issued to employees and  Black-Scholes  model  assumptions are presented in Note
J):

<TABLE>
<CAPTION>
                                                                 2004           2003
                                                             -----------    -----------
<S>                                                          <C>            <C>
Net loss - as reported                                       $(7,683,167)   $(3,679,290)
Add:  Total  stock  based  employee  compensation  expense
as reported under intrinsic value method (APB. No. 25)                --             --
Deduct:  Total stock based employee  compensation  expense
as reported under fair value based method (SFAS No. 123)        (752,517)      (184,045)
                                                             -----------    -----------
Net loss - Pro forma                                         $(8,435,684)   $(3,863,335)
Net loss attributable to common stockholders - Pro forma     $(9,371,751)   $(3,863,335)
Basic (and assuming dilution) loss per share - as reported   $     (0.65)   $     (0.45)
Basic (and assuming dilution) loss per share - Pro forma     $     (0.70)   $     (0.48)
</TABLE>

Liquidity

As shown in the accompanying  financial  statements,  the Company incurred a net
loss of $5,264,004 and $2,047,214  from  continuing  operations  during the year
ended August 31, 2004 and 2003, respectively.  The Company's current liabilities
exceeded its current assets by $7,071,971 as of August 31, 2004.

Net Earnings (Losses) Per Share

The Company computes earnings per share under Financial  Accounting Standard No.
128,  "Earnings Per Share" (SFAS 128).  Net loss per common share is computed by
dividing net loss by the weighted  average  number of shares of common stock and
dilutive common stock equivalents  outstanding during the year.  Dilutive common
stock  equivalents  consist of shares  issuable upon  conversion of  convertible
preferred  shares and the exercise of the  Company's  stock options and warrants
(calculated  using the treasury stock method).  During the year ended August 31,
2004 and 2003, common stock equivalents are not considered in the calculation of
the weighted average number of common shares  outstanding  because they would be
anti-dilutive, thereby decreasing the net loss per common share.

Reclassifications

Certain reclassifications have been made in prior years' financial statements to
conform to classifications used in the current year.


                                      F-13
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE A - SUMARY OF ACCOUNTING POLICIES (CONTINUED)

Comprehensive Income

Statement of Financial  Accounting  Standards No. 130 ("SFAS  130"),  "Reporting
Comprehensive  Income,"  establishes  standards for reporting and  displaying of
comprehensive  income,  its components and accumulated  balances.  Comprehensive
income is defined to include all changes in equity except those  resulting  from
investments by owners and distributions to owners. Among other disclosures, SFAS
130 requires  that all items that are required to be  recognized  under  current
accounting  standards as  components  of  comprehensive  income be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial  statements.  The  Company  does not have any  items of  comprehensive
income in any of the periods presented.

Segment Information

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 131,
Disclosures  about  Segments of an  Enterprise  and Related  Information  ("SFAS
131"). SFAS establishes  standards for reporting information regarding operating
segments in annual financial  statements and requires  selected  information for
those  segments  to  be  presented  in  interim   financial  reports  issued  to
stockholders.  SFAS 131 also establishes standards for related disclosures about
products and services and geographic areas. Operating segments are identified as
components of an enterprise about which separate discrete financial  information
is available for evaluation by the chief  operating  decision maker, or decision
making  group,  in  making  decisions  how  to  allocate  resources  and  assess
performance.  The information disclosed herein, materially represents all of the
financial information related to the Company's principal operating segments.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect certain  reported  amounts and  disclosures.  Accordingly  actual results
could differ from those estimates.

New Accounting Pronouncements

In December 2003, the FASB issued SFAS No. 132 (revised), EMPLOYERS' DISCLOSURES
ABOUT  PENSIONS  AND  OTHER  POSTRETIREMENT  BENEFITS  - AN  AMENDMENT  OF  FASB
STATEMENTS  NO.  87,  88,  AND  106.  This  statement   retains  the  disclosure
requirements  contained in FASB statement no. 132, Employers'  Disclosures about
Pensions  and Other  Postretirement  Benefits,  which it  replaces.  It requires
additional  disclosures to those in the original statement 132 about the assets,
obligations,  cash  flows,  and net  periodic  benefit  cost of defined  benefit
pension  plans and other  defined  benefit  postretirement  plans.  The required
information  should  be  provided  separately  for  pension  plans and for other
postretirement  benefit  plans.  The  revision  applies for the first  fiscal or
annual interim period ending after December 15, 2003 for domestic  pension plans
and June 15, 2004 for foreign pension plans and requires certain new disclosures
related to such plans.  The adoption of this  statement will not have a material
impact on the Company's results of operations or financial positions.


                                      F-14
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE A - SUMARY OF ACCOUNTING POLICIES (CONTINUED)

New Accounting Pronouncements (Continued)

In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150
("SFAS  No.  150"),   "Accounting  for  Certain   Financial   Instruments   with
Characteristics  of both  Liabilities  and  Equity."  SFAS No.  150  establishes
standards  for  how  an  issuer   classifies  and  measures  certain   financial
instruments with  characteristics  of both liabilities and equity.  SFAS No. 150
requires that an issuer classify a financial instrument that is within the scope
of SFAS  No.  150 as a  liability.  SFAS  No.  150 is  effective  for  financial
instruments  entered  into or modified  after May 31,  2003,  and  otherwise  is
effective for the Company  beginning  October 1, 2003.  The adoption of SFAS No.
150 did not have a  material  impact  on the  Company's  financial  position  or
results of operations.

In January 2003, the FASB issued FASB  Interpretation No. 46,  "Consolidation of
Variable  Interest  Entities"  ("FIN 46"). This  interpretation  explains how to
identify variable interest entities and how an enterprise  assesses its interest
in a variable interest entity to decide whether to consolidate that entity. This
interpretation requires existing unconsolidated variable interest entities to be
consolidated by their primary  beneficiaries  if the entities do not effectively
disperse  risks  among  parties   involved.   Variable  interest  entities  that
effectively  disperse risks will not be consolidated unless a single party holds
an interest or combination of interest that  effectively  recombines  risks that
were previously dispersed.  FIN 46 was revised in December 2003 and is effective
for the first  financial  reporting  period  after March 15,  2004.  The Company
adopted the  provisions of FIN 46 beginning with the quarter ended May 31, 2004,
which did not have a material impact on the financial statements.

NOTE B - BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS

Acquisitions

Pliant Technologies, Inc.
In July 2003, the Company acquired certain assets from Pliant Technologies, Inc.
("Pliant")  in  a  transaction  accounted  for  using  the  purchase  method  of
accounting. The following summarizes the asset purchase agreement with Pliant:

   Assets acquired                      $ 128,358
   Liabilities assumed                   (872,408)
   Goodwill                               745,050
   Cash paid                            $  (1,000)
                                        ==========


                                      F-15
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE B - BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS (CONTINUED)

Pliant Technologies, Inc. (Continued)

The Company has recorded the carryover basis of the net assets  acquired,  which
did not differ  materially from their fair value and its operating  results have
been included in the Company's  consolidated financial statements since the date
of  purchase.  Pursuant  to a separate  agreement  between  the  Company and the
holders of Pliant's previously incurred debt assumed by the Company, the Company
issued an aggregate of 228,351  shares of its  restricted  common stock (Note I)
and warrants to purchase an  aggregate of 182,681  shares of its common stock in
exchange for the discharge and cancellation of $830,150 of assumed  liabilities.
The remaining  amount  ($42,258) of the assumed debt remains  outstanding and is
secured by a lien on the purchased assets.

U.S. Convergion, Inc.

On April 3, 2003, the Company acquired all of the issued and outstanding  common
shares of U.S. Convergion, Inc. ("Convergion"), through an Agreement and Plan of
Exchange  ("Agreement").   Pursuant  to  the  Agreement,  the  Company  acquired
Convergion,  in  exchange  for  $671,899  consisting  of  374,630  shares of the
Company's  restricted  common  stock in a  transaction  accounted  for using the
purchase method of accounting (see Note I).

The following summarizes the acquisition of Convergion:

  Issuance of 374,630 shares of common stock (Note I)        $ (671,899)
  Assets acquired                                             2,588,152
  Liabilities assumed                                        (5,817,256)
  Goodwill                                                    4,062,003
                                                             -----------
  Acquisition costs                                          $ (161,000)
                                                             ===========

The Company  valued the common stock issued to the  Convergion  shareholders  at
$1.79 per share, which approximated the fair value of the Company's common stock
at the date of acquisition.  The Company has recorded the carryover basis of the
net assets acquired,  which did not differ  materially from their fair value and
its operating results have been included in the Company's consolidated financial
statements since the date of purchase.

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 142
"Goodwill and Other Intangible  Assets" (SFAS No. 142) effective August 1, 2002.
SFAS No. 142 addresses how intangible  assets that are acquired  individually or
with a group of other  assets  should be accounted  for in financial  statements
upon their acquisition.  This statement requires goodwill  amortization to cease
and for goodwill to be periodically reviewed for impairment.


                                      F-16
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE B - BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS (CONTINUED)

U.S. Convergion, Inc. (Continued)

Under  SFAS No.  142,  goodwill  impairment  occurs  if the net book  value of a
reporting unit exceeds its estimated  fair value.  In February 2004, the Company
completed a test for goodwill in connection with acquisition of Convergion,  and
the  result  indicated  that the  recorded  book  value of this  reporting  unit
exceeded its fair value, as determined by discounted cash flows. The decrease in
fair value is a result of:

      o     Significant operating losses since the date of acquisition
      o     Unanticipated decline in revenues and profitability
      o     Loss of key personnel

As a result of these events and circumstances,  Company management believes that
more likely than not the fair value of the  reporting  unit's  goodwill has been
reduced  below  its  carrying  value.  As  a  result,  management  performed  an
evaluation of the reporting  unit's tangible and intangible  assets for purposes
of  determining  the implied  fair value of  goodwill.  Upon  completion  of the
assessment, the Company recorded a non-cash impairment charge of $4,062,003, net
of tax,  or $0.31 per share in  February  2004 to reduce the  carrying  value of
goodwill in this reporting unit to its estimated value of $0.

Considerable   management   judgment  is  necessary  to  estimate   fair  value.
Accordingly,   actual  results  could  vary   significantly   from  managements'
estimates.

Divestitures and Discontinued Operations

In May 2004, the Company sold Convergion to Sylvia Holding Co., Inc.  ("Sylvia")
through a Stock  Purchase  Agreement  ("Purchase  Agreement").  Pursuant  to the
Purchase   Agreement,   Sylvia  acquired  certain  assets  and  assumed  certain
liabilities  of Convergion and agreed to issue to the Company a total of 500,000
shares of its common stock  valued at $0.001 per share.  As a result of the sale
of the Convergion  business segment,  the Company accounted for the segment as a
discontinued operation, and accordingly, the amounts in the financial statements
and  related  notes  for  all  periods  shown  have  been  restated  to  reflect
discontinued operations accounting.

The following summarizes the disposition of the Convergion business segment:

  Sylvia common stock                              $       500
  Debts assumed by Sylvia                            2,967,081
  Net assets disposed of                               (68,211)
  Disposition costs                                   (115,000)
                                                   -----------
  Net gain on disposal of Convergion               $ 2,784,370
                                                   ===========


                                      F-17
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE B - BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS (CONTINUED)

U.S. Convergion, Inc. (Continued)

The financial  statements  reflect the operating results and balance sheet items
of the  discontinued  operations  separately from continuing  operations.  Prior
years have been restated.  Operating results for the discontinued operations for
the year ended August 31, 2004 and 2003 were:

                                                   2004           2003
                                               -----------    -----------
Revenues                                       $ 2,249,354    $ 2,848,556
Expenses                                        (3,390,884)    (4,480,632)
Impairment of goodwill                          (4,062,003)            --
                                               -----------    -----------
Net loss  before tax                            (5,203,533)    (1,632,076)
Income tax provision (benefit)                          --             --
                                               -----------    -----------
Net loss                                        (5,203,533)    (1,632,076)

Net gain on sale of Convergion, before tax       2,784,370             --
Income tax provision (benefit)                          --             --
                                               -----------    -----------
Gain on sale, net of tax                         2,784,370             --
                                               -----------    -----------
Loss on discontinued operations , net of tax   $(2,419,163)   $(1,632,076)
                                               ===========    ===========

In connection with the Stock Purchase Agreement,  the Company issued to Sylvia a
promissory  note ("Note") in the amount of $500,000 to serve as security for the
obligations  of the Company under the Stock Purchase  Agreement.  The Note shall
only become due and  payable  upon the demand of Sylvia upon an event of default
of the Stock  Purchase  Agreement.  Additionally,  the  Company  entered  into a
Security Agreement with Sylvia. Pursuant to the Security Agreement,  the Company
granted  Sylvia a security  interest in any and all  existing or after  acquired
assets of the Company, up to $3,000,000,  securing the Company's  obligations to
Sylvia under the Note (collectively the "Escrow Document").  The Escrow Document
is held by the legal counsel of Sylvia and shall be released to the Company when
all covenants,  representation,  and conditions in the Stock Purchase  Agreement
are complied and satisfied.  As of August 31, 2004, the Escrow  Document has not
been released by Sylvia. Additionally, the Company management believes that more
likely than not the fair value of the Sylvia common stock has been reduced below
its  carrying  value at August 31,  2004.  As a result,  the Company  recorded a
non-cash impairment charge of $500 to reduce the carrying value of Sylvia common
stock to its estimated value of $0.


                                      F-18
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE C - RESTRICTED CASH

In June 2004, the Onslow County Tax Office,  North Carolina requested to garnish
the Company's  bank balance in the amount of $109,617 for  outstanding  property
taxes owed by the  Company's  wholly-owned  subsidiary,  ecom.  The  Company has
obtained  a court  order to  allow  the  Company  to  defend  its  position  and
recalculate the exact amount of taxes due. The Company management  believes that
the recalculated  amount due was approximately  $78,000.  As of August 31, 2004,
the  Company has not  resolved  the issue with  Onslow  County Tax  Office.  The
Company  has  included  the amount of taxes due in its  accrued  liabilities  at
August 31, 2004 and accounted restricted cash in the amount of $109,617.

NOTE D - PROPERTY AND EQUIPMENT

Major  classes of  property  and  equipment  at August 31,  2004  consist of the
following:

Leasehold Improvements                                     $  1,243,278
Furniture and Fixtures                                        1,051,489
Computer Equipment and Software                               1,877,877
                                                           ------------
                                                              4,172,644
Less: Accumulated Depreciation                               (3,281,195)
                                                           ------------
Net Property and Equipment                                 $    891,449
                                                           ============

Total  depreciation  expense charged to operations for the year ended August 31,
2004 and 2003 are $543,675 and $1,001,467, respectively.

NOTE E - PATENTS AND TRADEMARKS

The Company has adopted  SFAS No. 142,  Goodwill  and Other  Intangible  Assets,
whereby the Company periodically tests its intangible assets for impairment.  On
an annual basis, and when there is reason to suspect that their values have been
diminished  or  impaired,  these  assets  will be  tested  for  impairment,  and
write-downs to be included in results from operations may be necessary.

The costs and  accumulated  amortization of patents and trademarks at August 31,
2004 are summarized as follows:

                 Patents and trademarks                        $ 122,319
                 Less:  accumulated amortization                 (32,440)
                                                               ---------
                 Intangible assets, net                        $  89,879
                                                               =========

Total  amortization  expense charged to operations for the year ended August 31,
2004 and 2003 are $32,440 and $0, respectively.


                                      F-19
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE F - NOTES PAYABLE

Notes Payable at August 31, 2004 are as follows:

<TABLE>
<CAPTION>
<S>                                                                                               <C>
Note payable in monthly installments of $33,333 including interest at 6% per annum; maturity
date is in March 2005; collateralized by 500,000 shares held by a major stockholder and
personal guarantees by two stockholders.  The Company is currently in default under the
terms of the note agreement                                                                       $    501,134
Note payable in monthly installments of $1,919 including interest at 7.34% per annum;
unsecured; maturity date is in May 2005.                                                                18,975
Note payable in monthly installments of $2,813 including interest at 6% per annum;
unsecured; maturity date is in February 2005.                                                           19,180
Note payable to Bank in monthly installments of interest only at LIBOR daily floating rate
plus 3.5%; original maturity date was in July 2004, the Company has requested and the bank
has agreed to extend the maturity date every 30 days; current maturity date is in January
2005; personally guaranteed by Company shareholders.                                                 1,250,000
Note payable on demand to a related party, interest payable at 6% per annum on repayment
date; unsecured. (Note K and Q)                                                                        237,569
Note payable on demand to a related party, interest payable at 6% per annum on repayment
date; unsecured. (Note K and Q)                                                                        852,905
Note payable on demand to a related party, non-interest bearing; unsecured; maturity date is
in May 2004; the Company shall repay the note with Company common stock.  The Company is
currently in default under the terms of the note agreement. (Note K)                                   120,000
Note payable; liabilities assumed pursuant to Assets Purchase Agreement with Pliant (see
Note B); interest payable at 12% per annum, interest due and principal due in March 2004;
unsecured.  The Company is in default under the terms of the note agreements.                           41,133
                                                                                                  ------------
                                                                                                     3,040,896
Less: current portion                                                                               (3,040,896)
                                                                                                  ------------
                                                                                                  $         --
                                                                                                  ============
</TABLE>

NOTE G - ACCOUNTS PAYABLE AND ACCURED LAIBILITIES

Accounts payable and accrued liabilities at August 31, 2004 are as follows:

        Accounts payable                                    $ 2,863,682
        Accrued interest                                          2,462
        Accrued payroll, payroll expenses and
          taxes                                               1,161,552
        Other accrued expenses in connection
          with litigation (Note O)                              300,000
                                                            -----------
        Total                                               $ 4,327,696
                                                            ===========


                                      F-20
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE H - DUE TO FACTOR

The Company's  subsidiary,  ecommerce support centers,  inc., has an arrangement
for a  $2,000,000  factoring  facility  whereby  the factor  purchases  eligible
receivables and advances 80% of the purchased  amount to the Company.  Purchased
receivables  are bought at 96.25% of their face amount.  The Company  receives a
rebate of 2.40% for invoices paid by customers  between one to thirty days,  and
2.36% for  invoices  paid by  customers  after  thirty days  reduced by .04% per
additional day such invoice  remains  outstanding.  The arrangement is accounted
for as a sale of  receivables  on  which  the  factor  has  recourse  to the 20%
residual of aggregate receivables  purchased and outstanding.  Net charge to the
Company is 1.35% of the invoices  paid by customers  between one to thirty days,
and 1.39% after thirty days,  increased by .04% per  additional day such invoice
remains outstanding.  In connection with this agreement, the Company is required
to maintain certain financial  covenants.  As of August 31, 2004, the Company is
in default under the factor agreement.

At August 31, 2004,  balance due from factor  (included in accounts  receivable)
was as follows:

Accounts Receivable - Factored                        $  604,488
Less: Advance from Factor                               (483,590)
                                                      ----------
Net Due from Factor                                   $  120,898
                                                      ==========

NOTE I - CAPITAL STOCK

The Company is authorized to issue 75,000,000  shares of common stock with $.001
par value per share and  10,000,000  shares of  preferred  stock  with $.001 par
value per share.  In February 2003, the Company  affected a one-for-ten  reverse
stock split of its outstanding shares of common stock. The Company's  75,000,000
authorized shares of common stock with $.001 par value remained  unchanged.  All
references  in  consolidated   financial   statements  and  notes  to  financial
statements,  numbers of shares and share  amounts have been  restated to reflect
the reverse split.  As of August 31, 2004, the Company has 13,391,693  shares of
common stock issued and outstanding.

On December 10, 2002, the Company issued  1,000,000 shares of Series D preferred
stock to Gibralter  Publishing,  Inc. in exchange for the  cancellation of notes
payable of  $3,500,000  and  $1,500,000  and any  accrued  and  unpaid  interest
thereon.

In February 2003, the Company issued an aggregate of 8,880,739  shares of common
stock in exchange for $750,000 of previously incurred debt.


                                      F-21
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE I - CAPITAL STOCK (CONTINUED)

In March 2003, the Company issued  1,000,000  shares of common stock in exchange
for all of the outstanding shares of Series D Preferred Stock,  1,080,000 shares
of common stock for all of the  outstanding  shares of Series C Preferred  Stock
and 9,238 shares of commons stock for all of the outstanding  shares of Series A
Preferred  Stock.  Pursuant  to the  conversion  agreements  with the holders of
Series A Preferred  Stock,  stockholders  relinquished all rights to accumulated
dividends.  The  Company  accounted  all  accumulated  and unpaid  dividends  of
$190,400 as additional paid-in capital. The Company has no Series C and Series D
Preferred Stock outstanding at August 31, 2004.

In March 2003,  the Company issued 25,000 shares of common stock to a consultant
in exchange for services valued at $1.80 per share,  which approximated the fair
value of the  shares  issued  during  the period  the  services  were  rendered.
Compensation  costs of $45,000 were charged to operations  during the year ended
August 31,  2003.  In April 2003,  the Company  issued an  aggregate  of 374,630
shares of restricted  common stock in  connection  with the  acquisition  of U.S
Convergion.  (Note B). In July 2003,  the Company issued an aggregate of 228,351
shares of  restricted  common stock in exchange for the assumed  liabilities  of
$830,150 as part of the acquisition of Pliant (Note B).

In December 2003, the Company's Board of Directors designated 2,251,407 shares
of Series A Convertible Preferred Stock, par value $.001 per share (the "Series
A Preferred Stock") and 350,000 shares of Series B Convertible Preferred Stock,
par value $.001 per share (the "Series B Preferred Stock "). Both Series A
Preferred Stock and Series B Preferred Stock have a liquidation preference which
is senior to the Company's Common Stock.

In December 2003,  the Company  approved a private  placement  offering of up to
$3,000,000 of its authorized  Series A Preferred Stock at $1.3325 per share. The
Series A Preferred Stock is convertible  into one share of the Company's  common
stock after a one-year period from the date of issuance.  The Series A Preferred
Stock  provides  for a 4%  annual  cumulative  dividend,  that is  payable  when
declared by the  Company's  Board of  Directors  and is payable in shares of the
Series A  Preferred  Stock.  As of August 31,  2004,  the  Company had issued an
aggregate  of  2,251,407  shares  of  Series  A  Preferred  Stock  and  received
$2,772,260 of proceeds, net of offering costs and fees of $227,740. As of August
31, 2004,  the Company had accrued  cumulative  preferred  stock  dividends  and
charged to retained deficit in the amount of $61,067.

During the year ended August 31, 2004 the Company issued an aggregate of 350,000
shares of Series B Preferred Stock and received a total proceeds of $1,282,912,
net of costs and fees of $367,339. The Series B Preferred Stock is convertible
into common stock at the lesser of $1.75 per share or 80% of the lowest bid
price for the common stock in the 10 business days preceding the conversion but
it cannot be less than 50% of the $1.75 or $.875. This results in the conversion
of a maximum of 4,000,000 shares and a minimum of 2,000,000 shares of the
Company's common stock. The Series B Preferred Stock holders also have an option
to acquire additional common shares in an amount to permit the conversion rights
plus this option to result in a total of 4,000,000 shares of the Company's
common stock.

                                      F-22
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE I - CAPITAL STOCK (CONTINUED)

In  accordance  with  Emerging  Issues  Task Force Issue  98-5,  Accounting  for
Convertible  Securities  with a Beneficial  Conversion  Features or Contingently
Adjustable  Conversion Ratios ("EITF 98-5"),  the Company recognized an imbedded
beneficial  conversion  feature  present in the Series B  Convertible  Preferred
Stock.  The Company  recognized  and measured an  aggregate  of $875,000,  which
equals to the intrinsic value of the imbedded beneficial  conversion feature, to
additional paid-in capital and a return to the Series B Preferred Stock holders.
Since the preferred shares were convertible at the date of issuance,  the return
to the preferred  shareholders  attributed to the beneficial  conversion feature
has been recognized in full at the date the Series B Preferred Stock was issued.

Pursuant  to the  Series B  Preferred  Stock  purchase  agreement,  the  Company
transferred  2,000,000 shares of its common stock to an Escrow Agent. The shares
are to be held by the  Escrow  Agent  pending  any  conversion  of the  Series B
Convertible  Preferred Stock. The 2,000,000 shares of common stock were coded so
as not be  considered  issued  until the Series B Preferred  Stock  shareholders
exercise  the  conversion  right.  As of August 31,  2004,  none of the Series B
Preferred Stock shareholders exercised the conversion right.

In March and May 2004,  the Company  issued an aggregate of 67,500 shares of its
common stock to a consultant  in exchange for stock  options  exercised at $0.01
per share.  The Company  received $68 of proceeds.  The Company valued the stock
options  at the fair  value of its common  shares at the date the  options  were
granted.  Compensation  costs of $91,800 were charged to  operations  during the
year ended August 31, 2004 (Note J).

In August 2004, the Company authorized to issue an aggregate of 55,224 shares if
its common stock to four Board of Director  members in exchange for compensation
expenses  totaling  $98,884.  The shares were  valued at $1.79 per share,  which
approximated  the fair value of the shares issued during the period the services
were rendered.  Additionally,  in connection  with the Settlement  Agreement and
Mutual Release the Company entered into in August 2004 with the Company's former
CEO and Board of Directors  member  ("Former  CEO"),  the Company  accounted the
800,000  shares of the Company's  common stock to be returned from Former CEO as
common stock receivable (Note K).

NOTE J - STOCK OPTIONS AND WARRANTS

Options

The  following  table  summarizes  the  changes in options  outstanding  and the
related prices for the shares of the Company's common stock issued to employees,
consultants  and  shareholders  at August 31, 2004,  after giving effect to 1:10
reverse split in common stock in February 2003:


                                      F-23
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE J - STOCK OPTIONS AND WARRANTS (CONTINUED)

Options (Continued)

<TABLE>
<CAPTION>
                                   Options Outstanding                         Options Exercisable
                                    Weighted Average       Weighted      -------------------------------
                       Number       Contractual Life       Average         Number        Weighted Average
  Exercise Price     Outstanding        (Years)         Exercise Price   Exercisable      Exercise Price
  --------------     -----------        -------         --------------   -----------      --------------
<S>                     <C>              <C>                <C>             <C>               <C>
$  .01 - $3.16          977,592          3.86               $ 1.69          327,591           $  2.04
$ 7.00 - $9.50           20,000          0.61               $ 8.25           20,000           $  8.25
$10.25 - $11.40          68,335          0.42               $10.26           68,335           $ 10.26
                      ---------          ----               ------          -------           -------
                      1,065,927          2.69               $ 2.06          415,926           $  4.81
                      =========          ====               ======          =======           =======
</TABLE>

Transactions involving the Company's options issuance are summarized as follows:

                                                 Number      Weighted Average
                                                of shares     Exercise Price
                                               ----------    ----------------
Outstanding at August 31, 2002                    207,743       $    9.00
                                               ==========       =========
Granted                                           185,000            2.30
Exercised                                              --              --
Cancelled                                         (90,533)           3.66
                                               ----------       ---------
Outstanding at August 31, 2003                    302,210            5.22
                                               ==========       =========
Granted                                           844,092            1.30
Exercised                                         (67,500)            .01
Cancelled                                         (12,875)          17.06
                                               ----------       ---------
Outstanding at August 31, 2004                  1,065,927       $    2.06
                                               ==========       =========

Warrants

The  following  table  summarizes  the changes in warrants  outstanding  and the
related prices for the shares of the Company's common stock issued to employees,
consultants  and  shareholders  at August 31, 2004 after  giving  effect to 1:10
reverse split in common stock in February 2003.

<TABLE>
<CAPTION>
                                      Warrants Outstanding                         Warrants Exercisable
                                      --------------------                    ------------------------------
                                         Weighted Average      Weighted                          Weighted
                           Number        Contractual Life       Average          Number           Average
  Exercise Prices:      Outstanding          (Years)        Exercise Price    Exercisable     Exercise Price
  ----------------      -----------          -------        --------------    -----------     --------------
<C>                       <C>                 <C>               <C>            <C>                <C>
$ 1.33 - $7.81            4,591,466           3.37              $ 2.77         4,591,466          $  2.77
$11.06 - $11.88             117,931           1.00              $11.49           117,931          $ 11.49
$12.81 - $17.50              21,350           1.22              $15.13            21,350          $ 15.13
$25.00 - $33.75              16,250           0.43              $25.67            16,250          $ 25.67
                          ---------           ----              ------         ---------          -------
                          4,746,997           3.29              $ 3.12         4,746,997          $  3.12
                          =========           ====              ======         =========          =======
</TABLE>


                                      F-24
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE J - STOCK OPTIONS AND WARRANTS (CONTINUED)

Warrants (Continued)

Transactions  involving  the  Company's  warrants  issuance  are  summarized  as
follows:

                                                    Number      Weighted Average
                                                   of shares     Exercise Price
                                                  ----------    ----------------
Outstanding at August 31, 2002                       602,434       $   17.00
                                                  ==========       =========
Granted                                            3,891,014            2.83
Exercised                                                 --              --
Cancelled                                           (358,272)           7.94
                                                  ----------       ---------
Outstanding at August 31, 2003                     4,135,176       $    3.43
                                                  ==========       =========
Granted                                              692,452            2.12
Exercised                                                 --              --
Cancelled                                            (80,631)          16.89
                                                  ----------       ---------
Outstanding at August 31, 2004                     4,746,997       $    3.12
                                                  ==========       =========

The  weighted-average  fair  value of stock  options  and  warrants  granted  to
employees,  consultants and shareholders  during the years ended August 31, 2004
and 2003 and the  weighted-average  significant  assumptions  used to  determine
those fair values, using a Black-Scholes option pricing model are as follows:

                                                           2004         2003
                                                        ----------   ----------
Significant assumptions (weighted-average):
Risk-free interest rate at grant date                        1.06%        1.28%
Expected stock price volatility                                90%          38%
Expected dividend payout                                        --           --
Expected option life-years (a)                          3.0 to 4.0   3.0 to 4.0

(a) The expected option/warrant life is based on contractual expiration dates.


The Company  charged to  operations  compensation  expenses in  connection  with
granting  stock  options and  warrants to  consultants  a total of $323,739  and
$38,844  during  the  year  ended  August  31,  2004  and  2003,   respectively.
Additionally,  included in the total numbers of stock options  outstanding  were
193,377 stock options the Company granted to consultants in exchange for accrued
service fees and services rendered,  exercisable at $0.01 per share. The Company
valued  those  options at the fair market  value of its common stock at the date
the options were granted. The options granted settled $64,349 of accrued service
fees,  and  additional   compensation  expenses  of  $261,851  were  charged  to
operations  during the year ended  August 31, 2004.  As of August 31, 2004,  the
Company received $68 of proceeds for 67,500 stock options exercised at $0.01 per
share,  the Company  valued those options at the fair market value of its common
stock at the date the options were granted and $91,800 of  compensation  expense
was charged to  operations  during the year ended  August 31, 2004 (Note I). The
Company  also  granted  warrants to a  consultant  in  exchange  for one year of
financing  services.  Financing  costs of $383,579 was capitalized and amortized
over  twelve-month  period.  During the year ended August 31, 2004,  the Company
charged to operations $319,648 of amortized financing costs.


                                      F-25
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE J - STOCK OPTIONS AND WARRANTS (CONTINUED)

If the Company recognized compensation cost for the non-qualified employee stock
option plan in  accordance  with SFAS No. 123, the  Company's pro forma net loss
attributable  to  common  stockholders  and net loss per share  would  have been
$(9,371,751)  and $(0.70),  respectively  for the year ended August 31, 2004 and
$(3,863,335) and $(0.48), respectively for the year ended August 31, 2003.

NOTE K - RELATED PARTY TRANSACTIONS

During  the years  ended  August  31,  2004 and  2003,  the  Company  recognized
$1,162,691  and  $3,472,773  of  sales  in  connection  with  services  provided
Gibraltar  Publishing,  Inc.,  ("Gibraltar")  representing  15%  and  39% of the
Company's  sales for the years  ended  August 31,  2004 and 2003,  respectively.
Gibraltar was controlled by the Company's  former CEO,  director and significant
shareholder.

The Company also provides services to J&C Nationwide, Inc. and Cheapseats, Inc.,
companies owned and controlled by a director and significant  shareholder of the
Company.  The Company  recognized  $613,774 and $121,895 of sales in  connection
with services provided J&C Nationwide,  Inc. and Cheapseats,  Inc., representing
8% and 1% of the  Company's  sales for the years ended August 31, 2004 and 2003,
respectively.  J&C Nationwide,  Inc. and  Cheapseats,  Inc. were indebted to the
Company for  services  in the amount of $277,119  and $91,460 at August 31, 2004
and 2003, respectively.

As of August 31,  2002 the company was  indebted to  Gibraltar  to the extent of
approximately  $5,000,000. In December 2002, the Company issued 1,000,000 shares
of Series D Preferred Stock (Note I) to Gibraltar in exchange for such debt. The
Series D Preferred  Stock was converted into  1,000,000  shares of the Company's
common  stock in February  2003 as final  settlement  for the  $5,000,000  notes
payable to Gibraltar.  Accrued  interest on the notes of $920,652 was applied to
the balance that Gibraltar owed the Company for services.

Gibraltar  was  indebted to the  Company for  services in the amount of $168,607
(net of allowance  for doubtful  account of $60,000) at August 31, 2003.  During
the  year  ended  August  31,  2003,  the  Company  paid  certain   general  and
administrative  expenses on behalf of  Gibraltar,  the amount  Gibraltar due the
Company was $101,376 at August 31, 2003.

In August  2004,  the Company  entered into a  Settlement  Agreement  and Mutual
Release  ("Settlement")  with the  Company's  former CEO and Board of  Directors
member ("Former CEO"). Pursuant to the Settlement,  Former CEO agreed to sell to
the Company  800,000  shares of the  Company's  common stock owned by him for an
aggregate  of $1.00 plus other good and valuable  consideration.  Former CEO and
the Company  agreed to certain  releases  of each other and certain  affiliates,
including Gibraltar. The Company intends to cancel the shares returned by Former
CEO,  and  Former CEO agreed not to sell or  otherwise  transfer  the  remaining
351,173  shares of Company  common  stock owned by him until after  November 30,
2004.


                                      F-26
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE K - RELATED PARTY TRANSACTIONS (CONTINUED)

In connection  with the  Settlement,  the Company was legally  released from its
obligation of $176,146 of unpaid accrued salaries to Former CEO, and $203,770 of
accrued  expenses due to Gibraltar and other entities  controlled by Former CEO.
The Company  legally  released  Gibraltar  from  obligations of $656,297 (net of
allowance for doubtful  account of $60,000) of trade payable due to the Company,
and $80,753 of other expenses Gibraltar and other entities  controlled by Former
CEO indebted to the Company. As of August 31, 2004, the Company has not received
the  800,000  shares of the  Company's  common  stock  from  Former  CEO and has
accounted  the  common  shares  to be  returned  by Former  CEO as common  stock
receivable, and accounted $356,334 of net cost in connection with the Settlement
as a reduction in additional paid-in capital.

During  the  year  ended  August  31,  2003,  two  of  the  Company's  principal
shareholders  advanced funds in the form of unsecured notes, interest payable at
6% per annum, to the Company for working capital purposes. As of August 31, 2004
and 2003, the amounts due to the  shareholders are $1,090,474 and $308,696 (Note
F). Additionally,  a Company principal shareholder advanced funds in the form of
an  unsecured,  non-interest  bearing  note to the Company  for working  capital
purposes.  As of August 31, 2004 and 2003, the amount due to the  shareholder is
$120,000.  The Company  shall  repay the note with  common  stock at the rate of
100,000  shares of  common  stock per  $120,000  of  advances.  The  Company  is
currently in default under the term of the note agreement (Note F)

NOTE L - BUSINESS CONCENTRATION

Revenue from three (3) major customers  approximated  $4,287,297 or 55% of sales
and  $5,668,000  or 64% of sales for the years  ended  August 31, 2004 and 2003,
respectively.

NOTE M - LOSSES PER COMMON SHARE

The following  table  presents the  computation  of basic and diluted losses per
share:

                                                         2004           2003
                                                     -----------    -----------
      Net loss available for common shareholders     $(8,619,234)   $(3,679,290)
                                                     ===========    ===========
      Basic and fully diluted loss per share         $     (0.65)   $     (0.45)
                                                     ===========    ===========
      Continuing operations                          $     (0.47)   $     (0.25)
                                                     ===========    ===========
      Discontinued operations                        $     (0.18)   $     (0.20)
                                                     ===========    ===========
      Weighted average common shares outstanding      13,293,655      8,090,736
                                                     ===========    ===========


NOTE N - INCOME TAXES

The Company has adopted  Financial  Accounting  Standard Number 109 ("SFAS 109")
which requires the  recognition of deferred tax  liabilities  and assets for the
expected  future  tax  consequences  of events  that have been  included  in the
financial statement or tax returns. Under this method,  deferred tax liabilities
and assets are determined based on the difference  between financial  statements
and tax basis of assets and  liabilities  using  enacted tax rates in effect for
the year in which the differences are expected to reverse. Temporary differences
between taxable income reported for financial  reporting purposes and income tax
purposes are insignificant.


                                      F-27
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE N - INCOME TAXES (CONTINUED)

For income tax reporting purposes,  the Company's aggregate unused net operating
losses approximate $8,600,000, which expire through 2025. The deferred tax asset
related  to the  carryforward  is  approximately  $2,924,000.  The  Company  has
provided a valuation  reserve  against the full amount of the net operating loss
benefit,  since in the opinion of management  based upon the earnings history of
the  Company,  it is more likely than not that the  benefits  will be  realized.
Significant  changes  in  ownership  may limit the  Company's  future use of its
existing net operating losses.

Components of deferred tax assets as of August 31, 2004 are as follows:

Non-current:
Net operating loss carryforward                      $ 2,924,000
Valuation allowance                                   (2,924,000)
                                                     -----------
Net deferred tax asset                               $        --
                                                     ===========

NOTE O - COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

The Company leases office space under operating leases in Memphis, Tennessee for
its corporate use. Commitments for minimum rentals under  non-cancelable  leases
at August 31, 2004 are monthly  payments of $3,067 through May 2005. The Company
is  seeking  to  sublease  to others the office  space,  after the  disposal  of
Convergion business segment (Note B).

The Company leases office space under operating leases in North Carolina for its
corporate use. The lease is non-cancelable with a five-year term through May 31,
2008.

Commitments for minimum rentals under  non-cancelable  leases at August 31, 2004
are as follows:

                    Year                                Amount
                    ----                              ---------
                    2005                              $ 211,353
                    2006                                195,000
                    2007                                198,750
                    2008                                157,500
                                                      ---------
                   Total                              $ 762,603
                                                      =========

The Company  incurred and charged to operations  $245,317 and $308,353 in rental
expense for the years ended August 31, 2004 and 2003, respectively.


                                      F-28
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE O - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Capital Lease Obligations

Computer  equipment and software  includes the following amounts for capitalized
leases at August 31, 2004:

Computer equipment and software                              $ 1,234,202
Less: accumulated depreciation and amortization                 (985,932)
                                                             -----------
                                                             $   248,270
                                                             ===========

Future minimum lease payments required under the capital leases are as follows:

2005                                                         $   682,604
2006                                                              55,471
2007                                                               9,245
                                                             -----------
                                                             $   747,320
Less: amount representing interest                               (34,120)
                                                             -----------
                                                                 713,200
Less: current portion                                           (648,484)
                                                             -----------
Long-term portion                                            $    64,716
                                                             ===========
The Company had computer equipment and software  purchased under  non-cancelable
leases with an original  principal  cost of  $1,234,202  as of August 31,  2004.
Depreciation  expenses for computer  equipment and software under capital leases
amounted  $214,156  and  $309,900  for the year ended  August 31, 2004 and 2003,
respectively. The Company is currently in default under the terms of the capital
lease agreements in a total amount of $593,013. Consulting Agreements

The Company has consulting agreements with outside contractors,  certain of whom
are also Company  stockholders.  The  Agreements  are generally for a term of 12
months  from  inception  and  renewable  automatically  from year to year unless
either the Company or Consultant terminates such engagement by written notice.


                                      F-29
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE O - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Litigation

Tweddle Litho Corp. vs. Gibralter Publicing, Inc. and Market Central, Inc.

In October 2003, Tweddle Litho Company ("Tweddle") filed a complaint against the
Company and Gibralter Publishing, Inc. ("Gibralter", the Company's predecessor),
in the United States District  Court,  Eastern  District of North Carolina.  The
complaint  alleges  that the Company and  Gibralter  had engaged in a fraudulent
conveyance in December 2002, at such time that  Gilbralter  released the Company
from two promissory notes totaling  approximately $5 million in exchange for the
issuance of certain  Company  stock and  warrants  (Note I and K). The action in
North  Carolina  arose out of a  judgment  that  Tweddle  had  obtained  against
Gibralter in Michigan for  approximately  $400,000.  In August 2004, the Company
executed a Settlement  Agreement and Mutual Release with Tweddle and accordingly
accrued and  included in its accrued  liabilities  an  aggregate  of $400,000 of
settlement  fees in connection with the settlement  agreement.  As of August 31,
2004,  the Company  has paid to Tweddle  $150,000 of the  settlement  fees,  and
$250,000  remains  outstanding  and scheduled to be paid in full before February
2005.

United States of America vs. Market Central, Inc.

Subsequent  to the date of financial  statements,  the  Honorable  James C. Fox,
United States District Court,  Eastern  District of North Carolina Judge entered
an order requesting the U.S.  Attorney for Eastern District of North Carolina to
prosecute  an alleged  criminal  contempt of court that  occurred in the case of
Tweddle against the Company and Gibralter.  In October 2004, the Company and the
U.S.  Attorney entered into a written Plea Agreement  whereby the Company agreed
to pay $50,000 for the alleged criminal contempt of court. The matter is set for
disposition in U.S.  District  Court for the Eastern  District of North Carolina
ion January 18, 2005. The U.S. Attorney is supporting the Plea Agreement and the
Company expects that the Court will accept the Plea  Agreement.  The Company has
accounted the $50,000 for the alleged  criminal  contempt of court in connection
with the Plea Agreement as accrued liabilities at August 31, 2004.

Graybar Electric Company, Inc. vs. U.S. Convergion, Inc.

In August  2003,  a Default  Judgment  was entered in favor of Graybar  Electric
Company,  Inc. and against U.S.  Convergion,  Inc. in the amount of $43,869.  In
July 2004,  Graybar  Electric  Company,  Inc. filed a Notice of Filing a Foreign
Judgment in the General Court of Justice Superior Court Division, State of North
Carolina,  County of Onslow captioned as Graybar Electric Company, Inc. vs. U.S.
Convergion,  Inc. and Market Central,  Inc.  Subsequent to the date of financial
statements,  the Company filed its Rule 12(B)(6) Motion to Dismiss Complaint for
Foreign  Judgment;  Notice of Defenses,  by which the Company asserted  absolute
defenses  to the claim and the  Foreign  Judgment  was not  entered  against the
Company, but rather, against U.S. Convergion, Inc. The Company believes that the
claim will be defeated.


                                      F-30
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE O - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Litigation (Continued)

IMEC vs. Market Central, Inc.

In January  2004,  a judgment in the amount of $16,294 was entered  against U.S.
Convergion, Inc. in the Court of General Sessions, State of Tennessee, County of
Shelby in the case captioned as IMEC v. U.S. Convergion, Inc. In June 2004, IMEC
filed a Notice of Filing a Foreign  Judgment  in the  General  Court of  Justice
Superior Court Division, State of North Carolina,  County of Onslow captioned as
IMEC vs. Market Central,  Inc. f/d/b/a U.S.  Convergion,  Inc. Subsequent to the
date of financial  statements,  the Company  filed its Rule  12(B)(6)  Motion to
Dismiss Complaint for Foreign Judgment; Notice of Defenses, by which the Company
asserted absolute defenses to the claim and the Foreign Judgment was not entered
against the  Company,  but rather,  against  U.S.  Convergion,  Inc. The Company
believes that the claim will be defeated.

Lucius L. Patterson vs. Market Central, Inc.

In April 2004,  Lucius l.  Patterson  obtained a Foreign  Judgment  against U.S.
Convergion,  Inc. in the case captioned  Lucius L. Patterson vs. Market Central,
Inc. d/b/a U.S. Convergion, Inc. in the Circuit Court of Mobile County, Alabama,
in the amount of $39,897.  In August 2004, Lucius L. Patterson filed a Notice of
Filing a  Foreign  Judgment  in the  General  Court of  Justice  Superior  Court
Division,  State of North  Carolina,  County  of Onslow  captioned  as Lucius L.
Patterson  vs.  Market  Central,  Inc.  d/b/a U.S.  Convergion,  Inc. and Market
Central, Inc. Subsequent to the date of financial statements,  the Company filed
its Rule 12(B)(6) Motion to Dismiss  Complaint for Foreign  Judgment;  Notice of
Defenses,  by which the Company asserted  absolute defenses to the claim and the
Foreign Judgment was not entered against the Company,  but rather,  against U.S.
Convergion, Inc. The Company believes that the claim will be defeated.

iGate,  Inc.,   Successor-In-Interest  to  Mastech  Systems  Corporation,  iGate
Mastech, Inc. f/k/a Emplifi. Inc. and Ejiva, LLC f/k/a Ejiva, Inc. vs. Gibralter
Publishing, Inc. and Market Central, Inc.

In April 2004, iGate filed a Compliant  against Gibralter  Publishing,  Inc. and
the Company claiming that the Company was liable to iGate, Inc. in the amount of
$724,161. In May 2004, a default was entered against the Company.  Subsequent to
the date of financial statements,  the Court vacated the default and granted the
Company leave to file its Answer to the Complaint.  The Company filed its Answer
and Affirmative Defenses alleging absolute defenses to the claims of iGate, Inc.
The Company  asserts that it has no liabilities  to iGate,  inc. and will defeat
all liabilities asseryed in the Complaint.


                                      F-31
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE O - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Litigation (Continued)

Edward Arthur Bohn vs. Terrence Jude Leifheit;  E-Commerce Support Center, Inc.;
Gibralter  Publishing,  Inc; Global Demand Publishing,  Inc.; Sky Investments of
Jacksonville, Inc.; Jan Kaster and Market Central, Inc.

Subsequent to the date of financial statements, Edward Bohn filed a Compliant to
initiate the above-captioned  action, and obtained a Temporary Restraining Order
on the same day.  Subsequently,  Edward Bohn modified the Temporary  Restraining
Order to limit its  effort  against  the  Company,  to enjoin the  Company  from
issuing its stock to Terrence Jude Leifheit.  Subsequently, an Amended Complaint
was filed by Edward  Bohn to dismiss  all counts  against the Company and ecom.,
except for injunctive  relief  relating to the issuance of the Company's  stock.
The Company has no  liabilities  asserted  against either by Plaintiff or any of
the Defendants.

Weindruch vs. Paladyne

In May 2002,  Ronald Lynn Weindruch filed a complaint against the Company in the
Circuit Court of the  Eighteenth  Judicial  Circuit in and for Seminole  County,
Florida.  The  compliant  alleges  a  breach  of  contract.  Weindruch  received
judgments  against the Company in the amount of $50,000.  The  judgment  remains
unsatisfied  and  the  Company  believes  it  has  meritorious  defenses  to the
plaintiff's   claims  and  intends  to  vigorously  defend  itself  against  the
plaintiff's claims.

The Company is subject to other legal proceedings and claims, which arise in the
ordinary  course of its  business.  Although  occasional  adverse  decisions  or
settlements may occur, the Company  believes that the final  disposition of such
matters will not have material adverse effect on its financial position, results
of operations or liquidity.

NOTE P - GOING CONCERN MATTERS

The accompanying  statements have been prepared on a going concern basis,  which
contemplates  the  realization of assets and the  satisfaction of liabilities in
the normal course of business. As shown in the consolidated financial statements
during the years ended  August 31, 2004 and 2003,  the Company  incurred  losses
from  continuing  operations of $5,264,004  and  $2,047,214,  respectively.  The
Company's  current  liabilities  exceeded its current assets by $7,071,971 as of
August 31, 2004.  These  factors among others may indicate that the Company will
be unable to continue as a going concern for a reasonable period of time.

The  Company's  existence  is  dependent  upon  management's  ability to develop
profitable operations and resolve its liquidity problems. Management anticipates
the Company will attain  profitable status and improve its liquidity through the
continued  developing,  marketing  and selling of its  products and services and
additional  equity  investment  in the Company.  The  accompanying  consolidated
financial statements do not include any adjustments that might result should the
Company be unable to continue as a going concern.


                                      F-32
<PAGE>

                              MARKET CENTRAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003

NOTE P - GOING CONCERN MATTERS (CONTINUED)

In order to improve the  Company's  liquidity,  the Company is actively  pursing
additional  equity financing  through  discussions  with investment  bankers and
private  investors.  There can be no assurance the Company will be successful in
its effort to secure additional equity financing

If  operations  and cash  flows  continue  to  improve  through  these  efforts,
management  believes  that the Company can  continue  to  operate.  However,  no
assurance  can be given that  management's  actions  will  result in  profitable
operations or the resolution of its liquidity problems.

NOTE Q - SUBSEQUENT EVENTS

In September 2004, the Company  received  2,000,000  shares of common stock from
Ariel Way, Inc.  (approximately 10% of the outstanding stock of Ariel Way, Inc.)
a private company.  These shares received were in exchange for a license for the
software  controlled by Convey  Systems,  Inc. and other  management  consulting
services provided by the Company's executive management.  The Company expects to
complete the purchase of Convey Systems, Inc. in February 2005. This license and
the  consulting  services were valued at $250,000 by Ariel Way, Inc.

In November  2004,  the  Company's  two  significant  shareholders  notified the
Company that they were returning  approximately  5,800,000  common shares to the
Company's treasury. In addition, these individuals cancelled a warrant that they
owned which  provided  them with the right to purchase  approximately  2,300,000
shares of common stock in the Company, they resigned from the Company's Board of
Directors and they converted  approximately  $1,300,000 in demand notes due from
the Company into the Series A Preferred Stock.

In September 2004, the Company  authorized  additional Series A Preferred Shares
and initiated a private placement of these shares to provide working capital for
the Company. This private placement has been expanded since September to provide
for a total of $4,000,000 in proceeds from the sale of these shares. From August
31, 2004 to date,  the  Company has  received  gross  proceeds of  approximately
$760,000.


                                      F-33

<PAGE>

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

None.


ITEM 8A.   CONTROLS AND PROCEDURES

The registrant's principal executive officers and principal financial officer,
based on their evaluation of the registrant's disclosure controls and procedures
(as defined in Rules 13a-15(f) and 15d-15(e) of the Securities Exchange Act of
1934) as of December 1, 2004 have concluded that the registrant's disclosure
controls and procedures are adequate and effective to ensure that material
information relating to the registrant and its consolidated subsidiaries is
recorded, processed, summarized and reported within the time periods specified
by the SEC's rules and forms, particularly during the period in which this
annual report has been prepared.

The registrant's principal executive officers and principal financial officer
have concluded that there were no significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to September 30, 2003, the date of their most recent
evaluation of such controls, and that there were no significant deficiencies or
material weaknesses in the registrant's internal controls.

ITEM 8B.    OTHER INFORMATION

None

PART III

ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
            COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Executive Officers and Directors

As of November 29, 2004, the executive officers and directors of the Company
were as follows:

                               DIRECTOR
NAME                    AGE      SINCE      POSITION
----                    ---    --------     --------

Doyal G. Bryant          51      2004       Director, CEO
James L. McGovern#       60      1998       Director
Thomas A. Gordy#**       53      2004       Director
Clifford A. Clark        52      2001       Director, CFO, Secretary
Howard B. Workman#**     60      2004       Director
Paul Odom                56                 Senior Vice President - Software
                                            Applications and Solutions
Robert Maze              52                 Vice President, Marketing & Business
                                            Development, SourceWare Solution

NOTE: The terms of the directors are divided into three separate three-year
classes. Each director holds office until the year in which his term expires.
McGovern and Clark's terms expire in 2005.

** member of Audit Committee

#  member of Compensation Committee


                                       20
<PAGE>

There are no agreements with respect to the election of directors.

The Company has not compensated its directors in cash for service on the Board
of Directors or any committee thereof, but directors are reimbursed for expenses
incurred for attendance at meetings of the Board of Directors and any committee
of the Board of Directors. Certain directors have been compensated with shares
and options in recognition of their service on the Board, as described further
below. Officers are appointed annually by the Board of Directors and each
executive officer serves at the discretion of the Board of Directors, except as
may be provided for in employment contracts..

The Board of Directors has two standing committees: an Audit Committee and a
Compensation Committee. The Audit Committee oversees the Company's accounting
and financial reporting and internal controls, reviews annual audit reports and
management letters and makes recommendations to the Board regarding appointment
of independent auditors. The principal function of the Compensation Committee is
to recommend to the Board of Directors the compensation of officers and to
oversee the administration of the 1999 Stock Option Plan, at the request of the
Board.

None of the officers and/or directors of the Company have, nor have any of the
affiliates or promoters of the Company, filed any bankruptcy petition, been
convicted in or been the subject of any pending criminal proceedings, or the
subject or any order, judgment, decree involving the violation of any state or
federal securities laws within the past five years.

The business experience of each of the persons listed above during the past five
years is as follows:


DOYAL G. BRYANT has over 25 years experience in senior corporate management,
product development, financing, operations and sales in all of the Company's
combined product areas. He joined Market Central when the Company contracted to
acquire Convey Systems in which Mr. Bryant was an owner and President and CEO.
Prior to Convey, Mr. Bryant held senior management or ownership positions in
companies that provided financial and technical due diligence services for major
investment banking firms. He played an integral part in the growth and
development of major telecommunication companies such as ZTEL, Premiere
Technologies, CommSouth, Talk.Com, PrimeTec International, and ATMNet. His
companies have developed international joint venture agreements and investment
transactions for Voice, VoIP, and Internet related services in Canada , Mexico ,
Australia , Japan , Hong Kong , as well as several European and South American
countries. Mr. Bryant holds a B.S. in business administration from Drury College
in Missouri and has performed additional studies at Oxford University in
England.

CLIFFORD A. CLARK has been the Company's VP of Finance since February 2001 and a
director since July 2001. From 1999 to 2002, Mr. Clark served as Vice President
of Finance for Gibralter and other entities comprising Gibralter Publishing,
Inc. Mr. Clark is currently serving as VP of Finance of InSource Business
Strategies, a North Carolina based payroll processing company. Mr. Clark served
as President of Kane Realty from 1994 through 2001 and was also President of
Parallel Corporation from 1991 through June 2003. Mr. Clark's experience
includes more than 25 years in numerous financial and accounting roles,
including 11 years with Price Waterhouse and 5 years in the venture capital
arena. Mr. Clark has a bachelor's degree in Business Administration from the
University of North Carolina at Chapel Hill.

JAMES L. MCGOVERN has been President of McGovern & Associates since 1996. In
1996, he retired from Norstan where he was President of Norstan Communications
from 1985 to 1996. Prior, he was Chief Operating Officer of Electronic
Engineering Co., which was acquired by Norstan in 1985. McGovern also held a
number of key sales and management positions with Xerox Corporation. He was
Chairman of Virtual Hold Corporation, and a Director for Paknetx, which was
acquired by Aspect Telecommunications. Mr. McGovern holds a B.S. from
Northeastern University.

THOMAS A. GORDY is the President, Chief Executive Officer, and founder of
TAGG(R). Mr. Gordy has more than 25 years experience in business growth and
development. He is highly regarded as a growth and development strategist and
futurist. Mr. Gordy received his bachelor's degree in theology from Mercer
University in Macon and shortly thereafter began his career in healthcare. He
was a medical social worker, human resources director, and became Administrator
and CEO of his first hospital at the age of 26. Mr. Gordy began a career as a
development officer for a Fortune 400 healthcare company. He has extensive
experience in hospital administration and management, new facility development,
mergers and acquisitions, marketing, contractual development, new product and
service rollout, and operational and financial system auditing. In 1988, Mr.


                                       21
<PAGE>

Gordy established TAGG(R), a business accelerator for strategic growth and
development specializing in healthcare, technology development, and telecom
applications.

HOWARD B. WORKMAN is a licensed real estate broker in the states of New York and
Georgia. Since 1975 he has been President and CEO of Workman and Company, a real
estate company involved in brokerage, leasing and management of commercial real
property. He is also President of Southeastern Acquisitions, a real estate
acquisitions firm, and Workco Development, which develops strip shopping centers
and office building throughout the southeast. His holdings are in Georgia,
Florida, North and South Carolina and Tennessee. Mr. Workman was a director and
member of the loan committee for Charter Bank and Trust in Marietta. He is on
the honorary Board of Georgia Special Olympics and Chairman of the Adoption
Committee for Cradle of Love Adoption Agency.

PAUL S. ODOM was formerly the Founder, President, and Chief Technology Officer
of Pliant Technologies Inc. where he created a revolutionary information
management technology. He joined Market Central when the assets of Pliant were
acquired by the Company in 2003. Before forming Pliant Technologies Inc., he was
Vice President of Magisys Inc. where he led the design and implementation of
software applications for oil field operations. As Manager of Process Systems
Software for M. W. Kellogg from 1988 to 1994, he had the responsibility for the
development of software to automate engineering design processes. In addition,
Mr. Odom has more than 16 years of experience in leading edge software
applications development in the Oil and Gas industry, working with Dixie
Corporation, ARCO Chemical Company, and The Standard Oil Company of Ohio. Mr.
Odom has a Bachelor's degree in Chemical Engineering from the University of
Arizona and currently holds 5 patents in the area of information management and
engineering.

ROBERT A. MAZE is a 27 year veteran in technical sales and sales management
across multiple industries. Maze has expertise in building and managing `new'
sales organizations; including responsibilities for strategic planning and
day-to-day management of direct and indirect sales organizations. As former VP
of Sales & Marketing for an invoice document processing and management firm,
Maze completely reinvented its strategic marketing and sales plans resulting in
63% growth within 24 months. In addition, during an eight-year tenure at MCI, in
a senior sales management capacity, Maze oversaw daily management of three
Global 1000 companies: Johnson Controls, Dow Chemical, and Dow Corning;
collectively valued at more than $150M in annual revenues. Maze's extensive,
cross-industry management experience involved major companies, such as: MCI,
Bell Canada, NYNEX, and Southwestern Bell; Texas Airlines (owner of Continental
& Eastern Airlines); and the U.S. Air Force. Maze has experienced several
start-up companies; including the seed company dba LDDS Communications, Inc.
that later acquired MCI Telecom. Corp., dba LDDS Worldcom. Maze is an honors
graduate of Southwest University of Louisiana with a BS in Electronic
Engineering. He has studied Computer Science and Applied Engineering abroad. He
is also a veteran of the U.S. Air Force with specialization in Applied
Electronics.


                                       22
<PAGE>

ITEM 10.   EXECUTIVE COMPENSATION

The following table sets forth all compensation actually paid or accrued by the
Company for services rendered to the Company for the years ended August 31,
2002, 2003 and 2004 for the Company's Chief Executive Officer or others who
earned a salary greater than $100,000 annually for any of the periods below:

   NAME AND PRINCIPAL POSITION                     YEAR     SALARY        BONUS
   ---------------------------                     ----     --------      -----
   Terrence J. Leifheit, President CEO (1)         2002     $366,664      None
                                                   2003     $247,819      None
                                                   2004     $86,500       None
   Paul S.Odom
   Senior Vice President - Software Applications   2004     $120,000      None
   and

(1) Mr Leifheit resigned his officer and Director positions in August 2004.


                                       23
<PAGE>

Employee Stock Option Plan

The Company's  2003 Amended and Restated  Stock Plan (the  "Plan"),  assumed the
1996 Stock Option Plan, as amended on the migratory merger, which was adopted in
1996 and amended in October,  1997, July 2001, October 2003 and December 2003 to
increase the number of issuable  shares  under the Plan to  3,000,000  shares of
common  stock.  The  purpose  of the Plan is to  encourage  stock  ownership  by
management and employees of the Company, to provide an additional  incentive for
those  employees to  contribute to the success of the Company and to provide the
Company with the  opportunity  to use stock options as a means of recruiting new
managerial personnel where appropriate.

The Plan  authorizes  the grant of  options  which  qualify as  incentive  stock
options under Section 422A of the Internal Revenue Code  ("qualified  options"),
as well as stock  options  which do not qualify  under that  section of the Code
("nonqualified  options").  The Plan is  administered  by the Company's Board of
Directors who may delegate these duties to the Compensation Committee. The Board
is authorized to select the  individual  employees to receive  options under the
Plan,  the number of shares  subject to each  option,  the option term and other
matters specified in the Plan.

The Plan  provides  that the  exercise  price of any option may not be less than
100% of the fair  market  value  of the  Company's  stock at the date of  grant,
defined as the  average  bid and ask price over the prior five days'  trading in
which at least 1,000  shares have  traded.  Options  must be granted  within ten
years from the date the Plan was approved by the Company's shareholders.

A maximum of 3,000,000  shares of the Company's  Common Stock are authorized for
issuance  pursuant to options granted under the Plan,  subject to adjustments to
prevent   dilution  or  enlargement  of  rights  of   participants   in  certain
circumstances.  As of November 29, 2004,  5,054,536 options were outstanding all
of which were issued inside the Plan. As of November 29, 2004,  1,683,203 shares
are  exercisable  at an option  price per share  ranging from $.01 to $10.25 per
share and with expiration dates from February 2005 through October 2008.

Profit Sharing Plan

The Company sponsors a qualified employee savings plan (commonly referred to as
a "401K plan") for all eligible employees, including all the officers of the
Company. Participants may make contributions from their gross pay (limited to
15% of the employee's compensation, as defined), with Paladyne matching such
contributions (subject to certain limitations) at the rate of 25% of the first
6% of each participant's contribution. Effective June 1, 2002, the Company
modified the plan to eliminate any matching of contributions. No other deferred
compensation plan is currently in place.

Employment Agreements

The Company has employment agreements with three of its senior executives and
three of its management personnel. The three senior executives include Doyal G.
Bryant, CEO and Clifford A. Clark, CFO who entered into these agreements in
October and September 2004, Respectively. Bryant's contract provides for a three
year term and annual salary of $180,000 and a grant of 1,000,000 options at
$1.60 per share that are exercisable immediately and 3,000,000 additional
options that are exercisable based upon the future stock price of the Company's
common stock. Clark's contract provides for a three year term and annual salary
of $120,000 and a grant of 125,000 options at $1.60 per share that are
exercisable immediately and 250,000 additional options that are exercisable
based upon the future stock price of the Company's common stock. Paul Odom's
contract, entered into
in July 2003, provides for a five year term and annual salary of $120,000 and a
grant of 25,000 options at $2.00 - $2.35 per share that 2/3 are are exercisable
immediately. Mr. Odom's contract also provides for a commission on sales of
SourceWare sales.

The three management personnel contracts provide for annual cancellation at the
Company's election and provide for salaries between $100,000 - $120,000.


                                       24

<PAGE>

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, to the best of the Company's
knowledge, as of November 29, 2004, with respect to each person known by Company
to own beneficially more than 5% of the outstanding Common Stock, each director
and all directors and executive officers as a group.

                                             AMOUNT AND NATURE     PERCENT OF
                                               OF BENEFICIAL           CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER           OWNERSHIP (1)            (2)
------------------------------------         -----------------       ----------
Glen H. Hammer                                    1,129,000             16.5%
William A. Goldstein                              1,500,000             21.9%
Doyal G. Bryant*                                   1,000,000 (3)        12.7%
Paul S. Odom*                                      47,175 (5)             .7%
Clifford A. Clark*                                 169,975 (4)           2.4%
James L. McGovern*                                 28,119 (6)             .4%
Thomas A. Gordy*                                14,973 ((7)               .2%
Howard B. Workman*                                14,973 (8)              .2%
Terrence J. Leifheit                              539,240(9)             7.6%
All directors and executive officers as         1,275,215               15.8%
a group (6 persons in group)


Note: Unless otherwise noted, all persons address is 1650A Gum Branch Road,
       Jacksonville, NC 28540

*      Director and/or executive officer

Note:  Unless otherwise indicated in the footnotes below, the Company has been
       advised that each person above has sole voting and investment power over
       the shares indicated above.

      (1)   Share amounts include,  where indicated,  Common Stock issuable upon
            the exercise of certain stock options and stock  warrants  which are
            exercisable or convertible within sixty days from November 29, 2004

      (2)   Based upon 6,861,405 shares of Common Stock  outstanding on November
            29, 2004.  Percentage  ownership is calculated  separately  for each
            person on the basis of the actual number of outstanding shares as of
            November 29, 2004 and assumes the exercise of certain  stock options
            and  warrants   held  by  such  person  (but  not  by  anyone  else)
            exercisable within sixty days.

      (3)   Comprised  of  1,000,000  shares that may be acquired by Mr.  Bryant
            pursuant  to the  exercise  of stock  purchase  options  exercisable
            within sixty days at exercise  price of $1.60.  These options were a
            portion  of  those  granted  in an  employment  agreement  effective
            October 8, 2004. Mr Bryant will also receive  approximately  650,000
            shares in conjunction with the Convey acquisition, which is ecpected
            to be completed in February 2005.


      (4)   Includes (i) 20,286  shares owned  directly and (ii) 149,689  shares
            that may be acquired by Mr. Clark  pursuant to the exercise of stock
            purchase  options  and  warrants  exercisable  within  sixty days at
            exercise prices from $1.60 to $11.20 per share.

      (5)   Includes  16,949 shares owned directly and 30,226 shares that may be
            acquired by Mr.  Odom  pursuant  to the  exercise of stock  purchase
            options and warrants exercisable within sixty days at exercise price
            of $2.00-$2.35.


      (6)   Includes  20,286 shares owned  directly and 6,733 shares that may be
            acquired by Mr. McGovern  pursuant to the exercise of stock purchase
            options exercisable within sixty days at exercise price of $2.20

      (7)   Includes  13,806 shares owned  directly and 1,167 shares that may be
            acquired by Mr.  Gordy  pursuant to the  exercise of stock  purchase
            options exercisable within sixty days at exercise price of $2.20.


      (8)   Includes  13,806 shares owned  directly and 1,167 shares that may be
            acquired by Mr.  Workman  pursuant to the exercise of stock purchase
            options exercisable within sixty days at exercise price of $2.20.


      (9)   Includes (i) 351,173  shares owned  directly and (i) 137,831  shares
            held in a Voting  Trust for which Mr.  Leifheit  is the sole  voting
            trustee. Includes 50,236 shares that may be acquired by Mr. Leifheit
            pursuant to the  exercise  of stock  purchase  options and  warrants
            exercisable  within  sixty  days at  exercise  prices at $11.46  per
            share.


                                       25
<PAGE>


ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Ericson Publishing, Inc. (successor to Gibralter Publishing, Inc.) was one of
the Company's principal customers comprising approximately 15% of the Company's
revenues for the fiscal year ended August 31, 2004 but Ericson ceased being a
customer in July 2004. Ericson was owned by a former officer and director of the
Company. J&C Nationwide, Inc. and Cheapseats, Inc. are also related party
customers of the Company. Combined, these two companies represent 7.8% of the
Company's total revenues.

The Company leases office space to Gibralter Publishing, Inc. in its
Jacksonville facility.


                                       26
<PAGE>

ITEM 13.   EXHIBITS

(a)         EXHIBITS

2.1         Merger Agreement and Plan of Reorganization previously filed as
            Exhibit 2.1 to Form 10-SB/A dated December 31, 1997

2.2         Articles of Merger filed in North Carolina previously filed as
            Exhibit 2.2 to Form 8-K dated February 1, 2002

3.1         Certificate of Incorporation filed in Delaware on January 11, 1999
            previously filed as Exhibit 3.1 to Form 10KSB dated August 31, 2002

3.2         Certificate of Merger filed in Delaware on March 5, 1999 previously
            filed as Exhibit 3.2 to Form 10KSB dated August 31, 2002

3.3         Amendment to Certificate of Incorporation dated July 10, 2002 filed
            in Delaware previously filed as Exhibit 3.3 to Form 10KSB dated
            August 31, 2002

3.6         By-Laws of Registrant previously filed as Exhibit 3.2 (ii) to Form
            10-SB/A, dated December 31, 1997.

4.1         Specimen of Common Stock Certificate previously filed as Exhibit 4.1
            to Form 10-SB/A dated December 31, 1997

4.2         Certificate of Designations for Series A Convertible Preferred Stock
            Certificate previously filed as Exhibit 4.2 to Form 10-QSB dated
            April 15, 2004

4.3         Certificate of Designations for Series B Convertible Preferred Stock
            Certificate previously filed as Exhibit 4.1 to Form 10-QSB dated
            April 15, 2004

4.4         Form of Anti-Dilution Warrant previously filed as Exhibit 4.2 to
            Form 8-K dated February 1, 2002

4.5         Form of Parent Performance Warrant previously filed as Exhibit 4.3
            to Form 8-K dated February 1, 2002

10.1        Purchase Agreement of Synaptx Access, Inc. f.k.a. North American
            Telco / Cable Representatives, Inc. previously filed as Exhibit 10.2
            to Form 10-SB/A dated December 31, 1997


                                       27
<PAGE>

10.2        Purchase Agreement for Synaptx Impulse, Inc., f.k.a. Maxwell
            Partners, Inc. previously filed as Exhibit 10.3 to Form 10-SB/A
            dated December 31, 1997

10.3        Employment Agreement for Ronald L. Weindruch previously filed as
            Exhibit 10.5 to Form 10-SB/A dated December 31, 1997

10.4        New Lease Agreement on Principal Place of Business previously filed
            as Exhibit 10.7 to Form 10-KSB dated November 28, 2000

10.5        Agreement and Plan of Merger for WG Controls, Inc. between Synaptx
            Worldwide, Inc. and the WG Controls, Inc. shareholders as follows:
            James M. Gleason, Shirley Gleason, Michael Concialdi, and James
            Gammon previously filed as Exhibit 10.1 to Form 8-K dated March 23,
            1998

10.6        Agreement and Plan of Stock for Stock Exchange, dated June 1, 1998
            between Synaptx Worldwide, Inc. (the "Company") and John Primus and
            Jannine Primus previously filed as Exhibit 10.1 to Form 8-K dated
            August 14, 1998

10.7.1      Agreement and Plan of Merger, dated December 21, 2000, among
            Paladyne, Acquisition Sub and ecom filed as Exhibit 10.1.1 to Form
            8-K dated February 1, 2002

10.7.2      Amendment to Agreement and Plan of Merger among Paladyne,
            Acquisition Sub and ecom filed As Exhibit 10.1.2 to Form 8-K Dated
            February 1, 2002

10.7.3      Second Amendment to Agreement and Plan of Merger, between Paladyne
            and Mr. Leifheit on behalf of himself and as a representative for
            the former shareholders of ecom, dated April 9, 2002, previously
            filed as Exhibit 10.1.3 to Form 8K/A dated February 1, 2002

10.8        Indemnification Escrow Agreement among Paladyne, Mr. Leifheit,
            Clifford A. Clark and Thelen Reid & Priest LLP, as escrow agent,
            previously filed as Exhibit 10.2 to Form 8-K dated February 1, 2002

10.9        Form of Lock-up Agreement, previously filed as Exhibit 10.3 to Form
            8-K dated February 1, 2002

10.10.1     Gibralter Option Agreement, dated as of April 13, 2000, between
            Gibralter and ecom, previously filed as Exhibit 10.4.1 to Form 8-K
            dated February 1, 2002

10.10.2     First Amendment to Gibralter Option Agreement among ecom, Gibralter
            and Paladyne, previously filed as Exhibit 10.4.2 to Form 8-K dated
            February 1, 2002

10.10.3     Gibralter Assets Assignment among ecom and Gibralter, previously
            filed as Exhibit 10.4.3 to Form 8-K dated February 1, 2002


                                       28
<PAGE>

10.10.4     Promissory Note A from ecom to Gibralter in the principal amount of
            $1,500,000, previously filed as Exhibit 10.4.4.1 to Form 8-K dated
            February 1, 2002

10.10.5     Amended Promissory Note A from ecom to Gibralter in the principal
            amount of $1,500,000, previously filed as Exhibit 10.4.4.1 to Form
            8-K dated February 1, 2002

10.10.6     Promissory Note B from ecom to Gibralter in the principal amount of
            $3,500,000, previously filed as Exhibit 10.4.5 to Form 8-K dated
            February 1, 2002

10.10.7     Amended Promissory Note B from ecom to Gibralter in the principal
            amount of $3,500,000, previously filed as Exhibit 10.4.5.1 to Form
            8-K/A dated February 1, 2002

10.10.8     Gibralter Security Agreement among ecom and Gibralter, previously
            filed as Exhibit 10.4.6 to Form 8-K dated February 1, 2002

10.10.9     Unconditional Guaranty Agreement, among ecom, Paladyne and
            Gibralter, previously filed as Exhibit 10.4.7 to Form 8-K dated
            February 1, 2002

10.10.10    Gibralter Default and Assignment Agreement among ecom, Gibralter and
            Paladyne, previously filed as Exhibit 10.4.8 to Form 8-K dated
            February 1, 2002

10.10.11    Gibralter Secondary Operating Agreement among ecom and Gibralter,
            previously filed as Exhibit 10.4.9 to Form 8-K dated February 1,
            2002

10.10.12    Gibralter Escrow Agreement among Gibralter, ecom, Paladyne, and
            Kilpatrick Stockton LLP, as escrow agent, previously filed as
            Exhibit 10.4.10 to Form 8-K dated February 1, 2002

10.10.13    Amending Agreement among Gibralter, Paladyne and ecom, previously
            filed as Exhibit 10.4.11 to Form 8-K/A dated February 1, 2002

10.11       Gibralter Equipment Use Agreement among ecom, Gibralter and
            Paladyne, previously filed as Exhibit 10.5 to Form 8-K dated
            February 1, 2002

10.12       Gibralter Teleservices Agreement between Gibralter and ecom
            previously filed as Exhibit 10.6 to Form 8-K dated February 2, 2002

10.13       Employment Agreement between Paladyne and Mr. Leifheit previously
            filed as Exhibit 10.7 to Form 8-K dated February 1, 2002

10.14       Letter of Intent from Market Central, Inc. to Market Central, Inc.
            previously filed as Exhibit 10.1 to form 8-K dated October 9, 2003

10.15       First Amendment to Letter of Intent from Market Central, Inc. to
            Market Central, Inc. previously filed as Exhibit 10.2 to Form 8-K
            dated October 9, 2003


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<PAGE>

10.16       Loan and Security Agreement by and among Paladyne, ecom, and Market
            Central, Inc. previously filed as Exhibit 10.3 to Form 8-K dated
            October 9, 2003

10.17       Revolving Note from Market Central, Inc. and ecom to Market Central,
            Inc. dated August 29, 2003 previously filed as Exhibit 10.4 to Form
            8-K dated October 9, 2003

10.18       Settlement Agreement and Mutual release dated August 20, 2004,
            between Market Central, Inc. and Terrence J. Leifheit previously
            filed as Exhibit 10.18 to Form 8-K dated August 30, 2004

21.1        *Subsidiaries of Market Central, Inc.

31.1        *Certification by the Company's principal executive officer pursuant
            to Section 302 of the Sarbanes-Oxley Act of 2003

31.2        *Certification by the Company's principal financial officer pursuant
            to Section 302 of the Sarbanes-Oxley Act of 2003

32.1        *Certification by the Company's principal executive officer pursuant
            to Section 906 of the Sarbanes-Oxley Act of 2003.

32.2        *Certification by the Company's principal financial officer pursuant
            to Section 906 of the Sarbanes-Oxley Act of 2003.

*Filed herewith


ITEM 14    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table discloses accounting fees and services which were paid to
the Company's independent auditors:

               Fee Category           Fiscal 2004 Fees        Fiscal 2003 Fees
        ------------------------    --------------------    --------------------
        Audit Fees                             $135,040                 $79,054
        Audit Related Fees                            -                       -
        Tax Fees                                      -                   7,525
        All Other Fees                                -                       -
                                    --------------------    --------------------
        Total Fees                             $135,040                 $86,579
                                    ====================    ====================

Audit Fees. Consists of fees billed for professional services rendered for the
audit of Market Central's consolidated financial statements and review of the
interim consolidated financial statements included in quarterly reports and
services that are normally provided by Russell Bedford Stefanou Mirchandani LLP
in connection with statutory and regulatory filings or engagements.

Audit-Related Fees. Consists of fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of Market
Central's consolidated financial statements and are not reported under "Audit
Fees." There were no Audit-Related services provided in fiscal 2004 or 2003.

Tax Fees. Consists of fees billed for professional services for tax compliance,
tax advice and tax planning.

All Other Fees. Consists of fees for products and services other than the
services reported above. There were no management consulting services provided
in fiscal 2004 or 2003.


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<PAGE>

POLICY ON AUDIT COMMITTEE PRE-APROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT
SERVICES OF INDEPENDENT AUDITORS

The Audit Committee's policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditors. These services may
include audit services, audit-related services, tax services and other services.
Pre-approval is generally provided for up to one year and any pre-approval is
detailed as to the particular service or category of services and is generally
subject to a specific budget. The independent auditors and management are
required to periodically report to the Audit Committee regarding the extent of
services provided by the independent auditors in accordance with this
pre-approval, and the fees for the services performed to date. The Audit
Committee may also pre-approve particular services on a case-by-case basis.


                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly organized.

                                               MARKET CENTRAL, INC.
                                               (Registrant)

                                               By: /S/  Doyal Bryant
                                                   --------------------
Date:  December 13, 2004                           Doyal G. Bryant
                                                   President, and CEO

In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

Name                     Position                              Date
----------------------   -----------------------------------   -----------------

/S/ Doyal G. Bryant      President, Director                   December 13, 2004
----------------------   -----------------------------------   -----------------
Doyal G. Bryant


/S/Howard Workman        Director                              December 13, 2004
----------------------   -----------------------------------   -----------------
Howard Workman


/S/Thomas Gordy          Director                              December 13, 2004
----------------------   -----------------------------------   -----------------
Thomas Gordy


/S/James L. McGovern     Director                              December 13, 2004
----------------------   -----------------------------------   -----------------
James L. McGovern

/S/ Clifford A. Clark    Vice President Finance and Director   December 13, 2004
----------------------   -----------------------------------   -----------------
Clifford A. Clark



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