Madison Technologies Inc. 10-K/A

Item 1. Business. Summary Madison Technologies Inc. (“ Madison ”) is a Nevada corporation that was incorporated on June 15, 1998. Madison was initially incorporated under the name “Madison-Taylor General Contractors, Inc.” Effective May 24, 2004, Madison changed its name to “Madison Explorations, Inc.” by a majority vote of the shareholders. Effective March 9, 2015, Madison changed its name to “Madison Technologies Inc,” by a majority vote of the shareholders. See Exhibit 3.3 – Certificate of Amendment for more details. On September 16, 2016, pursuant to the terms of the Product License Agreement Madison was granted the exclusive rights to distribute Tuffy Pack’s product line of line custom inserts that provide a level of personal protection from ballistic threats similar to what law enforcement officers wear daily as bullet proof vests. See Exhibit 10.5 - Product License Agreement for more details. Effective the fourth quarter of fiscal 2020 Madison abandoned the Tuffy Pack product line to focus on the deployment of the Luxurie Legs line of products On July 17, 2020, the Company entered into an agreement to acquire the Casa Zeta-Jones Brand License Agreement from Luxurie Legs, LLC of Delaware. Luxurie Legs transferred all of its rights, title and interest in the License Agreement to the Company in exchange for the Company’s newly issued preferred convertible Series A stock. See Form 8-K - Current Report filed July 20, 2020 for more details. On February 16, 2021, Madison Technologies Inc., a Nevada corporation (the “Company”) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Sovryn Holdings, Inc. (“Sovryn”) and the holders (the “Sovryn Shareholders”) of Sovryn’s issued and outstanding shares of common stock, par value $0.0001 per share (“Sovryn Common Shares”), pursuant to which the Shareholders exchanged 100% of the outstanding Sovryn Common Shares, for (i) 100 shares of series B preferred stock, par value $0.001 per share (“Series B Preferred Stock”), of the Company which was transferred by Jeffrey Canouse, the Company’s controlling shareholder and existing Chief Executive Officer (the “Controlling Shareholder”), to the designee of Sovryn and (ii) 1,000 shares of series E convertible preferred stock, par value $0.001 per share of Sovryn (“Series E Preferred Stock,” and together with Series B Preferred Stock, the “Preferred Exchange Shares,” and the foregoing exchange of Sovryn Common Shares for Preferred Exchange Shares being the “Equity Exchange”).See Form 8-K – Current Report filed February 23, 2021 for more details Immediately prior to the closing of the Share Exchange Agreement, we entered into Exchange Agreements (the “Convertible Note Exchange Agreements”) with the holders of our outstanding of convertible promissory notes (the “Convertible Notes”). Pursuant to Convertible Note Exchange Agreements, the holders of the Convertible Notes were issued, in exchange for their Convertible Notes, a total of 230,000 shares of our newly-designated Series D Convertible Preferred Stock. Our new Series D Convertible Preferred Stock is convertible into common stock at a ratio of 1,000 shares of common stock for each share of preferred stock held. Immediately prior to the closing of the Share Exchange Agreement, we entered into Exchange Agreements (the “Preferred Stock Exchange Agreements” and together with the Convertible Note Exchange Agreements, the “Exchange Agreements”) with the holders of our outstanding series A convertible preferred stock (the “Series A Preferred Stock”). Pursuant to the Preferred Stock Exchange Agreements, the holders of the Series A Convertible Preferred Stock were issued, in exchange for their Series A Preferred Stock, options to purchase a majority of the outstanding shares of common stock of a newly to be formed wholly owned subsidiary of the Company to be called CJZ License, Inc. Madison maintains its statutory resident agent’s office at 1859 Whitney Mesa Drive, Henderson, Nevada, 89014 and its business office is located at 450 Park Avenue, New York, NY, 10022. Madison’s office telephone number is 212-339-5888 Madison has an authorized capital of 500,000,000 shares of Common Stock with a par value of $0.001 per share, of which 23,472,565 shares of Common Stock are currently issued and outstanding. Madison has not been involved in any bankruptcy, receivership or similar proceedings. There has been no material reclassification, merger consolidation or purchase or sale of a significant amount of assets not in the ordinary course of Madison’s business. Madison Technologies Inc. Form 10-K - 2020 Page 4 Business of Madison Casa Zeta-Jones Brand License Agreement; On July 17, 2020, the Company entered into an agreement to acquire the Casa Zeta-Jones Brand License Agreement from Luxurie Legs, LLC of Delaware. Luxurie Legs transferred all of its rights, title and interest in the License Agreement to the Company in exchange for the Company’s newly issued preferred convertible Series A stock. Product and Services With its licensing agreement with Casa Zeta-Jones Brand, Madison is currently developing a new luxury shaving regiment exclusively designed and branded for women. The core objective of the brand is to focus on the daily shaving experience and a regiment of luxury products selected by Catherine Zeta-Jones. The product will be an online subscription as a club model format. For an estimate $34.99 monthly reoccurring fee customers will receive a 30 day supply including the following: - A weekly exfoliating wash - A daily moisturizing pre-shave leg wash - A daily super moisturizing luxury shave cream - 4 – 5 blade self lubricating razor cartridge - A luxury razor handle included in the first shipment Markets Madison’s sale strategy is to create a sophisticated social media marketing operation that employs online marketing strategies developed by Facebook, Instagram and YouTube to track the behavior of potential customers that are most likely to buy specific products based of their previous and recent purchases. The operation will also utilize retargeting techniques that place promotional video marketing ads on the news feed of potential customers in real time that have done searches for particular products that align with the ones we are selling. The creative/marketing team will maintain ongoing market analysis with a key focus on market differentiation. From the onset, they will create a “Casa Zeta-Jones Marketing Roadmap” including everything from software and branding, ecommerce website, loyalty program and email automation to marketing tactics execution and marketing-as-a-service. Madison will also engage brand influencers and top social media personas in an aggressive strategy to use the power of their social networks to help build and maintain the shave club membership base. Distribution Methods Madison distribution method is to deliver the products worldwide via an online sign up process through an e-commerce website. The website will use a subscription based revenue model, and will offer a tier system for subscriptions. Customers will be a able to select from luxury products selected exclusively by Catherne Zeta-Jones. Once an order is received Madison will outsource the packaging and delivery to fulfillment providers services including but not limited to The Jay Group, ModusLink and Echodata. By implementing these companies’ services Madison will be able to establish a reliable supply chain that will receive delivery of the Licensed Products, warehouse the Luxurie Legs Products, package the Luxurie Legs Products as per each customer order, and ship the Licensed Products to the customer efficiently and cost effectively. Madison Technologies Inc. Form 10-K - 2020 Page 5 Management expects to expand Madison’s sales distribution strategy beginning in May 2021 and to be operational by November 2021, this includes the following components: 1. Initial inventory with an estimated cost of $600,000 2. Social media and online advertising of $50,000 Status of Licensed Products The Luxerie Legs Products razor handle will be supplied by Shick Edgewell, and the creams will be formulated by a independent formulation laboratory . Madison is currently working with several laboratories to perfect the cream products. Madison anticipates establishing a supply chain that is able to supply up to 200,000 units on an initial order. Management believes this initial order of Luxurie Legs Products will be sufficient for Madison’s anticipated inventory requirements for the first six months. Competitive Conditions Madison will be competing with other online retail companies possessing greater financial resources and technical facilities than Madison in connection with the sale of similar products. Many of the competitors have a very diverse portfolio and have not confined their market to one product or line of products, but offer a wide array of products. All of these competitors have been in business for longer than Madison and may have established more strategic partnerships and relationships than Madison. Management believes that it will have a competitive advantage over its competitors due to its plan of operations. Madison has identified numerous competitors in the women’s shaving market products segment, from a variety of online merchants, and although most offer products similar or the same as Madison, management believes Madison will have a competitive advantage in the ability to fill orders and deliver the Luxurie Legs Products to its customers building on Catherine Zeta-Jones fame and followership to rapidly draw market attention which will develop buyer loyalty. Madison has also identified several online retailers that supply products that management believes would be in direct competition with Madison’s business. Some of those competitors include, but not limited to, the following: ● All Girl Shave Club - an online based supplier of high quality, female focused unique shaving and body products, delivered on a bi-monthly subscription model. ● Oui the People- an online based supplier of premium shaving related products built around a proprietary safety razor focused on the female consumer . ● Billie - an online supplier women’s shaving and beauty products through a 1, 2 or 3 month reoccuring ordering model. Madison Technologies Inc. Form 10-K - 2020 Page 6 Sovryn Holdings, Inc. On February 16, 2021, Madison Technologies Inc., a Nevada corporation (the “Company”) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Sovryn Holdings, Inc. (“Sovryn”) and the holders (the “Sovryn Shareholders”) of Sovryn’s issued and outstanding shares of common stock. Product and Services Through Sovryn Holdings, Inc., Madison has embarked on an acquisition strategy, rolling-up un-affiliated Class A/LPTV TV stations in the top 100 DMA’s (Designated Market Areas) with a goal of building out a nationwide platform through one or more station acquisitions per DMA. Each licensed TV station can broadcast between 10 and 12 and potentially more revenue “streams” of content (“channels”) over-the-air, 24 hours per day/7 days per week. Management’s strategy is to stage the acquisitions focusing on DMA’s 1-30 and expanding thereafter on DMA’s 31-100, acquiring one station per DMA and building a portfolio of 100 stations within 18-24 months. Management has currently identified and held discussions with a number stations owners, has received FCC approval for the acquisition of KNLA/KNET, a revenue producing Class A television station with coverage of 16mm people in the number 2 DMA in the U.S., Los Angeles, signed letters of intent with 3 other stations in the top 20 and verbal agreements on another 11 key, cash flowing stations in the top 30 markets. Madison’s objective is to create one the largest, most comprehensive, state of the art, broadcast Over-The-Air (“OTA”) content distribution platforms to capitalize on the changing media and distribution landscape and on the growing OTA viewership in the U.S. The over-the-air programming carried on these stations is initially expected to include entertainment, shopping, weather, sports as well as religious networks and networks targeting select ethnic groups with content lease agreements as the prime source of revenue. Pricing of lease agreements is in part determined by market rank, the signal contour and the number of OTA TV households in a given market, as well as supply and demand. As the platform is built out, management not only anticipates substantial operational synergies from the roll-up but also an expansion in the revenue base with greater channel utilization and the addition of high-quality third-party content providers that are currently not reaching the “OTA” viewers, which now stands at an estimated 20mm households (44mm people) out of 108mm TV HH’s nationwide. Station Operations Madison’s plan is to acquire 50 independent TV stations in the top 30 DMA’s over the next 6-12 months. In addition, Madison expects to grow the station base to 100 tv stations nationwide through additional acquisitions targeting the top 100 DMA’s across the nation, ultimately covering 80% of the population of the U.S. over the next 18-24 months. Each licensed TV station has the capability of delivering 10+ different revenue “streams” (channels) of content Over-the-Air, 24 hours per day/7 days per week . If converted to the new FCC approved ATSC 3.0 technology, the streaming capacity will increase to 25+ channels or more, giving Sovryn the potential to stream content upon completion of the roll-up to over 2500 channels aggregated over expected 100 stations. Madison will operate the stations remotely and centrally, eliminating the need for in-market personnel or a studio facility. Remote operations of stations results in significant cost efficiencies. Recent FCC deregulation in TV broadcasting has eliminated the need for full time employees and studio facilities operating Class A and Low Power stations allowing for greater cost efficiency. New Broadcast TV Technology In 2017, the FCC approved ATSC 3.0 technology, a next generation broadcast platform that will bring new revenue opportunities to broadcast television. ATSC 3.0 is an enhancement to the previous standard, providing new opportunities such as increased capacity, mobility and addressability allowing for customizable content, viewer measurability, target advertising and internet connectivity. All these features and more will be available on mobile devices allowing for broadcast operators to capitalize on audiences traditionally reserved for telecom operators. Competitive Conditions Madison’s broadcast stations will face competition from other free over-the-air television and radio stations, telecommunication companies, cable and satellite providers, print media providers, internet and other emerging technologies. Some of the company’s current and potential competitors have greater resources and access to capital. If Madison needs to obtain additional funding, the company may be not be able to obtain such capital on favorable terms and be forced to delay its development as a result. Furthermore, technological advancements and the resulting increase in programming alternatives may increase competition for household audiences. Madison Technologies Inc. Form 10-K - 2020 Page 7 Dependence on Customers Currently, Madison is not and will not be dependent on one or a few major customers. Technology and Intellectual Property Madison does not own, either legally or beneficially, any patents or trademarks. Governmental and Industry Regulations Broadcast licenses are issued by and subject to the jurisdiction of the FCC, pursuant to the Communications Act of 1934. The FCC regulates Madison’s broadcasting business and has the authority to issue, renew, revoke and modify broadcast licenses and impose penalties for the violation of its regulations. The company’s must at often obtain the FCC’s approval to obtain, renew, assign or modify a license, purchase a new station or sell an existing station. The FCC licenses are critical to the operations and we cannot operate without them. We cannot be certain that the FCC will renew these licenses in the future if acquired or approve new acquisitions in a timely manner. If licenses are not renewed or acquisitions are not approved, we may lose revenue that we could otherwise have earned and this would have an adverse effect on the overall business and financial condition. Madison will be subject to federal and state laws and regulations that relate directly or indirectly to its operations including federal securities laws. Madison will also be subject to common business and tax rules and regulations pertaining to the operation of its business. Research and Development Activities and Costs Madison has not spent any funds on research and development activities to date. Compliance with Environmental Laws Madison’s current operations are not subject to any environmental laws. Facilities Madison does not own or rent facilities of any kind at the date of this filing. Madison’s plan of operation may require the use of warehousing facilities to store inventory and fulfill customer orders, these may be leased on a month to month basis as required. Madison plans to conduct its operations from the office of its chief executive officer without paying any rent until Madison is in a position to commence and expand operations. Number of Total Employees and Number of Full Time Employees Other than the directors and officers, Madison has the following employees; Employee Name Position Stuart Sher Creative Manager Mr. Sher is the founder of ICON Licensing Group positioned in New York City and has launched and executed successful multimillion dollar licensing and branding platforms for celebrities. Stuart also the founder of Noah’s Ark Miami 1969-1993 a landmark fashion retailer President of criteria recording studios A&R. Mr. Sher is the creative manager of Madison to oversee and approve overall creative direction of brand, product, packaging, creative assets, brand messaging, new product offerings, new brand opportunities. Employee Name Position Walter Hoelzel Marketing Manager Mr. Hoelzel is a business entrepreneur and advertising and marketing expert with a 30 plus year career working extensively in the fields of advertising, marketing and product development. Mr. Hoelzel has developed numerous highly successful private label design programs for companies like J.C. Penney’s, Bloomingdales, Old Navy and American Eagle Outfitters. Mr. Hoelzel is the marketing manager to oversee all product and packaging development (core and new) - brand development, go-to-market strategy and marketing, brand messaging and creative asset development, marketing, website and social media agencies. Madison Technologies Inc. Form 10-K - 2020 Page 8 Item 1A. Risk Factors. Madison is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item. Item 1B. Unresolved Staff Comments. Madison is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item. Item 2. Properties. Madison’s executive offices are located at 450 Park Avenue, 30 th Floor, New York, NY, 10022. Madison currently has no interest in any property. Item 3. Legal Proceedings. Madison is not a party to any pending legal proceedings and, to the best of Madison’s knowledge, none of Madison’s property or assets are the subject of any pending legal proceedings. Item 4. Mine Safety Disclosures. There are no current mining activities at the date of this report. PART II