Madison Technologies Inc. 10-K/A

Item 8. Financial Statements and Supplementary Data. MADISON TECHNOLOGIES INC. DECEMBER 31, 2020 AND 2019 TABLE OF Contents Independent Auditor’s Report F-2 FINANCIAL STATEMENTS Balance Sheets F-3 Statements of Operations F-4 Statements of Stockholders’ Deficit F-5 Statements of Cash Flows F-7 Notes to the Financial Statements F-8 to F-19 K. R. MARGETSON LTD. Chartered Professional Accountant 313 East 5 th Street Tel: 604.220.7704 North Vancouver BC, V7L 1M1 Fax: 1.855.603.3228 Canada REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Madison Technologies Inc. Opinion on the financial statements I have audited the accompanying balance sheets of Madison Technologies Inc. as of December 31, 2020 and 2019 and the related statements of operations, stockholders’ deficit and cash flows for each of the two years in the period ended December 31, 2020 and the related notes (collectively referred to as the “financial statements’). In my opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and 2019 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared using accounting principles generally accepted in the United States of America assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred operating losses since inception, and has a working capital deficiency which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to their planned financing and other matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for opinion These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audits. My company is a public accounting firm registered with the Public Company Accounting Oversight Board (“PCAOB”) and is required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. I conducted my audits in accordance with the standards of the PCAOB. Those standards require that I plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting. As part of my audits, I am required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, I express no such opinion. My audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. My audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. Critical Audit Matter Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. I determined that there are no critical audit matters. I have served as the Company’s auditor since 2009. /s/ K. R. Margetson Ltd Chartered Professional Accountant North Vancouver, BC Canada April 15, 2021 F- 2 MADISON TECHNOLOGIES INC. Balance Sheets December 31, 2020 December 31, 2019 ASSETS CURRENT ASSETS Cash $ 9,491 $ 1,366 Prepaid expenses (Note 6) 67,718 5,178 77,209 6,544 Intangible Assets – (Note 3) 433,707 - Total Assets $ 510,616 $ 6,544 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Accounts payable and accrued charges $ 61,779 $ 33,655 License fee payable (Note 4) 33,500 33,500 Demand notes and accrued interest payable (Note 7) 20,486 - Convertible notes payable (Note 8) 494,992 297,766 610,757 364,921 Long term portion of convertible notes and interest payable (Note 8) 57,759 - Total liabilities 668,516 364,921 STOCKHOLDERS’ DEFICIIT Capital Stock: (Note 10 and 11) Preferred Shares – 50,000,000 shares authorized, $0.001 par value Preferred Shares - Series A, $0.001 par value; 3%, stated value $100 per share 100,000 shares designated, 92,999 shares issued and outstanding $ 93 $ - Preferred Shares - Series B, $0.001 par value; Super Voting 100 shares designated, 100 shares issued and outstanding - - Preferred Shares - Series C, $0.001 par value; 2%, stated value $100 per share 10,000 shares designated, none issued - - Common Shares - $0.001 par value; 500,000,000 shares authorized 23,472,565 shares issued and outstanding (Dec 31, 2019 - 18,057,565 shares) 23,472 18,057 Additional Paid in Capital: Preferred shares Series A 343,001 - Common shares 959,976 197,845 Accumulated deficit (1, 484,442 ) (574,279 ) Total stockholders’ deficit (157,900 ) (358,377 ) Total liabilities and stockholders’ deficit $ 510,616 $ 6,544 Note 1 Going concern Note 14 Subsequent events See Accompanying Notes to the Financial Statements. F- 3 MADISON TECHNOLOGIES INC. STATEMENTS of Operations For the For the Year Ended Year Ended Dec 31, 2020 Dec 31 2019 Revenues Sales $ 1,374 $ 4,983 Cost of sales 796 3,081 Gross Margin 578 1,902 Operating expenses Amortization 64,687 - General and administrative 30,314 25,575 Consulting fees 172,750 - Management fees 34,000 - Marketing and product development 88,647 - Professional fees 55,144 12,449 Royalties 62,782 - Total operating expenses 508,324 38,024 Loss before other expense (507,746 ) (36,122 ) Other items Amortized interest (212,769 ) - Interest (24,648 ) (6,141 ) Write down of investment (Note 5) (165,000 ) - Net loss and comprehensive loss $ (910,163 ) $ (42,263 ) Net loss per share-Basic and diluted $ (0.047 ) $ (0.002 ) Average number of shares of common stock outstanding 19,453,890 17,462,770 See Accompanying Notes to the Financial Statements. F- 4 MADISON TECHNOLOGIES INC. StatementS of stockholders’ DEFICIT Number of Shares Amount Additional Paid In Capital Preferred Preferred Preferred Preferred Preferred Accumulated Series A Series B Common Series A Series B Common Series A Common Deficit Total Balance, December 31, 2019 - - 18,057,565 $ - $ - $ 18,057 $ - $ 197,845 $ (574,279 ) $ (358,377 ) Conversion of debt at $0.01 per share - - 3,420,000 - - 3,420 - 30,780 - 34,200 Issuance of shares for services - - 95,000 - - 95 - 855 - 950 Shares issued for license 92,999 10,000 - 93 - - 343,001 - - 343,094 Conversion of debt at $0.005 per share - - 1,900,000 - - 1,900 - 7,600 - 9,500 Equity portion on convertible debt issued - - - - - - - 722,896 - 722,896 Net loss for the year - - - - - - - - (910,163 ) (910,163 ) Balance, December 31, 2020 92,999 10,000 23,472,565 $ 93 $ - $ 23,472 $ 343,001 $ 959,976 $ (1,484,442 ) $ (157,900 ) See Accompanying Notes to the Financial Statements F- 5 MADISON TECHNOLOGIES INC. StatementS of stockholders’ DEFICIT Additional Common Paid In Shares Accumulated Shares Amount Capital Subscribed Deficit Total Balance, December 31, 2018 16,757,565 $ 16,757 $ 119,145 $ 30,000 $ (532,016 ) $ (366,114 ) Common shares issued for cash Shares issued at $0.05 per share 1,000,000 1,000 49,000 - - 50,000 Shares issued at $0.10 per share 300,000 300 29,700 (30,000 ) - - Net loss for the year - - - - (42,263 ) (42,263 ) Balance, December 31, 2019 18,057,565 $ 18,057 $ 197,845 $ - $ (574,279 ) $ (358,377 ) See Accompanying Notes to the Financial Statements. F- 6 MADISON TECHNOLOGIES INC. StatementS of cash flows For the For the Year Ended Year Ended Dec 31, 2020 Dec 31, 2019 Cash flows from operating activities: Net loss for the year $ (910,163 ) $ (42,263 ) Adjustments to reconcile net loss to cash used in operating activities: Amortization of intangible assets 64,687 - Amortized interest 212,769 - Accrued interest on notes payable 25,134 6,141 Foreign exchange on notes payable 164 1,637 Demand note issued for services 20,000 - Convertible notes issued for services 75,000 - Changes in current assets and liabilities: Prepaid expenses (5,040 ) (2,178 ) Accounts payable and accrued charges 28,124 (14,514 ) Net cash used in operating activities (489,325 ) (51,177 ) Cash flows from investing activities: Website (10,000 ) - Net cash used in investing activities (10,000 ) - Cash flows from financing activities: Proceeds from convertible notes issued 506,500 - Fees incurred in debt conversion 950 - Cash received from share issuance - 50,000 Net cash provided by financing activities 507,450 50,000 Net increase in cash 8,125 (1,177 ) Cash, beginning of year 1,366 2,543 Cash, end of year $ 9,491 $ 1,366 SUPPLEMENTAL DISCLOSURE Interest paid $ - $ - Taxes paid $ - $ - The following is information pertaining to the year ended December 31, 2020: (1) In the transaction wherein the Company was assigned the Casa Zeta- Jones License, $45,000 of debt assumed and $100,000 of costs incurred were secured with convertible notes. (2) $50,000 of prepaid royalty fees were secured with convertible notes. (3) A retainer for legal fees for $12,500 was secured with a convertible note. During the year, legal fees of $5,000 were incurred and paid for in cash, which reduced both amount of the retainer and the balance owing on the convertible note. (4) Convertible debt of $44,650 was converted into 5,415,000 shares of common stock. See Accompanying Notes to the Financial Statements F- 7 MADISON TECHNOLOGIES INC. NOTES TO THE FINANCIAL STATEMENTS December 31, 2020 Note 1 Nature and Continuance of Operations The Company was incorporated on June 15, 1998 in the State of Nevada, USA and the Company’s common shares are publicly traded on the OTC Markets OTCQB. Up until fiscal 2014, the Company was in the business of mineral exploration. On May 28, 2014, the Company formalized an agreement whereby it purchased assets associated with a smokeless cannabis delivery system. The Company planned to develop this system for commercial purposes. On December 14, 2014, this asset purchase agreement was terminated. On September 16, 2016, the Company entered into an exclusive distribution product license agreement with Tuffy Packs, LLC to distribute products into the United Kingdom and 43 other essentially European countries. The Company Soled ballistic panels which are personal body armors, that conform to the National Institute of Justice (NIJ) Level IIIA threat requirements. The Company’s plan of operations and sales strategy included online and social media marketing, as well as attending various tradeshows and conferences. As the Company failed to make specified payments as required, the agreement was amended to a non-exclusive basis. On July 17, 2020, the Company entered into an acquisition agreement to acquire the Casa Zeta-Jones Brand License Agreement from Luxurie Legs, LLC of Delaware (“Luxurie”). Luxurie transferred all 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. Upon conversion, the stock could control up to 95% of the outstanding common shares. The agreement also required voting control, represented by newly issued shares of super voting preferred Series B stock. On September 28, 2020, the Company entered into a share exchange agreement to acquire 51% interest of Posto Del Sole Inc., a jewelry designer company to further develop the Company’s existing brands and create new designer labels. The title and rights will be transferred when all the terms and conditions in the Securities Exchange Agreement are met. At December 31, 2020, the share exchange had not closed and advances made to Posto Del Sole Inc. were expensed. These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At December 31, 2020, the Company had not yet achieved profitable operations, had a working capital deficit $533,548, had accumulated losses of $1,484,442 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Subsequent to the year-end, the Company entered into a number of agreements that provide financing in amounts greater than $16.5 million. That said, there is no assurance that the businesses being funded by this additional debt will ultimately be successful. F- 8 Note 2 Summary of Significant Accounting Policies a) Year end The Company has elected a December 31st fiscal year end. b) Cash and cash equivalents The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As at December 31, 2020, the Company did not have any cash equivalents. (2019 – $nil). c) Revenue Recognition In May 2014, the FASB issued guidance on the recognition of Revenue from Contracts with Customers. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. To achieve this core principle, the guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance addresses several areas including transfer of control, contracts with multiple performance obligations, and costs to obtain and fulfill contracts. The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company adopted the ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method. Revenues for the year ended December 31, 2020 were not adjusted. The adoption of Topic 606 did not have a material impact to the Company’s financial statements. Revenue from contracts with customers is generated primarily from selling products online. The customer orders and pays for the products through an online portal. Once the payment goes through, a purchase order is generated and submitted to the supplier. When the supplier ships the products to the customer, revenue is then recognized when the performance obligation is completed. The Company recognizes revenue when a contract is in place, goods or services are delivered to the purchaser and collectability is reasonably assured. d) Basic and Diluted Net Loss per Share The Company reports basic loss per share in accordance FASB ASC Topic 260, “ Earnings per share ”. Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share on the potential exercise of the equity-based financial instruments is not presented where anti-dilutive. e) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future, actual results may ultimately differ from the estimates. Management believes such estimates to be reasonable. f) Fair Value Measurements The Company follows FASB ASC Topic 820, “ Fair Value Measurements and Disclosures” , for all financial instruments and non-financial instruments accounted for at fair value on a recurring basis. This accounting standard establishes a single definition of fair value and a framework for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurement and expands disclosures about fair value measurements required under other accounting pronouncements The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk. The Company has adopted FASB ASC 825, “ Financial Instruments”, which allows companies to choose to measure eligible financial instruments and certain other items at fair value that are not required to be measured at fair value. The Company has not elected the fair value option for any eligible financial instruments. F- 9 The carrying value of the Company’s financial instruments including cash, accounts payable and accrued liabilities, license fee payable, demand notes and interest payable and convertible notes payable approximate their fair value due to the short maturities of these financial instruments. g) Income Taxes The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. In estimating future tax consequences, all expected future events other than enactment of changes in the tax laws or rates are considered. Due to the uncertainty regarding the Company’s future profitability, the future tax benefits of its losses have been fully reserved. h) Intangible Assets Intangible assets are non-monetary identifiable assets, controlled by the Company that will produce future economic benefits, based on reasonable and supportable assumptions about conditions that will exist over the life of the asset. An intangible asset that does not meet these attributes will be recognized as an expense when it is incurred. Intangible assets that do, are capitalized and initially measured at cost. Those with a determinable life will be amortized on a systematic basis over their future economic life. Those with a indefinite useful life shall not be amortized until its useful life is determined to be longer indefinite. An intangible asset subject to amortization shall be periodically reviewed for impairment. A recoverability test will be performed and, if applicable, unscheduled amortization is considered. License agreements have been capitalized, recorded at cost and amortized over the life of the contracts. Website costs have been capitalized and will be subject to amortization once the website is operational. They will be amortized over the life of the license to which it supports. i) Recent Accounting Standards In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. This new guidance includes several provisions to simplify the accounting for income taxes. The standard removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation, and calculating income taxes in interim periods. This standard is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption of this standard is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements. In August 2018, the FASB issued ASU No. 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”. This new guidance requires a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. Also, capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. This standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Company’s financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Recently, the FASB issued the final ASU to delay adoption for smaller reporting companies to calendar year 2023. The Company is currently assessing the impact of the adoption of this ASU on its financial statements. F- 10 In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” and subsequent amendments to the initial guidance: ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842). As the Company has no leases, this pronouncement did not affect the Company’s financial statements. The Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective date. Management does not believe that any pronouncement not yet effective but recently issued would, if adopted, have a material effect on the accompanying financial statements. Note 3 Intangible assets Intangible assets are amortized on a straight-line basis over the terms of the license agreements. Cost Amortization Net Tuffy Packs, LLC License $ 50,000 $ 50,000 $ - Website for Casa-Zeta Jones Brand $ 10,000 $ - $ 10,000 Casa Zeta-Jones Brand License $ 488,094 $ 64,687 $ 423,407 $ 548,094 $ 94,687 $ 433,407 Note 4 License Agreements A. The Company entered into an exclusive product license agreement on September 16, 2016 with Tuffy Packs, LLC, a Texas corporation, to sell Ballistic Panels in certain countries, essentially in Europe. The license was for a period of two years and may be renewed for successive terms of two years each. The payment terms for the license was as follows: 1. $10,000 payable within seven days after the effective date; 2. An additional $15,000 payable within 30 days after the effective date; and 3. A final payment of $25,000 payable within 90 days of the effective date. At December 31, 2018, the Company had paid $16,500 to the Licensor, leaving an unpaid balance of $33,500. To date, the Company has recorded a total license amortization of $50,000, which fully amortizes the license. As a result of the failure to make payments as required under the agreement, the Company was informed on March 20, 2017, that going forward, the agreement would be on a non-exclusive basis. B. On July 17, 2020, the Company entered into an acquisition agreement with Luxurie Legs, LLC, a Delaware corporation, to acquire the Casa Zeta-Jones Brand license agreement. The license agreement, as amended, grants the Company the worldwide rights to promote and sell certain products, and license the rights to manufacture, promote and sell such products under the brand Casa Zeta-Jones and more. The license agreement purchase included the issuance of 92,999 Series A 3% Convertible Preferred Series A shares valued at $343,094, 10,000 Preferred Series B voting shares valued at $nil, the assumption of $45,000 in debt and costs incurred of $100,000. The values were based on the licensor obtaining 95% of the Company’s common shares, whose value was discounted by a 50% factor, given the lightly traded history in its shares. F- 11 The Company is subject to the following terms: a. A 3.5 year term as follows: i. Year 1: execution – December 31, 2021 ii. Year 2: January 1, 2022 – December 31, 2022 iii. Year 3: January 1, 2023 – December 31, 2023 b. Marketing date November 2020, On Shelf Date February 15, 2021. c. Royalty payments with a rate of 8%, net of sales, subject to guaranteed minimums noted below. d. Advance prepayment of $150,000 to be applied against royalties, paid as follows: i. $50,000 upon signing (paid) ii. $50,000 on July 20, 2020 (paid) iii. $50,000 on September 1, 2020 (paid) e. Guaranteed minimum sales and guaranteed minimum royalties: Year Guaranteed Minimum Royalties Guaranteed Minimum Sales i. 7/17/20 – 12/31/21 $ 250,000 $ 3,200,000 ii. 1/1/22 – 12/31/22 $ 250,000 $ 3,200,000 iii. 1/1/23 – 12/31/23 $ 250,000 $ 3,200,000 f. The Company to provide the Licensor with 50 gift sets of Licensed Products annually. Note 5 Securities Exchange Agreement The Company entered into a Securities Exchange Agreement on September 25, 2020 with Posto Del Sole Inc. (“PDS”) a New York corporation, to acquire 51% of the shares of PDS and in return, the Company will issue 10,000 Preferred Series C shares. (See Note 11). As part of the agreement, the Company is to provide monthly investments to a total aggregate of $1,000,000 during the twelve-month period following the closing. PDS has 60 days from closing to provide the necessary financial statements and notes in order to satisfy regulatory requirements and disclosures. As at December 31, 2020 PDS had not provided any such information, the Securities Exchange Agreement had not closed and as a result, the Company wrote off advances of $165,000 that were made to PDS in anticipation of closing. Note 6 Prepaid Expenses The Company has the following in prepaid expenses: December 31, 2020 December 31, 2019 Advances for service fees $ 3,000 $ 5,178 Advance for legal fees 7,500 - Advances for management fees 20,000 - Advance for royalties 37,218 - $ 67,718 $ 5,178 F- 12 Note 7 Note Payable The Company has one note payable that is accruing interest at 5% per annum. The note is unsecured and matures on June 30, 2021. December 31, 2020 December 31, 2019 Note payable bearing interest at 5% $ 20,000 $ - Accrued interest thereon 486 - $ 20,486 $ - Note 8 Convertible Notes and Accrued Interest Payable A summary of the convertible notes and accrued interest payable is as follow: Face Value Conversion Rate Interest rate Due Date Accrued Interest Carrying Value Dec 31 2020 Total Dec 31 2019 Total $ 10,000 $ 0.005 - - $ - $ 500 $ 500 $10,000 (a) $ 85,000 $ 0.01 - - - 50,800 50,800 85,000 (b) $ 50,000 $ 0.01 10 % 05/01/2022 2,500 50,000 52,500 - (c) $ 5,000 $ 0.01 10 % 05/01/2022 259 5,000 5,259 - (d) $ 12,500 $ 0.01 10 % 6/23/2021 457 7,500 7,957 - (d) $ 20,000 $ 0.04 - - - 20,000 20,000 20,000 $ 68,490 $ 0.05 - - - 68,490 68,490 48,490 (e) $ 25,000 $ 0.05 12 % - 19,682 25,000 44,682 41,690 (f) $ 25,000 $ 0.05 8 % - 31,797 25,000 56,797 54,797 (f) $ 23,438 $ 0.05 5 % - 16,113 23,438 39,551 37,789 (f) $ 649,000 $ 0.05 10 % Various 13,931 140,513 154,444 - (g) $ 75,000 $ 10 % Various 911 50,860 51,771 - (h) $ 85,650 $ 467,101 $ 552,751 $297,766 Less long-term portion 57,759 - Current portion $ 494,992 $297,766 All notes are unsecured and, except where specifically noted, are due on demand. Except for notes denoted below under (e), all accrued interest occurred in the twelve months ended December 31, 2020. No conversion shall result in the Holder holding in excess of 9.99% of the total issued and outstanding common stock of the Company at any time. (a) On October 28, 2020, $9,500 was converted into 1,900,000 common shares. (b) On July 23, 2020, $16,900 in debt and $950 in costs were converted into 1,785,000 common shares and on November 2, 2020, $17,300 was converted into 1,730,000 common shares. (c) The notes are convertible into common stock at the discretion of the Holder at the lesser of $0.01 or 50% of the lowest closing bid price for the Company’s stock during the 20 immediately preceding the date of delivery by Holder to the Company of the Conversion Notice. F- 13 (d) The notes are convertible into common stock at the discretion of the Holder at 50% of the lowest closing bid price for the Company’s common stock during the 30 trading days immediately preceding the date of delivery by Holder to the Company of the Conversion Notice. (e) Included in this debt is $490 due to the former CEO. (f) On April 2, 2020, these notes terms were changed from non-convertible to convertible at $0.05 debt to 1 common share. They were also amended to include the above noted clause with respect to holding less than 9.99% of the issued and outstanding common stock. During the year ended December 31, 2020, interest accrued on this debt was $6,164 (2019 - $6,146). For comparative purposes, these amounts previously shown as debt payable as at December 31, 2019, have been reclassified as convertible debt. (g) Based on the intrinsic value of the beneficial conversion feature, as per FASB topic ASC 470-20 Debt with Conversion and other Options, it was determined that all of the value of the following notes issued during the year ended December 31, 2020 should be allocated to equity and amortized to interest, based on the due date of the debt. A summary of the balances is as follows: Allocated to Amortized Accrued Equity Due Date as interest at 10% Total $ 30,000 03-31-2021 $ 18,651 $ 1,258 $ 19,909 100,000 07-20-2021 43,752 4,493 48,245 60,000 08-31-2021 20,232 2,121 22,353 20,000 09-30-2021 5,344 570 5,914 60,000 10-31-2021 11,826 1,282 13,108 50,000 10-31-2021 8,582 890 9,472 50,000 10-31-2021 8,582 890 9,472 10,000 11-04-2021 1,474 153 1,627 110,000 11-18-2021 12,354 1,266 13,620 55,000 11-19-2021 6,160 633 6,793 27,000 12-31-2021 1,336 148 1,484 27,000 12-31-2021 1,336 148 1,484 20,000 12-31-2021 696 71 767 30,000 12-31-2021 188 8 196 $ 649,000 $ 140,513 $ 13,931 $ 154,444 (h) Based on the intrinsic value of the beneficial conversion feature, as per FASB topic ASC 470-20 Debt with Conversion and other Options, it was determined that a portion of the value of the following notes issued during the year ended December 31, 2020 should be allocated to equity and amortized to interest, based on the due date of the debt. These notes are convertible into common stock at the discretion of the Holder at 70% of the lowest closing bid price for the Company’s common stock during the 20 trading days immediately preceding the date of delivery by Holder to the Company of the Conversion Notice. The face value of each note is $25,000 and a summary of the balances is as follows: Allocated to equity Due date Amortized as Interest Accrued Interest at 10% Total $ 10,714 07-31-2021 $ 2,772 $ 514 $ 17,572 10,714 08-31-2021 1,618 301 16,205 7,468 09-30-2021 366 96 17,994 $ 28,896 $ 4,756 $ 911 $ 51,771 F- 14 Note 9 Related Party On September 28, 2020, the Company entered into a renewable employment agreement with the President and CEO of the Company as described in Note 12 , Commitments . The President and CEO of the Company currently holds 100 Series B Preferred Super Voting shares which he is entitled to 51% voting rights no matter how many shares of common stock or other voting stock of the Company are issued or outstanding in the future, such that he shall always have majority voting control of the Company. Note 10 Common Stock The following common stock transactions occurred during the year ended December 31, 2020: On July 23, 2020, the Company issued 1,785,000 shares of common stock pursuant to the conversion of a note payable of $16,900 at $0.01 per share plus legal fees of $950, totaling $17,850. On October 28, 2020, the Company issued 1,900,000 shares of common stock pursuant to the conversion of a note payable of $9,500 at $0.005 per share. On November 2, 2020, the Company issued 1,730,000 shares of common stock pursuant the conversion of a note payable of $17,300 at $0.01 per share. The following common stock transactions occurred in the year ended December 31, 2019: On March 25, 2019, the Company completed a private placement of 600,000 shares of common stock at a per share price of $0.05 for gross proceeds of $30,000. This was issued during the period ended December 31, 2019. On February 14, 2019, the Company completed a private placement of 400,000 shares of common stock at a per share price of $0.05 for gross proceeds of $20,000. This was issued during the period ended December 31, 2019. There are no shares subject to warrants or options as of December 31, 2020. F- 15 Note 11 Preferred Shares Series A 3% Convertible Preferred Stock, par value $0.001 with a stated valued of $100 per share There are 100,000 designated and authorized Series A 3% convertible preferred stock with a 9.99% conversion cap and anti-dilution rights for 24 months from time of issuance. Holders of Series A 3% Preferred Stock shall be entitled to receive, when and as declared, dividends equal to 3% per annum on the stated value, payable in additional shares of Series A Preferred Stock. Holders of Series A 3% Convertible Preferred Stock have the right to vote on any matter that may be submitted to the Company’s shareholders for vote, on an as converted basis, either by written consent or by proxy. Each share of Series A 3% Convertible Preferred Stock may be convertible into 3420 shares of Common Stock, or as adjusted to equal the conversion ratio multiplied by a fraction, the numerator of which shall be the number of shares outstanding on a fully diluted basis after the issuance of the dilution shares, and the denominator shall be 360,000,000. (See Form 8K filing on August 6, 2020, Exhibit 10.3) On July 17, 2020, 92,999 Series A 3% Convertible Preferred Stock were issued pursuant to the License Agreement at a value of $343,094 The acquisition cost was derived using the current market price of $0.04 x 95% of the number of the issued and outstanding shares of the Company at the time (18,057,565) x 50% of the value. (See Note 4). As at December 31, 2020, there were unpaid and accrued dividends of $703. Series B Super Voting Preferred Stock, par value $0.001 There are 100 designated and authorized Series B Super Voting Preferred Stock. Holders with Series B Super Voting Preferred Stock have the right to vote on all shareholder matters equal to 51% of the total vote of common stockholders. The Series B Super Voting Preferred Stockholder is entitled to 51% voting rights no matter how many shares of common stock or other voting stock of the Company are issued or outstanding in the future, such that the holder of Series B Super Voting Preferred Stock shall always have majority control of the Company. On July 17, 2020, 100 Series B Super Voting Preferred Stock were issued pursuant to the License Agreement. The Series B Super Voting Preferred Stock was valued at par at $Nil. Although the Series B Super Voting Preferred Stock is entitled to 51% voting rights as described above, the stock has no dividend rate nor a conversion feature. Furthermore, the shares were not issued to the investors but rather were granted to new unrelated management. Series C 2% Convertible Preferred Stock, par value $0.001 with a stated value of $100 per share There are 10,000 designated and authorized Series C 2% convertible preferred stock with a 9.99% conversion cap. Holders of Series C 2% Preferred Stock shall be entitled to receive, when and as declared, dividends equal to 2% per annum on the stated value, payable in additional shares of Series C Preferred Stock. So long as any shares of Series C Preferred Stock remain outstanding, neither the Company nor any subsidiary thereof shall, without the consent of the Holders of 80% of the shares of Series C Preferred Stock then outstanding, redeem, repurchase or otherwise acquire directly or indirectly any Junior Securities nor shall the Company directly or indirectly pay or declare or make any distribution upon, nor shall any distribution be made in respect of, any Junior Securities, nor shall any monies be set aside for or applied to the purchase or redemption of any Junior Securities. Each holder of the Series C Preferred Stock shall have the right to vote on any matter that may from time to time be submitted to the Company’s shareholders for a vote, on an as converted basis, either by written consent or by proxy. Each share of Series C 2% Convertible Preferred Stock may be convertible into 100 shares of Common Stock. (See Note 5) As at December 31, 2020, no Series C Convertible Preferred shares were issued. F- 16 Note 12 Commitments The Company entered into a one-year employment agreement with Jeffrey Canouse on September 28, 2020 as President and Chief Executive Officer. The term may be renewed or non-renewed with not less than thirty days’ notice prior to the expiration of the initial employment term. The employment may be terminated by death or disability, terminated with or without cause or terminated by the employee. If the employee is terminated by the Company without cause or by the employee for good reason, then the Company will continue to pay his base salary of $8,000 for the remainder of the employment term or renewal term. Beginning on the first anniversary date of the initial salary increase and continue on each anniversary of the increase date, the base salary shall be increased by an amount not less than 5% times the base salary in effect, plus any additional amount as determined by the Company’s Board of Directors. As of December 31, 2020, Canouse had received $34,000 in management fees, $24,000 of which was pursuant to the employment agreement. The Company entered into a one-year employment agreement with Walter Hoelzel on September 29, 2020 as Chief Marketing Officer. The term may be renewed or non-renewed with not less than thirty days’ notice prior to the expiration of the initial employment term. The employment may be terminated by death or disability, terminated with or without cause or terminated by the employee. If the employee is terminated by the Company without cause or by the employee for good reason, then the Company will continue to pay his base salary of $5,000 for the remainder of the employment term or renewal term. As of December 31, 2020, Hoelzel had received $25,000 in consulting fees, $15,000 of which were pursuant to the employment agreement. The Company entered into a one-year employment agreement with Stuart Sher on September 29, 2020 as Chief Creative Officer. The term may be renewed or non-renewed with not less than thirty days’ notice prior to the expiration of the initial employment term. The employment may be terminated by death or disability, terminated with or without cause or terminated by the employee. If the employee is terminated by the Company without cause or by the employee for good reason, then the Company shall continue to pay his base salary for the remainder of the employment term or renewal term. As of December 31, 2020, Sher had received $25,000 in consulting fees, $15,000 of which were pursuant to the employment agreement. The Company entered into a consulting agreement with Virtue Development Company on September 29, 2020 for project consultancy. The consulting agreement is for 6 months with 6 months renewal options at the beginning of the 5 th month. The monthly compensation is $4,250 and as at December 31, 2020, the Company had paid $12,750 in fees pursuant to this agreement. The Company entered into a consulting agreement with Oscaleta Partners LLC on November 1, 2020 as project manager. The consulting agreement may be terminated by either party at the end of the initial 6 months term by giving 30 days written notice to the other party or at any time with cause. The monthly compensation is $25,000 and as of December 31, 2020, the Company incurred $75,000 in consulting fees. The Company entered into a one-year consulting agreement with Bernt Ullmann on November 23, 2020 to provide market exposure services. The monthly compensation is $5,000 per month and as of December 31, 2020, the Company incurred $5,000 fees. Note 13 Income Taxes Income tax recovery differs from that which would be expected from applying the effective tax rates to the net income (loss) as follows: December 31, December 31, 2020 2019 Net loss for the year $ (910,163 ) $ (42,263 ) Statutory and effective tax rates 21.0 % 27.0 % Income taxes expenses (recovery) at the effective rate $ (191,134 ) $ (11,406 ) Effect of change in tax rates 26,276 - Permanent differences 44,681 - Tax benefit not recognized 120,177 11,406 Income tax expense (recovery) and income tax liability (asset) $ - $ - F- 17 As at December 31, 2020 the tax effect of the temporary timing differences that give rise to significant components of deferred income tax asset are noted below. A valuation allowance has been recorded as management believes it is more likely than not that the deferred income tax asset will not be realized. December 31, December 31, 2020 2019 Tax loss carried forward $ 1,135,000 $ 437,900 Deferred tax assets 238,421 118,244 Valuation allowance (238,421 ) (118,244 ) Deferred taxes recognized $ - $ - Tax losses of $438,000 will expire between 2028 and 2039. Tax losses of $697,000 have no expiry date. Note 14 Subsequent Events Subsequent to December 31, 2020, the Company issued convertible notes payable totaling $35,000, convertible at $0.05 with a rate of 10% per annum that matures on January 31, 2022. On February 16, 2021, the Company entered into a Share Exchange Agreement with Sovryn Holdings, Inc. to exchange 100% of the outstanding common shares of Sovryn Holdings, Inc. for i) 100 shares of Series B Preferred Stock of the Company to be transferred by Jeffrey Canouse, the Company’s CEO to a designee of Sovryn and ii) 1,000 shares of Series E Convertible Preferred Stock. Upon the effectiveness of an amendment to the Company’s Articles of Incorporation to increase the Company’s authorized common stock, from par value $0.001 to par value $0.0001 per share, from 500,000,000 shares to 7,000,000,000 shares, all shares of Series E Convertible Preferred Stock issued to the shareholders shall automatically convert into approximately 2,305,000,000 shares of common stock of the Company. The Series E Convertible Preferred Stock votes on an as-converted basis with the common stock prior to their conversion. The Series E Preferred Stock shall represent approximately 59% of the fully diluted shares of common stock of the Company after the closing of the transactions contemplated by the Securities Purchase Agreement. Prior to the closing of the Share Exchange Agreement with Sovryn Holdings, Inc., the Holders of the outstanding convertible notes payable of $764,000 will exchange their convertible notes payable to 230,000 shares of Series D Convertible Preferred Stock. These new Series D Convertible Preferred Stock shall be convertible into common stock of the Company at a ratio of 1,000 shares of common stock for each share of Series D Convertible Preferred Stock held. At the same time, Series A Convertible Preferred Stock that were previously issued, can be exchanged for common stock as well. On February 17, 2021, the Company entered into a securities purchase agreement with funds affiliated with Arena Investors LP (the “Investors”) pursuant to which we pursuant to which it issued convertible notes in an aggregate principal amount of $16.5 million for an aggregate purchase price of $15 million (collectively, the “Notes”). In connection with the issuance of the Notes, the Company issued to the Investors warrants to purchase an aggregate of 192,073,017 shares of Common Stock (collectively, the “Warrants”) and 1,000 shares of series F convertible preferred stock (the “Series F Preferred Stock”). The Notes each have a term of thirty-six months and mature on February 17, 2023, unless earlier converted. The Notes accrue interest at a rate of 11% per annum, subject to increase to 20% per annum upon and during the occurrence of an event of default. Interest is payable in cash on a quarterly basis beginning on March 31, 2021. Notwithstanding the above, at the Company’s election, any interest payable on an applicable payment date may be paid in registered Common Stock of the Company (rather than cash) in an amount equal (A) the amount of the interest payment due on such date, divided by (B) an amount equal to 80% of the average VWAP of the Common Stock for the five (5) days immediately preceding the date of conversion. F- 18 The Notes are convertible at any time, at the holder’s option, into shares of our common stock equal to the lesser of: (i) the amount determined by dividing (A) $50,000,000, by (B) the total number of shares of preferred stock, Common Stock and Common Stock Equivalents outstanding on such Conversion Date (assuming full conversion or exercise of all then issued and outstanding securities of the Company that are exercisable for or convertible into such equity securities of the Company) and (ii) $1.00, subject to adjustment herein (the “Conversion Price”) , subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%) . The conversion price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with the issuance by the Company of common stock or common stock equivalents at an effective price per share lower than the conversion price then in effect . Notwithstanding the foregoing, at any time during the continuance of any Event of Default, the Conversion Price in effect shall be equal to 75% of the average VWAP of the Common Stock for the five (5) Trading Days on the Trading Market immediately preceding the date of conversion (the Alternative Conversion Price”); provided, however, that the Alternate Conversion Price may not exceed $0.015 per share, as adjusted pursuant to the terms of the Notes. The conversion price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with the issuance by the Company of common stock or common stock equivalents at an effective price per share lower than the conversion price then in effect. The Notes may not be redeemed by the Company. Each Warrant is exercisable for a period of five years from the date of issuance at an initial exercise price to (i) 125%, times (ii) the amount determined by dividing (A) $50,000,000, by (B) the total number of shares of preferred stock, Common Stock and Common Stock Equivalents outstanding on such Conversion Date (assuming full conversion or exercise of all then issued and outstanding securities of the Company that are exercisable for or convertible into such equity securities of the Company), subject to adjustment herein , subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%) . The exercise price is also subject to adjustment due to certain events, including stock dividends, stock splits and recapitalizations . The Series F Preferred Stock have no voting rights and shall convert into 4.9% of our issued and outstanding shares of common stock on a fully diluted basis upon Shareholder Approval. Each of the Investors have contractually agreed to restrict their ability to exercise the Warrants and convert the Notes such that the number of shares of the Company common stock held by each of them and their affiliates after such conversion or exercise does not exceed 9.99% of the Company’s then issued and outstanding shares of common stock. On February 17, 2021, Sovryn, entered into an asset purchase agreement (the “Asset Purchase Agreement”) with NRJ TV II CA OPCO, LLC, a Delaware limited liability company (“OpCo”) and NRJ TV III CA License Co., LLC, a Delaware limited liability company (together with OpCo, “Sellers”). Upon the terms and subject to the satisfaction of the conditions described in the Asset Purchase Agreement, Sovryn will acquire the licenses and Federal Communications Commission (“FCC”) authorizations to the KNET-CD and KNLA-CD Class A television stations owned by the Sellers (the “Acquired Stations”), certain tangible personal property, real property, contracts, intangible property, files, claims and prepaid items together with certain assumed liablities in connection with the Acquired Stations (the “Asset Sale Transaction”). As consideration for the Asset Sale Transaction, Sovryn has agreed to pay the Sellers $10,000,000, $2,000,000 of which was paid to Sellers upon execution of the Asset Purchase Agreement, as follows: (i) an escrow deposit of $1,000,000 to be held in escrow pursuant to the terms of an escrow agreement entered into between Sovryn and the Sellers (the “Escrow Fee”) and (ii) a non-refundable option fee of $1,000,000 (the “Option Fee”). The closing of the Asset Sale Transaction (the “Closing”) is subject to, among other things, consent by the FCC to the assignment of the FCC authorizations pertaining to the Acquired Stations, from Sellers to Sovryn (the “FCC Consent”). The Closing shall occur no more than five (5) business days following the later to occur of (i) the date on which the FCC Consent has been granted and (ii) the other conditions to the Closing set forth in the Asset Purchase Agreement. Concurrently with the closing of the Asset Purchase Agreement, the Board of Directors of the Company appointed Phil Falcone to serve as the Company’s new Chief Executive Officer and member of the Board of Directors; Henry Turner was appointed as Chief Technology Officer and Chief Operating Officer; and Warren Zenna as a member of the Board of Directors. Jeffrey Canouse resigned his position as Chief Executive Officer and was appointed as Chief Compliance Officer and Secretary of the Company and will continue to be a member of the Board of Directors. Effective 10 days after mailing to shareholders of a Schedule 14F-1 proposing changes in the Company’s Board of Directors, Jeffrey Canouse will resign as a director of the Company and Warren Zenna will become a director of the Company. F- 19 Madison Technologies Inc. Form 10-K - 2020 Page 17 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. There are no changes in and disagreements with Madison’s accountants on accounting and financial disclosure. Madison’s Independent Registered Public Accounting Firm since January 31, 2009 has been K. R. Margetson Ltd, Chartered Professional Accountant, 331 East 5 th Street, North Vancouver, BC V7L 1M1, Canada.