Item 1. Business
Item
1. Business.
Summary
Madison
Technologies Inc. (“Madison” or the “Company” or “we” or “us” or “our”) is
a Nevada corporation that was incorporated on June 15, 1998.
On
February 16, 2021, we 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 $0.001 per share (“Sovryn Common Shares”), pursuant to which the Shareholders exchanged 100% of the outstanding
Sovryn Common Shares, for (i) 100 shares of our Series B Preferred Stock, par value $0.001 per share (“Series B Preferred Stock”),
which was transferred by Jeffrey Canouse, our controlling shareholder and Chief Executive Officer at the time (the “Controlling
Shareholder”), to the designee of Sovryn and (ii) 1,000 shares of Series E 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”).
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 Preferred Stock. Our new Series D 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 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 our newly
to be formed wholly owned subsidiary to be called CZJ License, Inc. In addition, the agreements related to the Luxurie Legs line of products
were transferred to CZJ License, Inc. in March 2021.
On
February 17, 2021, we entered into a securities purchase agreement with funds affiliated with Arena Investors LP (the “Investors”)
pursuant to which we 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, we 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 Preferred
Stock (the “Series F Preferred Stock”).
The
Notes each have a term of thirty-six months and mature on February 17, 2024, 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 our election, any interest payable on an applicable
payment date may be paid in our registered Common Stock (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 volume weighted average price of our Common Stock for the five
days immediately preceding the date of conversion.
The
Notes are convertible at any time, at the holder’s option, into shares of our Common Stock at a price of $0.02, subject to adjustment
(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
our issuance 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 volume weighted average price of our Common Stock for the five 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 our issuance of common Stock or common stock equivalents at an effective
price per share lower than the conversion price then in effect. We may not redeem the Notes.
Madison Technologies Inc. Form 10-K - 2021 Page 4
Each
Warrant is exercisable for a period of five years from the date of issuance at an initial exercise price of $0.025, 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 converted into 192,073,017 shares of Common Stock upon the increase of our authorized shares of capital stock
which occurred on September 16, 2021.
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 “Los Angeles Acquired Stations”), certain tangible
personal property, real property, contracts, intangible property, files, claims and prepaid items together with certain assumed liabilities
in connection with the Los Angeles 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 took place on April 19, 2021.
On
March 14, 2021, Sovryn entered into an asset purchase agreement (the “KVVV Asset Purchase Agreement”) with Abraham Telecasting
Company, LLC, a Texas limited liability company (the “Houston Seller”). Upon the terms and subject to the satisfaction of
the conditions described in the KVVV Asset Purchase Agreement, Sovryn agreed to acquire the licenses and Federal Communications Commission
(“FCC”) authorizations to the KVVV-LD low power television station owned by the Houston Seller (the “Houston Acquired
Station”), certain tangible personal property, certain real property leases, contracts, intangible property, files, claims and
prepaid items together with certain assumed liabilities in connection with the Houston Acquired Station (the “KVVV Asset Sale Transaction”).
As consideration for the KVVV Asset Sale Transaction, Sovryn has agreed to pay the Houston Seller $1,500,000 in cash, $87,500 of which
was paid to the Houston Seller and to be held in escrow pursuant to the terms of an escrow agreement entered into between Sovryn and
the Houston Seller (the “KVVV Escrow Fee”). The closing of the KVVV Asset Sale Transaction (the “KVVV Closing”)
is subject to, among other things, consent by the FCC to the assignment of the FCC authorizations pertaining to the Houston Acquired
Station, from the Houston Seller to Sovryn (the “Houston FCC Consent”). The KVVV Closing shall occur no more than ten (10)
business days following the later to occur of (i) the date on which the Houston FCC Consent has been granted and (ii) the other conditions
to the KVVV Closing set forth in the KVVV Asset Purchase Agreement. The closing of the KVVV Asset Sale Transaction took place on June
1, 2021.
On
March 29, 2021, Sovryn, entered into an asset purchase agreement (the “KYMU Asset Purchase Agreement”) with Seattle 6 Broadcasting
Company, LLC, a Washington limited liability company (the “Seattle Seller”). Upon the terms and subject to the satisfaction
of the conditions described in the KYMU Asset Purchase Agreement, Sovryn agreed to acquire the licenses and FCC authorizations to the
KYMU-LD low power television station owned by the Seattle Seller (the “Seattle Acquired Station”), certain tangible personal
property, certain real property leases, contracts, intangible property, files, claims and prepaid items together with certain assumed
liabilities in connection with the Seattle Acquired Station (the “KYMU Asset Sale Transaction”). As consideration for the
Seattle Asset Sale Transaction, Sovryn has agreed to pay the Seattle Seller $1,750,000, $87,500 of which was paid to the Seattle Seller
and to be held in escrow pursuant to the terms of an escrow agreement entered into between Sovryn and the Seattle Seller (the “Seattle
Escrow Fee”). The closing of the KYMU Asset Sale Transaction (the “KMYU Closing”) is subject to, among other things,
consent by the FCC to the assignment of the FCC authorizations pertaining to the Seattle Acquired Station, from Seattle Seller to Sovryn
(the “Seattle FCC Consent”). The Seattle Closing shall occur no more than ten (10) business days following the later to occur
of (i) the date on which the Seattle FCC Consent has been granted and (ii) the other conditions to the KMYU Closing set forth in the
KMYU Asset Purchase Agreement. The closing of the KMYU Asset Sale Transaction took place on September 24, 2021.
Madison Technologies Inc. Form 10-K - 2021 Page 5
On
June 9, 2021, Sovryn, entered into an asset purchase agreement (the “W27EBAsset Purchase Agreement”) with Local Media TV
Chicago, LLC, a Delaware limited liability company (the “Chicago Seller”). Upon the terms and subject to the satisfaction
of the conditions described in the W27EB Asset Purchase Agreement, Sovryn agreed to acquire the licenses and FCC authorizations to the
W27EB-D Class A television station owned by the Chicago Seller (the “Chicago Acquired Station”), certain tangible personal
property, certain real property leases, contracts, intangible property, files, claims and prepaid items together with certain assumed
liabilities in connection with the Chicago Acquired Station (the “W27EBAsset Sale Transaction”). As consideration for the
Chicago Asset Sale Transaction, Sovryn has agreed to pay the Seattle Seller $5,700,000, $285,000 of which was paid to the Chicago Seller
and to be held in escrow pursuant to the terms of an escrow agreement entered into between Sovryn and the Chicago Seller (the “Chicago
Escrow Fee”). The closing of the W27EB Asset Sale Transaction (the “W27EB Closing”) is subject to, among other things,
consent by the FCC to the assignment of the FCC authorizations pertaining to the Chicago Acquired Station, from Chicago Seller to Sovryn
(the “Chicago FCC Consent”). The Chicago Closing shall occur no more than third (3 rd ) business days following
the later to occur of (i) the date on which the Chicago FCC Consent has been granted and (ii) the other conditions to the W27EB Closing
set forth in the W27EB Asset Purchase Agreement.
On
July 13, 2021, Sovryn, entered into an asset purchase agreement (the “KPHE Asset Purchase Agreement”) with Lotus TV of Phoenix
LLC, an Arizona limited liability company (the “Arizona Seller”). Upon the terms and subject to the satisfaction of the conditions
described in the KPHE Asset Purchase Agreement, Sovryn agreed to acquire the licenses and FCC authorizations to the KPHE-LD low power
television station owned by the Arizona Seller (the “Arizona Acquired Station”), certain tangible personal property, certain
real property leases, contracts, intangible property, files, claims and prepaid items together with certain assumed liabilities in connection
with the Arizona Acquired Station (the “Arizona Asset Sale Transaction”). As consideration for the Arizona Asset Sale Transaction,
Sovryn has agreed to pay the Seattle Seller $2,000,000, $100,000 of which was paid to the Arizona Seller and to be held in escrow pursuant
to the terms of an escrow agreement entered into between Sovryn and the Arizona Seller (the “Chicago Escrow Fee”). The closing
of the KPHE Asset Sale Transaction (the “Arizona Closing”) is subject to, among other things, consent by the FCC to the assignment
of the FCC authorizations pertaining to the Arizona Acquired Station, from Arizona Seller to Sovryn (the “Arizona FCC Consent”).
The Arizona Closing shall occur no more than five (5) business days following the later to occur of (i) the date on which the Arizona
FCC Consent has been granted and (ii) the other conditions to the Arizona Closing set forth in the KPHE Asset Purchase Agreement.
On
August 31, 2021, Sovryn entered into an asset purchase agreement (the “KVSD Asset Purchase Agreement”) with D’Amico
Brothers Broadcasting Corp., a California company (the “San Diego Seller”). Upon the terms and subject to the satisfaction
of the conditions described in the KVSD Asset Purchase Agreement, Sovryn agreed to acquire the licenses and Federal Communications Commission
(“FCC”) authorizations to the KVSD-LD low power television station owned by the San Diego Seller (the “San Diego Acquired
Station”), certain tangible personal property, certain real property leases, contracts, intangible property, files, claims and
prepaid items together with certain assumed liabilities in connection with the San Diego Acquired Station (the “KVSD Asset Sale
Transaction”). As consideration for the KVSD Asset Sale Transaction, Sovryn has agreed to pay the San Diego Seller $1,500,000 in
cash, $75,000 of which was paid to the San Diego Seller (subsequent to the period end) and to be held in escrow pursuant to the terms
of an escrow agreement entered into between Sovryn and the San Diego Seller (the “KVSD Escrow Fee”).The closing of the KVSD
Asset Sale Transaction (the “KVSD Closing”) is subject to, among other things, consent by the FCC to the assignment of the
FCC authorizations pertaining to the San Diego Acquired Station, from the San Diego Seller to Sovryn (the “San Diego FCC Consent”).
The KVSD Closing shall occur no more than the three (3) business days following the later to occur of (i) the date on which the San Diego
FCC Consent has been granted and (ii) the other conditions to the KVSD Closing set forth in the KVSD Asset Purchase Agreement.
On
September 9, 2021, we entered into a Secured Loan and Security Agreement (“Loan Agreement”) with Top Dog Productions, Inc.,(d/b/a
The Jay and Tony Show) as the borrower (the “Borrower”) under such Loan Agreement. The Loan Agreement provides that we will
make one or more disbursements of a Loan to the Borrower in an aggregate principal amount not to exceed $2,000,000. Our commitment to
make disbursements ends on September 8, 2022 and all unpaid principal will mature on September 9, 2022. Interest will accrue on the outstanding
principal under the Note at 5%; provided, however, that interest will accrue at 24% per annum from the date of the occurrence of an Event
of Default until the principal is paid. Any accrued and unpaid interest shall be payable on March 9, 2022 and September 9, 2022 and on
the date any principal of the loan is prepaid on the amount of such principal so prepaid. The Borrower may repay the principal of the
loan at any time. Any principal that is repaid may not be reborrowed. To date, the Borrower has not made a principal or interest payment
and unpaid interest was approximately $12,000 as of June 30, 2022.
Madison Technologies Inc. Form 10-K - 2021 Page 6
On
the September 16, 2021, we entered into an exchange agreement (collectively, the “Exchange Agreement”) with the holders of
Series E Preferred Stock pursuant to which the holders agreed to exchange all of the shares of Series E Preferred Stock for an aggregate
of 1,152,500 shares of convertible Series E-1 Preferred Stock and an aggregate of 1,091,388,889 shares of Common Stock. Each share of
series E-1 Preferred Stock is convertible into 1,000 shares of Common Stock and has voting rights equal to the number of shares of Common
Stock into which the Series E would be convertible on the record date for the vote or consent of our stockholders, and shall otherwise
have voting rights and powers equal to the voting rights and powers of common stock.
On
September 23, 2021, we entered into a Limited Waiver and First Amendment to the Securities Purchase Agreement, Notes, Warrants and Registration
Rights Agreement (the “Waiver”), with the Investors and Arena Investors, LP, in its capacity as agent. Pursuant to the Agreement,
the Agent and the Investors have agreed (i) to waive certain Event of Default (each as defined in the Notes) which occurred on or prior
to the date of the Waiver , (ii) to make certain amendments to the Purchase Agreement to, among other things, allow for us to issue up
to $2 million of subordinated indebtedness, enter into the loan agreement with Top Dog Productions Inc., make
certain amendments to the Purchase Agreement to effect such waivers and to release the remainder of the proceeds in the Funding
Account (as defined in the Purchase Agreement) to us, (iii) to make certain amendments to the Notes to, among other things, make the
conversion price a fixed price of $0.02 and to provide for certain Permitted Acquisitions (as defined under the Waiver), (iv) to make
certain amendments to the Warrants to, among other things, make the exercise price a fixed price of $0.025 and to clarify the mechanics
of the cashless exercise provision and (v) to make certain amendments to the registration rights agreement to extend the Effectiveness
Date (as defined in the Registration Rights Agreement) to February 17, 2022.
On
October 20, 2021, we entered into a Stock Acquisition Agreement with Top Dog Productions Inc., Jay Blumenfield and Anthony Marsh whereby
we will acquire all of the shares of Top Dog Productions Inc., and in exchange, we will pay the purchase price of $10,000,000 in shares
of our Common Stock.
The
number of shares of Common Stock to be issued will be subject to a “collar”, with a minimum number of 16,666,667 shares in
the event that the closing bid and ask price before the Closing for our stock is $0.60 or greater, and a maximum number of 25,000,000
shares in the event that the closing bid and ask price before the Closing for our stock is $0.40 or less, with ratable adjustments for
a Closing Price between $0.40 and $0.60. The Closing is subject to receipt of audited and other financial statements of Top Dog Productions
Inc., other deliverables, and terms and conditions. This agreement is also subject to standard termination provisions including if the
Closing had not occurred within 60 days of the execution of the Agreement. The terms of this transaction have since been amended. The
number of shares of our Common Stock issued to the shareholders of Top Dog Productions Inc. to complete the transaction will total 12,500,000
shares. In addition, the shareholders of Top Dog Productions Inc. may receive an additional 12,500,000 shares of our Common Stock by
the year ended December 31, 2024, subject to EBITDA milestones.
On
October 25, 2021, Sovryn entered into an asset purchase agreement with Mako Communications, LLC, a Texas Limited Liability company to
acquire the licenses and Federal Communications Commission (“FCC”) authorizations to the K07AAJ-D and W05DK-D low power television
stations construction permits for the Bakersfield and San Juan. As consideration for the Bakersfield and San Juan Asset Sale Transaction,
Sovryn has agreed to pay $115,000 in cash, $10,000 of which was paid in escrow pursuant to the terms of an escrow agreement entered into
between us and Mako Communications LLC.
On
November 3, 2021, Sovryn entered into an asset purchase agreement with Prism Broadcasting Network Inc . , a Georgia corporation to acquire
the licenses and Federal Communications Commission (“FCC”) authorizations to the WANN-CD low power television station. As
consideration for the WANN Asset Sale Transaction, Sovryn has agreed $5,250,000 in cash, $200,000 of which was paid to in escrow pursuant
to the terms of an escrow agreement entered into between Sovryn and the Prism Broadcasting Network Inc.
Madison Technologies Inc. Form 10-K - 2021 Page 7
On
November 15, 2021, we entered into a Purchase and Sale agreement with ZA Group Inc. to sell CZJ License Inc., one of our wholly owned
subsidiaries, for $250,000. At Closing, the ZA Group Inc. delivered a convertible promissory note with a principal amount equal to the
purchase price. The interest rate on the note was 5% per annum and matures on November 5, 2023. The Note may be converted, from time
to time, after 180 days from the issuance date of the Note into common stock of ZA Group Inc., at a fixed conversion price of $0.005 per
share, subject to a beneficiary ownership limitation of not more than 4.99% of the outstanding shares of common stock of ZA Group Inc.
Our
operations, prior to the acquisition of Sovryn Holdings, Inc. in February 2021, included (i) the distribution of Tuffy Pack’s product
line of custom inserts that provided a level of personal protection from ballistic threats similar to what law enforcement officers wear
daily as bullet proof vests and (ii) with its licensing agreement with the Casa Zeta-Jones Brand, development and distribution of a new
luxury shaving regiment under the Luxurie Legs line of products exclusively designed and branded for women under the Casa Zeta-Jones
Brand.
We
abandoned the Tuffy Pack product line during the fourth quarter of 2020 and in connection with the Acquisition of Sovryn Holdings, as
described below, we no longer intended to focus on the CZJ Brand and Luxurie Legs line of products and instead pursued the business of
Sovryn Holdings.
Product
and Services
We,
through our wholly-owned subsidiary, Sovryn 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 received FCC approval for seven acquisitions (i) KNLA/KNET, a Class A television station in Los Angeles, (ii) KVVV, a
low power television station in Houston and (iii) KYMU-LD, a low power television station in Seattle, having closed, with four remaining,
W27EB Chicago, KVSD San Diego, KPHE Phoenix, and KDTL St. Louis. Finally, we have also signed a purchase agreements to acquire the WXNY
in New York and WANN in Atlanta, as well ownership of The Jay & Tony Show.
Madison’s
initial objective was to create a broadcast Over-The-Air (“OTA”) content distribution platform 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.
Madison Technologies Inc. Form 10-K - 2021 Page 8
Recent
Developments
We
are exploring more capital efficient and technology centric alternatives to its planned station acquisition distribution platform. While
there is no guarantee that we will be successful with this alternative approach, we have determined that we will postpone further capital
expenditures on acquisitions and as a result, the planned acquisitions of W27EB-Chicago, KPHE-Phoenix, KVSD-San Diego, WANN-Atlanta and
KDTL-St. Louis stations have been terminated and future acquisition plans have been put on hold while we evaluate this alternative approach.
As
the cornerstone of our new strategy, we formed a new vertical and have embarked on a buildout of a news and entertainment network, Blockchain
TV (“BCTV”) dedicated to cryptocurrency, NFT, Web3 and blockchain technology which we expect to launch in the coming months.
On February 15, 2022, we entered into an agreement with TMG, Inc., a Canada-based television production firm to produce, manage and operate
the television network and have since hired and engaged a number of blockchain news and entertainment personalities as anchors and hosts.
Through
our relationship with TMG, Inc., we plan to produce, manage and operate proprietary content that will be broadcast and streamed 24/7
as “BCTV” on our OTA platform, APP and website and through third party broadcasters, cable television operators, alternative
video distribution platforms such as YouTube, Roku, Pluto and xumo. The live content is designed and modeled after “Squawk Box”
with anchors, Bobby Del Rio, Catherine Murray and Ruth O’Neill, bringing viewers live, hourly shows on what is happening in the
crypto space, NFT, Web3 and the Metaverse marketplace. BCTV plans to go “live” with its network in the third quarter of 2022.
Our primary revenue sources for BCTV will be advertising and sponsorship revenues.
We
seek to complete our acquisition of Top Dog Productions, Inc., a Los Angeles based television production company founded and operated
by Award-winning producers Jay Blumenfield and Tony Marsh. Their studio team will continue creating and developing shows for third party
networks as well proprietary content for BCTV. One example is their creation of an unscripted series, “Woke up Rich”, that
details rags to riches story of individuals who got involved in crypto.
We
plan to derive additional programming content by aggregating the world’s top influencers in the space, bringing larger than life
personalities to the screen and elevating their viral content into long and short-form programing that we push out on all platforms from
social media to broadcast television. We envision airing gaming content with viewers enabled to play along interactively and be rewarded
with real world and meta world prizes.
We
registered the trademark “BLOCKCHAIN.TV Power 100” and we are compiling a list of the top 100 most influential people and
companies in the blockchain space around the world that we plan to use as a source for interviews that we incorporate in a daily show.
Our programming content plans include Blockchain Awards Shows for NFT, Crypto and Metaverse.
We
plan to livestream our content globally with game center technology from studios in New York City, Miami and Niagara Fall, Canada. Blockchain
Entertainment will create and develop special events and conferences including opportunities around education.
We
see the opportunity to use BLOCKCHAIN.TV to generate another revenue stream through e-commerce opportunities in Community NFT, Metaverse
and crypto services.
Station
Operations
Each
licensed TV station has the capability of delivering 10+ different TV 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 us the
potential to stream content upon completion of the roll-up to over 2500 channels aggregated over expected 100 stations.
We
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.
Madison Technologies Inc. Form 10-K - 2021 Page 9
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
Our
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 our current and potential competitors
have greater resources and access to capital. If we need to obtain additional funding, we may 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.
Our
BCTV content will compete for viewership in a marketplace that is fragmented and niche. Major media organizations such as Bloomberg and
Comcast, which operates CNBC and MSNBC, deliver content about crypto, NFT, Web3 and the metaverse, but none have a dedicated source for
viewers to continuously consume that content.
Dependence
on Customers
Currently,
we are not and will not be dependent on one or a few major customers. Our business is designed to generate revenue from four primary
categories of customers: (1) advertisers and sponsors of our BCTV content that airs on our OTA platform, APP and website and through
third party broadcasters, cable television operators, alternative video distribution platforms such as YouTube, Roku, Pluto and xumo;
(2) people who view our BCTV content, and form the audience that attracts advertisers and sponsors; (3) people who interact with our
content either as viewers or as attendees as BLOCKCHAIN.TV branded events; and (4) third party networks that lease channels on our OTA
platform.
Technology
and Intellectual Property
Except
for the trademark “BLOCKCHAIN.TV Power 100”, we do 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 our
broadcasting business and has the authority to issue, renew, revoke and modify broadcast licenses and impose penalties for the violation
of its regulations. We must often obtain the FCC’s approval to obtain, renew, assign or modify a license, purchase a new station
or sell an existing station. Our FCC license for KVVV is due for renewal on August 1, 2022, our licenses for KNLA and KNET are due for
renewal on December 1, 2022 and our license for KYMU is due for renewal on February 1, 2023. 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.
We
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.
Madison Technologies Inc. Form 10-K - 2021 Page 10
Research
and Development Activities and Costs
We
have not spent any funds on research and development activities to date.
Compliance
with Environmental Laws
Our
current operations are not subject to any environmental laws.
Facilities
We
lease TV production and broadcast transmission facilities in Los Angeles County, California, King County, Washington and Harris County,
Texas.
Number
of Total Employees and Number of Full Time Employees
We
have four employees, all of whom are full time with three in TV broadcast operations and one in administration.