Madison Technologies Inc. 10-Q

United states SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ quarterly report under section 13 0r 15( d ) of the securities exchange act of 1934 For the quarterly period ended June 30, 2022 ☐ transition report under section 13 0r 15( d ) of the securities exchange act of 1934 For the transition period from ________________________ to _______________________ Commission file number 000-51302 Madison Technologies Inc. (Exact name of registrant as specified in its charter) Nevada 85-2151785 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Not Applicable Not Applicable (Address of principal executive offices) (Zip Code) Not Applicable (Registrant’s telephone number, including area code) n/a (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company in Rule 12b-2 of the Exchange Act. Larger accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☒ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No Applicable only to corporate issuers State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. Class Outstanding at September 27, 2022 Common Stock - $0.001 par value 1,599,095,027 Form 10-Q – Q2 Madison Technologies Inc. Page 2 MADISON TECHNOLOGIES INC. INTERIM Financial Statements JUNE 30, 2022 and 2021 (unaudited) Form 10-Q – Q2 Madison Technologies Inc. Page 3 MADISON TECHNOLOGIES INC. (UNAUDITED) TABLE OF Contents CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Balance Sheets 4 Statements of Operations 5 Statements of Stockholders’ Deficit 6 Statements of Cash Flows 7 Notes to the Financial Statements 8-28 Form 10-Q – Q2 Madison Technologies Inc. Page 4 MADISON TECHNOLOGIES INC. condensed consolidated Balance Sheets ( Unaudited) June 30, 2022 December 31, 2021 ASSETS CURRENT ASSETS Cash $ 22,543 $ 55,656 Accounts receivables, net 131,285 167,800 Note receivables 804,876 749,603 Due from related party - 709,259 Total Current Assets 958,876 1,682,318 Intangible assets, net 12,223,317 12,196,646 Equipment, net 1,396,682 1,486,347 Investments 101 101 Operating lease right-of-use assets, net 1,347,426 1,400,980 Total Assets $ 15,926,230 $ 16,766,392 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Accounts payable and accrued expenses $ 1,142,949 $ 791,802 Derivative liability 4,159,329 3,464,529 Current portion of lease liabilities - 3,767 Promissory notes 896,335 491,741 Convertible notes payable 1,601,196 850,000 Interest payable on senior secured notes 1,650,000 453,750 Total current liabilities 9,449,809 6,055,589 Long term portion of lease liability obligations 1,467,482 1,464,728 Long term convertible notes, net of discount 13,752,413 12,919,392 Total liabilities 24,669,704 20,439,709 Preferred Shares - Series C, $ 0.001 par value; 2 %, stated value $ 100 per share 10,000 shares designated, 0 issued and outstanding, June 30, 022 and December 31, 2021, respectively; - - Preferred Shares - Series D, $ 0.001 par value; convertible, stated value $ 3.32 per share, 230,000 shares designated, 155,000 and 0 shares issued and outstanding, June 30, 2022 and December 31, 2021, respectively; 75,000 converted 155 155 Preferred Shares - Series E, $ 0.001 par value; convertible, stated value $ 1,000 per share, 1,000 shares designated, 0 issued and outstanding, June 30, 2022 and December 31, 2021, respectively; 1,000 shares exchanged to Series E-1 - - Preferred Shares - Series E-1, $ 0.001 par value; convertible, stated value $ 0.87 per share, 1,152,500 shares designated, 1,152,500 and 0 shares issued and outstanding, June 30, 2022 and December 31, 2021, respectively; 1,153 1,153 Preferred Shares - Series F, $ 0.001 par value; convertible, stated value $ 1 per share, 1,000 shares designated, 0 issued and outstanding, June 30, 2022 and December 31, 2021, respectively; 1,000 shares converted - - Preferred Shares - Series G, $ 0.001 par value; convertible, stated value $ 1,000 per share, 4,600 shares designated, 0 issued and outstanding, June 30, 2022 and December 31, 2021, respectively; 4,600 shares converted - - Preferred Shares – Series H, $ 0.001 par value; convertible, stated value $ 1 per share, 39,895 shares designated, issued and outstanding, June 30, 2022 and December 31, 2021, respectively; 40 40 Temporary equity value STOCKHOLDERS’ DEFICIT Capital Stock: 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, 0 shares issued and outstanding, June 30, 2022 and December 31, 2021, respectively; - - Preferred Shares - Series B, $ 0.001 par value; 100 shares designated, 100 shares issued and outstanding, June 30, 2022 and December 31, 2021, respectively - - Preferred Stock value Common Shares - $ 0.001 par value; 6,000,000,000 shares authorized 1,599,095,027 shares issued and outstanding, June 30, 2022 and December 31, 2021, respectively 1,599,095 1,599,095 Additional paid in capital 10,473,261 10,473,261 Accumulated deficit ( 20,817,179 ) ( 15,747,021 ) Total stockholders’ deficit ( 8,744,822 ) ( 3,674,665 ) Total liabilities and stockholders’ deficit $ 15,926,230 $ 16,766,392 See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. Form 10-Q – Q2 Madison Technologies Inc. Page 5 MADISON TECHNOLOGIES INC. CONDENSED CONSOLIDATED STATEMENTS of Operations (Unaudited) Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 Revenues $ 471,266 $ 296,025 $ 946,265 $ 296,025 Operating Expenses Selling, general and administrative 330,819 541,842 480,845 624,021 Television operations 84,051 19,370 171,683 19,370 Amortization of intangible assets 80,494 179,789 161,488 215,073 Professional fees 1,299,415 658,765 2,140,748 1,004,296 Loss on asset disposals - - 52,668 - Total operating expenses 1,795,279 1,399,766 3,007,432 1,862,760 Loss before other expense ( 1,324,013 ) ( 1,103,741 ) ( 2,061,167 ) ( 1,566,735 ) Other income (expense) Interest income 9,729 - 19,047 - Interest expense ( 1,689,180 ) ( 556,872 ) ( 3,028,038 ) ( 916,820 ) Total non operating expense ( 1,679,451 ) ( 556,872 ) ( 3,008,991 ) ( 916,820 ) Loss from continuing operations 3,003,464 ( 1,660,613 ) ( 5,070,158 ) ( 2,483,555 ) Loss from discontinued operations - ( 39,210 ) - ( 73,045 ) Net loss and comprehensive loss $ ( 3,003,464 ) $ ( 1,699,823 ) $ ( 5,070,158 ) $ ( 2,556,600 ) Net loss per share-Basic and diluted $ ( 0.002 ) $ ( 0.072 ) $ ( 0.003 ) $ ( 0.106 ) Average number of shares of common stock outstanding 1,599,095,027 23,748,881 1,599,095,027 24,168,698 See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. Form 10-Q – Q2 Madison Technologies Inc. Page 6 MADISON TECHNOLOGIES INC. CONDENSED CONSOLIDATED StatementS of stockholders’ DEFICIT (U naudited) Additional Common Preferred Paid In Accumulated Shares Amount Stock Capital Deficit Total Balance, December 31, 2021 1,599,095,027 $ 1,599,095 $ 1,348 $ 10,473,261 $ ( 15,747,021 ) $ ( 3,674,665 ) Net loss for the period - - - - ( 5,070,158 ) ( 5,070,158 ) Balance, June 30, 2022 1,599,095,027 $ 1,599,095 $ 1,348 $ 10,473,261 $ ( 20,817,179 ) $ ( 8,744,822 ) Additional Common Preferred Paid In Accumulated Shares Amount Stock Capital Deficit Total Balance, December 31, 2020 23,472,565 $ 23,472 $ - $ 1,302,977 $ ( 1,484,442 ) $ ( 157,900 ) Common issued for Series B Preferred transfer 1,500,000 1,500 - ( 1,500 ) - - Conversion of debt to Series D Preferred - - - 667,984 - 667,984 Series E Preferred issued for assets - - - 4,225,061 - 4,225,061 Series G Preferred issued for subscriptions sold - - - 4,173,000 - 4,173,000 Equity portion on convertible debt issued - - - 30,000 - 30,000 Net loss for the period - - - - ( 2,556,600 ) ( 2,556,600 ) Balance, June 30, 2021 24,972,565 $ 24,972 $ - $ 10,397,615 $ ( 4,041,042 ) $ ( 6,381,545 ) See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. Form 10-Q – Q2 Madison Technologies Inc. Page 7 MADISON TECHNOLOGIES INC. CONDENSED CONSOLIDATED StatementS of cash flows (u naudited) For the Six Months Ended June 30, 2022 June 30, 2021 Cash Flows from operating activities: Net loss for the period $ ( 5,070,158 ) $ ( 2,556,600 ) Adjustments to reconcile net loss to cash used in operating activities: Amortized interest 1,382,726 253,275 Amortization 161,488 234,443 Fair value of Warrant issued for services 9,000 - Foreign exchange on notes payable - ( 179 ) Changes in assets and liabilities: Accounts payable and accruals 1,547,397 1,010,741 Payment of lease liability ( 111,127 ) ( 26,376 ) Accounts receivable 36,515 ( 80,666 ) Due from related party 709,259 ( 85,388 ) Prepaid expenses 3,602 22,065 Net cash used in operating activities ( 1,331,300 ) ( 1,228,684 ) Cash Flows from investing activities: Purchases of equipment, intangible assets and goodwill ( 44,941 ) ( 12,343,010 ) Funds advanced for note receivable ( 58,874 ) - Net cash used in investing activities ( 103,815 ) ( 12,343,010 ) Cash Flows from financing activities: Proceeds from convertible notes sold $ 1,402,000 $ 15,030,000 Shares subscribed but not issued - 4,173,000 Net cash provided by financing activities 1,402,000 19,203,000 Net increase (decrease) in cash 33,113 5,631,306 Cash, beginning of period 55,656 9,491 Cash, end of period $ 22,543 $ 5,640,797 SUPPLEMENTAL DISCLOSURE Interest paid $ 529,786 $ 216,792 Taxes paid $ - $ - See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements Form 10-Q – Q2 Madison Technologies Inc. Page 8 MADISON TECHNOLOGIES INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) June 30, 2022 Note 1 Nature of Operations Our Company was incorporated on June 15, 1998 in the State of Nevada, USA and our common shares are publicly traded on the OTC Markets OTCQB. We, through our wholly-owned subsidiary, Sovryn Holdings, Inc. (“Sovryn”) acquired three un-affiliated Class A/LPTV TV. Each licensed TV station can broadcast between 10 and 12 channels over-the-air, 24 hours per day/7 days per week. In 2021, we generated revenue by leasing channels to third parties on KNLA/KNET, a Class A television station in Los Angeles, KVVV, a low power television station in Houston and KYMU-LD, a low power television station in Seattle. On November 15, 2021, we sold our wholly owned subsidiary, CZJ License Inc. for $ 250,000 . During August 2021, our shareholders approved to amend and restate our Articles of Incorporation to increase our authorized common stock from 500,000,000 shares to 6,000,000,000 shares. Note 2 Going Concern The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. For the year ended December 31, 2021, we incurred a net loss of $ 14,262,579 and had a working capital deficit and an accumulated deficit of $ 4,373,271 and $ 15,747,021 , respectively, at December 31, 2021. We have not yet made the $ 0.4 million interest payments on the Notes held by Arena Partners LP that were due on April 1, 2022 and July 1, 2022, and we are currently in discussions with Arena Capital LP on a plan of forbearance. It is management’s opinion that these matters raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the issuance date of this report. Our ability to continue as a going concern is dependent upon management’s ability to obtain a plan of forbearance, further implement our business plan and raise additional capital as needed from the sales of stock or debt. The accompanying consolidated financial statements do not include any adjustments that might be required should we be unable to continue as a going concern. Note 3 Summary of Significant Accounting Policies Use of estimates The preparation of the consolidated interim financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates. Form 10-Q – Q2 Madison Technologies Inc. Page 9 Consolidation The accompanying consolidated financial statements include the accounts of our wholly owned subsidiaries, Sovryn Holdings Inc. and CZJ License Inc. CZJ License Inc. was consolidated up until it was sold on November 15, 2021. All the intercompany balances and transactions have been eliminated in the consolidation. During the year ended December 31, 2021, the operations of CZJ License Inc. were consolidated into our operation and were designated as discontinued. Interim Reporting While the information presented in the accompanying interim three month financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with accounting principles generally accepted in the United States of America. These interim financial statements follow the same accounting policies and methods of their application as the Company’s December 31, 2021 annual financial statements. All adjustments are of a normal recurring nature. It is suggested that these interim financial statements be read in conjunction with the Company’s December 31, 2021 annual financial statements. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that can be expected for the year ended December 31, 2022. Segment reporting We use “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by our chief operating decision maker for making operating decisions and assessing performance as the source for determining our reportable segments. Our chief operating decision maker is our chief executive officer, who reviews operating results to make decisions about allocating resources and assessing our entire performance. We did not report any segment information since we primarily generates sales from its television stations. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. Revenue recognition We adopted the ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). We recognize revenue when we transfer promised services to the customer. The performance obligation is the monthly services rendered. We have one main revenue source which is leasing of television station channels. Accordingly, we recognize revenue when services are provided as time passes the customers have access to utilize the channel. These revenues are billed in advance, arrears and/or are prepaid. The performance obligation is the monthly services rendered. At the moment, we have one main revenue source which is leasing of television channels. Where there is a leasing contract for channels, we bill monthly for our services as rendered. Where there is no contract, the revenue is recognized as provided. We recognize revenue in accordance with ASC 606 using the following 5 steps to identify revenues: ● identify the contract with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to performance obligations in the contract; and ● recognize revenue as the performance obligation is satisfied. Form 10-Q – Q2 Madison Technologies Inc. Page 10 Advances from Client’s deposits are contract liabilities with customers that represent our obligation to either transfer goods or services in the future, or refund the amount received. Where possible, we obtain retainers to lessen our risk of non-payment by our customers. Advances from Client’s deposits are recognized as revenue as we meet specified performance obligations as detailed in the contract. Accounts receivables Trade accounts receivable are stated at the amount we expect to collect. Management considers the following factors when determining the collectability of specific customer accounts: customer credit worthiness, past transaction history, current economic industry trends and changes in customer payment terms. Past due balances over 90 days and other higher risk amounts are reviewed individually for collectability. Based on the management’s assessment, we provide for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. As of June 30, 2022, our allowance for doubtful accounts receivable was $ 31,500 . Operating leases In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”). The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. For leases with an initial term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the term of the lease. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as sales-type, finance or operating, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We adopted the new standard April 19, 2021. We have elected not to recognize lease assets and lease liabilities for leases with an initial term of 12 months or less. Intangible assets Intangible assets are non-monetary identifiable assets, controlled by us 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 an 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. They will be amortized over the life of the license to which it supports. Equipment Equipment represents purchases made for assets, whose useful life was determined to be greater than one year. The assets are initially recorded at cost and depreciated over their estimated useful lives. Form 10-Q – Q2 Madison Technologies Inc. Page 11 Website development costs We recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost”. The website development costs are divided into three stages, planning, development and production. The development stage can further be classified as application and infrastructure development, graphics development and content development. In short, website development cost for internal use should be capitalized except content input and data conversion costs in content development stage. Costs associated with the website consist primarily of website development costs paid to third party. These capitalized costs will be amortized based on their estimated useful life over three years upon the website becoming operational. Internal costs related to the development of website content will be charged to operations as incurred. Website development costs related to the customers are charged to cost of sales. Impairment of Long-Lived Assets In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets ” , all long-lived assets such as plant and equipment and intangible assets we hold and use are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. Concentration of credit risk We place our cash and cash equivalents with a high credit quality financial institution. We maintain United States Dollars. We minimize its credit risks associated with cash by periodically evaluating the credit quality of its primary financial institution. Financial instruments Our financial instruments consist principally of cash, accounts payable, accrued liabilities and notes payable. The carrying amounts of such financial instruments in the accompanying financial statements approximate their fair values due to their relatively short-term nature or the underlying terms are consistent with market terms. It is the management’s opinion that we are not exposed to any significant currency or credit risks arising from these financial instruments. Fair value measurements We follow the guidelines in ASC Topic 820 “Fair Value Measurements and Disclosures”. Fair value is defined 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, we consider the principal or most advantageous market in which we 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. Form 10-Q – Q2 Madison Technologies Inc. Page 12 We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. All financial instruments approximate their fair value. Level 1 — Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets. Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Convertible Notes with Fixed Rate Conversion Options We may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. We record the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the Note date with a charge to interest expense in accordance with ASC 480 - “Distinguishing Liabilities from Equity”. Derivative Liabilities We have certain financial instruments that are derivatives or contain embedded derivatives. We evaluate all our financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 810-10-05-4 and 815-40. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with us, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on extinguishment. Loss per share Net Loss Per Share Basic loss per share is calculated by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in our earnings (loss). Diluted loss per share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless such dilutive potential shares would result in anti-dilution. As of June 30, 2022, no options were outstanding and 218,673,016 warrants were outstanding and exercisable. Additionally, as of June 30, 2022, the outstanding principal balance, including accrued interest of the third-party convertible debt, totaled $ 19,874,163 and was convertible into 974,980,166 shares of Common Stock. We issued shares of Preferred Stock that may be converted into our Common Stock. Of the outstanding shares of Preferred Stock as of June 30, 2022, Series D Preferred Stock was convertible into 155,000,000 Common shares, Series E-1 Preferred Stock was convertible into 1,152,500,000 Common shares and Series H Preferred Stock was convertible into 39,895,000 Common shares. The total potentially dilutive shares calculated are 2,546,500,563 . It should be noted that contractually the limitations on the third-party notes (and the related warrants) limit the number of shares converted to either 4.99% or 9.99% of the then outstanding shares. As of June 30, 2022, and 2021, potentially dilutive securities consisted of the following: Schedule of Potentially Dilutive Securities June 30, 2022 June 30, 2021 Warrants 218,673,016 192,073,017 Convertible Preferred Stock 1,346,895,000 230,000,000 Convertible debt 974,980,166 835,839,600 Total 2,546,500,563 1,257,912,617 Form 10-Q – Q2 Madison Technologies Inc. Page 13 Business Combinations In accordance with ASC 805-10, “Business Combinations”, we account for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that we hold in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in our results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets. Credit losses In June 2016, the FASB issued ASU 326, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (CECL) model which requires us 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. We are currently assessing the impact of the adoption of this ASU on its financial statements. Related Party Transactions We follow FASB ASC subtopic 850-10, “Related Party Transactions”, for the identification of related parties and disclosure of related party transactions. Pursuant to ASC 850-10-20, related parties include: a) our affiliates; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit sharing trusts that are managed by or under the trusteeship of management; d) our principal owners; e) our management; f) other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. Material related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. Form 10-Q – Q2 Madison Technologies Inc. Page 14 Discontinued operations Discontinued operations are components of an entity that either have been disposed or abandoned or is classified as held for sale. Additionally, in order to qualify as a discontinued operation, the disposal or abandonment must represent a strategic shift that has or will have a major effect on an entity’s operations and financial results. Income taxes We follow the guideline under ASC Topic 740 Income Taxes. “Accounting for Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Due to the uncertainty regarding our future profitability, the future tax benefits of its losses have been fully reserved. Recently Issued Accounting Pronouncements We adopt new pronouncements relating to generally accepted accounting principles applicable to us as they are issued, which may be in advance of their effective date. In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this new guidance will have on its financial statements We do not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements. Note 4 Notes Receivable Schedule of Notes Receivable June 30, 2022 December 31, 2021 Secured note – Top Dog Productions Inc. $ 527,624 $ 468,750 Convertible note – ZA Group 250,000 250,000 Prepaid expenses 6,664 24,042 Accrued interest 20,588 6,811 Total Notes Receivables $ 804,876 $ 749,603 On September 9, 2021, we entered into a secured promissory note with Top Dog Productions Inc. We agreed to lend an aggregate principal sum of up to $ 2,000,000 that accrues at a rate of 5 % per annum. The note receivable and all accrued interest is due on September 9, 2022. The principal and interest amount of the note may be prepaid in whole or in part at any time, without penalty nor premium. Accrued interest is $ 12,762 at June 30, 2022. On November 15, 2021, we entered into a $ 250,000 convertible promissory note with ZA Group Inc. for the sale of its wholly owned subsidiary, CZJ License Inc. The note accrues at a rate of 5 % per annum. The principal and accrued interest of the note receivable will be due and payable on November 5, 2023. At any time after 180 days following the date of the note receivable, we may convert all or any part of the outstanding and unpaid amount of the note into fully paid and non-assessable shares of common stock of ZA Group Inc. at a fixed conversion price of $ 0.005 per share. Accrued interest is $ 7,826 at June 30, 2022. Form 10-Q – Q2 Madison Technologies Inc. Page 15 Note 5 - Intangible Assets Our Federal Communication Commission Licenses (“FCC”) and domain name are considered indefinite-lived intangible assets that are not amortized, but instead are tested at least annually for impairment. The Market Advantage intangible asset is being amortized on a straight-line basis over 94 months from the acquisition date. Amortization expense for the three months ended June 30, 2022 was $ 6,260 and $ 0 , respectively and $ 1,878 and $ 3,756 for the six months ended June 30, 2022. Schedule of Intangible Assets June 30, 2022 Cost Amortization Net Domain Name $ 172,427 $ - $ 172,427 Market Advantage 58,843 8,138 50,705 FCC Licenses 10,159,063 - 10,159,063 $ 10,390,333 $ 8,138 $ 10,382,195 Future amortization expense of the intangible assets is as follows: Schedule of Future Amortization Expenses of Intangible Assets For the Twelve Months Ending June 30, 2022 $ 7,512 2023 7,512 2024 7,512 2025 7,512 2026 7,512 Thereafter 13,145 Total $ 50,705 Note 6 Goodwill As of March 31, 2022, we carry goodwill for the following television station asset purchases made in 2021: Schedule of Goodwill Asset Purchase KNLA - KNET acquisition $ 977,059 KVVV acquisition 613,097 KYMU acquisition 225,966 Total $ 1,816,122 Note 7 Equipment Schedule of Equipment Useful Life Cost Accumulated Depreciation Net Transmitter 10 years $ 854,059 $ ( 94,069 ) $ 759,990 Antenna 10 years 283,029 ( 30,860 ) 252,169 Tech Equipment 5 years 446,155 ( 84,153 ) 362,003 Office Equipment 5 years 7,389 ( 1,601 ) 5,788 Microwave 5 years 22,065 ( 5,332 ) 16,733 $ 1,612,697 $ ( 206,015 ) $ 1,396,682 Depreciation expense was $ 52,339 and $ 10,829 for the three months ended June 30, 2022 and 2021, respectively, and $ 104,178 and $ 10,829 for the six months ended June 30, 2022 and 2021, respectively. Form 10-Q – Q2 Madison Technologies Inc. Page 16 Note 8 Right of Use Assets We have six operating leases ranging from a period of 80 months to a period of 332 months. The annual interest rate used was 15 %. As at June 30, 2022, the remaining right of use assets are as follows: Schedule of Remaining Right of Use Assets Term Accumulated (in months) Amount Amortization Net Tower Lease 1 168.5 $ 547,663 $ 45,508 $ 502,155 Tower lease - 2 88 244,079 33,755 210,324 Tower lease - 3 329 233,043 6,261 226,782 Generator lease 168.5 109,507 9,099 100,408 Studio lease - 1 214.5 280,084 16,513 263,571 Studio lease - 2 77 49,561 5,374 44,187 $ 1,463,937 $ 116,511 $ 1,347,426 The remaining lease liability at June 30, 2022 was $ 1,467,482 . The current portion of the lease liability was $ 0 and the non-current portion of the lease liability was $ 1,467,482 . Schedule of Remaining Lease Liability 2022 $ 144,801 2023 231,120 2024 239,780 2025 253,163 2026 261,433 Remaining 3,219,115 Lease obligations, net 4,349,412 Amount representing interest 2,881,930 Remaining lease liability 1,467,482 Less current portion - Non-current lease obligation $ 1,467,482 Note 9 Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities as of December 31 are summarized below: Schedule of Accounts Payable and Accrued Liabilities June 30, 2022 December 31. 2021 Accounts payable $ 923,935 $ 659,219 Customer deposits 64,563 78,812 Accrued expenses 46,184 38,238 Accrued interest 108,267 15,533 Total $ 1,142,949 $ 791,802 On June 10, 2022, we entered into an agreement with a third party pursuant to which we received $ 125,000 in cash that we repay daily at $ 1,837 per diem until we have paid $ 183,750 in total. As of June 30, 2022, included in accounts payable is the $ 163,538 remaining balance owed and included in accrued expenses is $ 52,288 financing fee that is being amortized over the term of the agreement. Form 10-Q – Q2 Madison Technologies Inc. Page 17 Note 10 Securities Exchange Agreements Sovryn Holdings, Inc. We entered into a Securities Exchange Agreement on February 16, 2021 with Sovryn, a Delaware corporation and acquired 100 % of the shares of Sovryn in exchange for i) 100 shares of our Series B Preferred Stock to be transferred by Jeffrey Canouse, our CEO at the time, to a designee of Sovryn and ii) 1,000 shares of Series E Preferred Stock. Upon the effectiveness of an amendment to out Articles of Incorporation to increase our authorized common stock, from par value $ 0.001 to par value $ 0.0001 per share, from 500,000,000 shares to 6,000,000,000 shares, all shares of Series E Preferred Stock issued to the shareholders shall automatically convert into approximately 2,305,000,000 shares of our Common Stock. The Series E Preferred Stock votes on an as-converted basis with our Common Stock prior to their conversion. The Series E Preferred Stock represented approximately 59 % of the fully diluted shares of our Common Stock after the closing of the transactions contemplated by the Securities Purchase Agreement. The valuation for the Preferred Series E shares was determined to be $ 4,225,062 based on the market value of our shares we exchanged at the date the transaction. The transaction was recorded as an asset purchase and we recorded goodwill of $ 4,224,962 which was based on the market value of our shares exchanged at the date of the transaction. Note 11 Asset Purchase On April 19, 2021, pursuant to a February 17, 2021 asset purchase agreement, Sovryn paid a total of $ 10,182,534 to acquire the licenses and Federal Communications Commission (“FCC”) authorizations to the KNET-CD and KNLA-CD Class A television stations (“the Los Angeles 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 Stations. The following table shows the estimated fair values of the Los Angeles Stations’ assets acquired and liabilities assumed at the April 19, 2021 purchase date: Schedule of Asset Acquisitions ASSETS ACQUIRED Transmitter equipment $ 576,944 Technical equipment 183,841 Antenna systems 128,562 Microwave equipment 22,065 Total tangible assets acquired 911,412 Total liabilities assumed - NET TANGIBLE ASSETS ACQUIRED $ 911,412 INTANGIBLE ASSETS ACQUIRED FCC licenses 8,294,063 Transmitter site leasehold Goodwill 977,059 INTANGIBLE ASSETS ACQUIRED 9,271,122 NET ASSETS ACQUIRED $ 10,182,534 On June 1, 2021, pursuant to a March 14, 2021 an asset purchase agreement, Sovryn paid a total of $ 1,500,000 to acquire the licenses and Federal Communications Commission (“FCC”) authorizations to the KVVV-LD low power television station (“the Houston 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 Station. Form 10-Q – Q2 Madison Technologies Inc. Page 18 The following table shows the estimated fair values of the Houston Station’s assets acquired and liabilities assumed at the June 1, 2021 purchase date: ASSETS ACQUIRED Transmitter equipment $ 107,141 Technical equipment 71,399 Antenna systems 112,211 Furniture and equipment 7,389 Total tangible assets acquired 298,140 Total liabilities assumed - NET TANGIBLE ASSETS ACQUIRED $ 298,140 INTANGIBLE ASSETS ACQUIRED FCC licenses 530,000 Transmitter site leasehold 58,763 Goodwill 613,097 INTANGIBLE ASSETS ACQUIRED 1,201,860 NET ASSETS ACQUIRED $ 1,500,000 On September 24, 2021, pursuant to a March 29, 2021 an asset purchase agreement, Sovryn paid a total of $ 1,864,920 to acquire the licenses and Federal Communications Commission (“FCC”) authorizations to the KYMU-LD low power television station (“the Seattle 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 Station. The following table shows the estimated fair values of the Seattle Station’s assets acquired and liabilities assumed at the September 24, 2021 purchase date: ASSETS ACQUIRED Transmitter equipment $ 169,974 Technical equipment 91,274 Antenna systems 42,256 Microwave equipment - Total tangible assets acquired 303,954 Total liabilities assumed - NET TANGIBLE ASSETS ACQUIRED $ 303,954 Goodwill INTANGIBLE ASSETS ACQUIRED FCC licenses 1,335,000 Goodwill 225,966 INTANGIBLE ASSETS ACQUIRED 1,560,966 NET ASSETS ACQUIRED $ 1,864,920 Form 10-Q – Q2 Madison Technologies Inc. Page 19 Note 12 Note Payable On December 28, 2021, we sold a $ 500,000 promissory note that bears interest at 12 % per annum and matures on April 5, 2022 , as amended. In connection with the note sale, we issued 500,000 Warrants that expire on December 31, 2023 and may be converted in shares of our Common Stock starting June 26, 2022 at a price of $ 0.025 per share. We estimate the value the Warrant to be approximately $ 9,000 , based on a value of $ 0.018 per share of our Common Stock as of December 28, 2021.The promissory note is subordinate to the Notes we issued to the Investors. As of June 30, 2022, $ 500,000 in note principal is outstanding. On January 14, 2022, we sold an unsecured $ 150,000 note payable with $ 15,000 in fees payable upon the April 5, 2022 maturity that we treated as deferred financing fees and amortize over the term of the note. The obligation is subordinate to the Notes we issued to the Investors. As of June 30, 2022, $ 120,000 in note principal is outstanding. On January 14, 2022, we sold an unsecured $ 150,000 note payable with $ 15,000 in fees payable upon the April 5, 2022 maturity that we treated as deferred financing fees and amortized over the term of the note. The obligation is subordinate to the Notes we issued to the Investors. As of June 30, 2022, $ 135,000 in note principal is outstanding. On April 27, 2022, we sold a $ 125,000 unsecured note payable that has a $ 12,500 original issue discount and matures on December 31, 2022 . In connection with the note sale, we issued the noteholder a Warrant to purchase a total of 2,500,000 shares of our Common Stock at $ 0.025 per share, on a cashless exercise basis, that is exercisable starting September 15, 2022 and until April 15, 2024. We estimate the total value of the Warrants to be $ 45,000 , based on a $ 0.018 price per share of our Common Stock that we treat as a debt discount and amortize over the term of the note. As of June 30, 2022, $ 125,000 in note principal is outstanding. Note 13 Convertible Notes Payable Our convertible notes payable are as follows as of: Schedule of Convertible Notes Payable June 30, 2022 December 31, 2021 Senior Secured [a] $ 16,500,000 $ 16,500,000 Series 1 [b] 1,050,000 850,000 Series 2 [c] 250,000 - Series 3 [d] 275,000 - Series 4 [e] 220,000 - Series 5 [f] 192,500 - Total 18,487,500 17,350,000 Less current portion 1,987,500 850,000 Long term portion $ 16,500,000 $ 16,500,000 [a] On February 17, 2021, we entered into a securities purchase agreement with funds affiliated with Arena Investors LP (the “Investors”) pursuant to which it issued two convertible notes having an aggregate principal amount of $ 16,500,000 for an aggregate purchase price of $ 15,000,000 (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 our Common Stock (collectively, the “Warrants”) and 1,000 shares of Series F Preferred Stock that convert into 192,073,017 shares of our Common Stock (the “Series F Preferred Stock”). The Warrants and Series F Preferred Stock were each valued at $ 864,000 based on a $ 0.0045 price per share of our Common Stock and treated as a debt discount this is amortized over the term of the Notes. Form 10-Q – Q2 Madison Technologies Inc. Page 20 The Notes 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 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 registered shares of our Common Stock 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 (5) days immediately preceding the date of conversion . At June 30, 2022 and December 31, 2021 accrued and unpaid interest was $ 1,650,000 and $ 453,750 , respectively. We have not yet made the $ 453,750 million interest payments on the Notes held by Arena Partners LP that were due on April 1, 2022 and July 1, 2022, and we are currently in discussions with Arena Capital LP on a plan of forbearance. On September 24, 2021, the Company and the Investors amended the Notes and related closing documents, by executing the Limited Waiver and First Amendment the closing documents (“the amendment”). The amendment also waived specified events of default. The Notes are henceforth convertible at any time, at the holder’s option, into shares of our Common Stock at a price of $ 0.02 per share, subject to default event adjustment. Notwithstanding the foregoing, at any time during the continuance of any Event of Default, the Conversion price in effect shall be equal to the alternate conversion price. If at any time the conversion price as determined hereunder for any conversion would be less than the par value of the Common Stock, then at the sole discretion of the Holder, the conversion price hereunder may equal such par value for such conversion and the conversion amount for such conversion may be increased to include Additional Principal, where Additional Principal means such additional amount to be added to the principal amount of this Note to the extent necessary to cause the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had the conversion price not been adjusted by the Holder to the par value 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 our 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. As part of the agreement with the Investors, we issued 192,073,017 Warrants. On September 24, 2021, we and the Investor amended the warrant agreement such that each Warrant is exercisable for a period of five (5) years from the date of issuance at an initial exercise price equal to $ 0.025 per share, that is adjusted to $ 0.020 per share when interest is paid late, 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 Holder may be eligible for cashless exercise. The Series F Preferred Stock has no voting rights and shall convert into 4.9% of our issued and outstanding shares of our Common Stock on a fully diluted basis upon Common Shareholder Approval. The Series F Preferred Stock was converted and 192,073,017 common shares were issued on October 11, 2021. The Investors have contractually agreed to restrict their ability to exercise the Warrants and convert the Notes such that the number of shares of our Common Stock held by the Investors and their affiliates after such conversion or exercise does not exceed 9.99% of our then issued and outstanding shares of Common Stock. [b] Series 1: We sold a total of $ 1,050,000 in subordinated convertible note that bear interest at 6 % per annum, mature on December 31, 2022 and may be converted at the noteholder’s option at any time into shares of our Common Stock at a fixed price of $ 0.021 per share. Form 10-Q – Q2 Madison Technologies Inc. Page 21 [c] Series 2: On January 6, 2022, we sold one of our shareholders a $ 250,000 unsecured note payable that bears interest at 12 % per annum and matures on April 6, 2022 . In connection with the note sale, we issued the noteholder a Warrant to purchase 6,250,000 shares of our Common Stock, on a cashless exercise basis, at $ 0.021 per share at any time starting July 1, 2022 and ending July 1, 2024. We estimate the value of the Warrant to be $ 112,500 , based on a $ 0.018 price per share of our Common Stock that is treated as a debt discount to be amortized over the term of the note. We have not yet repaid the noteholder. On January 14, 2022, we sold one of our shareholders a $ 25,000 unsecured note payable that bears interest at 12 % per annum and matures on April 6, 2022 . In connection with the note sale, we issued the noteholder a Warrant to purchase 600,000 shares of our Common Stock, on a cashless exercise basis, at $ 0.021 per share at any time starting July 1, 2022 and ending July 1, 2024. We estimate the value of the Warrant to be $ 10,800 , based on a $ 0.018 price per share of our Common Stock that we treated as a debt discount to be amortized over the term of the note. In May 2022, we repaid the note. On February 17, 2022, we sold a $ 50,000 unsecured note payable that bears interest at 12 % per annum and matures on April 6, 2022 . In connection with the note sale, we issued the noteholder a Warrant to purchase 1,250,000 shares of our Common Stock, on a cashless exercise basis, at $ 0.021 per share at any time starting July 1, 2022, and ending July 1, 2024. We estimate the value of the Warrant to be $ 22,500 , based on a $ 0.018 price per share of our Common Stock that we treat as a debt discount that we amortized over the term of the note. In April 2022, we repaid the note. [d] Series 3: On February 15, 2022, we sold two $ 137,500 unsecured convertible notes payable bearing an 11.25 % interest rate per annum that mature on February 23, 2023 and have a $ 15,000 original issue discount. In connection with the note sales, we issued the noteholders Warrants to purchase a total of 2,500,000 shares of our Common Stock at $ 0.10 per share, on a cashless exercise basis, that are exercisable at any time until February 11, 2027. We estimate the total value of the Warrants to be $ 90,000 , based on a $ 0.018 price per share of our Common Stock that we treat as a debt discount and amortize over the terms of the notes along with the deferred financing fees. The notes’ principal and interest may be converted into our Common Stock at $ 0.02 per share. [e] Series 4: On May 5, 2022, we sold a shareholder a convertible subordinate note totaling $ 110,000 that accrues interest at 12 % per annum and matures on May 5, 2023 . The loan may be converted into shares of our Common Stock at $ 0.02 per share. In connection with the note sale, we issued the noteholder a Warrant to purchase 5,000,000 shares of our Common Stock at $ 0.02 per share. On June 24, 2022, we sold a convertible subordinate note totaling $ 110,000 that accrues interest at 12 % per annum and matures on May 5, 2023 . The loan may be converted into shares of our Common Stock at $ 0.02 per share. In connection with the note sale, we issued the noteholder a Warrant to purchase 5,000,000 shares of our Common Stock at $ 0.02 per share. [f] Series 5: On May 5, 2022, we sold an $ 82,500 note payable that has a $ 7,500 original issue discount and matures on May 5, 2023 and bears interest at 12 % per annum. In connection with the note sale, we issued the noteholder a Warrant to purchase a total of 3,750,000 shares of our Common Stock at $ 0.02 per share, on a cashless exercise basis, that is exercisable upon issuance and up through May 5, 2029. We estimate the total value of the Warrants to be $ 67,500 , based on a $ 0.018 price per share of our Common Stock that we treat as a debt discount and amortize over the term of the note. As of June 30, 2022, $ 82,500 in note principal is outstanding. On May 5, 2022, we sold an $ 110,000 note payable that has a $ 10,000 original issue discount and matures on May 5, 2023 and bears interest at 12 % per annum. In connection with the note sale, we issued the noteholder a Warrant to purchase a total of 5,000,000 shares of our Common Stock at $ 0.02 per share, on a cashless exercise basis, that is exercisable upon issuance and up through May 5, 2029. We estimate the total value of the Warrants to be $ 90,000 , based on a $ 0.018 price per share of our Common Stock that we treat as a debt discount and amortize over the term of the note. As of June 30, 2022, $ 110,000 in note principal is outstanding. On February 17, 2022, we sold a $ 50,000 unsecured note payable that bears interest at 12 % per annum and matures on April 6, 2022 . In connection with the note sale, we issued the noteholder a Warrant to purchase 1,250,000 shares of our Common Stock, on a cashless exercise basis, at $ 0.021 per share at any time starting July 1, 2022 and ending July 1, 2024. We estimate the value of the Warrant to be $ 22,500 , based on a $ 0.018 price per share of our Common Stock that we treat as a debt discount that we amortized over the term of the note. In April 2022, we repaid the note. Form 10-Q – Q2 Madison Technologies Inc. Page 22 Note 14 Related Party We entered into a consulting agreement with Warren Zenna of Zenna Consulting Group to provide oversight of marketing and communications services. The agreement commenced March 1, 2021 and ended on July 31, 2021. We paid Zenna Consulting Group $ 0 fees in the three months ended March 31, 2022 and 2021, respectively. Mr. Zenna is a member of our Board of Directors. On March 1, 2022, we granted a Warrant to Mr. Zenna to purchase up to 500,000 shares of our Common Stock at $ 0.025 per share, on a cashless exercise basis, at any time beginning September 1, 2022 and ending September 1, 2026. We estimate the value the Warrant to be approximately $ 9,000 , based on the $ 0.018 market price per share of our Common Stock on March 1, 2022. Effective January 1, 2022, we entered into a management consulting agreement with GreenRock LLC, a company controlled by Philip Falcone, for a period of one year ending December 31, 2022, under which we provide monthly remuneration of $ 35,000 , plus expenses in connection with his duties, responsibilities and performance as our chief executive officer. In February 2021, our subsidiary, Sovryn Holdings Inc., entered into consulting agreement with GreenRock LLC to provide us with chief executive officer services. In the three months ended March 31, 2022 and 2021, we paid GreenRock LLC $ 40,000 and $ 0 in fees, respectively. Mr. Falcone is the managing member of GreenRock LLC and is our Chief Executive Officer. We paid GreenRock LLC bonuses of $ 255,794 and 488,934 for the three and six months ended June 30, 2022. On April 7, 2021, we issued 1,500,000 shares of our Common Stock to Mr. Canouse in exchange for transferring his 100 shares of our Series B Preferred Stock to FFO1 Irrevocable Trust, an entity controlled by Mr. Falcone, our CEO and Chairman of our Board of Directors. The shares were valued at $ 1,500 . The 100 shares of Series B Preferred Stock that provide a 51% voting control regardless of the number of common or other voting securities we have issued at present or at any time in the future, such that the holder of the Series B Preferred shares shall maintain majority voting control over matters voted on by our shareholders. FFO1 Irrevocable Trust also holds 461,000 Preferred Series E-1 shares and FFO2 Irrevocable Trust holds 461,000 Preferred Series E-1 shares. Lisa Falcone, wife of Mr. Falcone, is the trustee of FFO2 Irrevocable Trust and Ms. Falcone has shared voting and dispositive power. Note 15 Mezzanine Equity We account for certain of our Preferred Stock in accordance with the guidance in ASC Topic 480, Distinguishing Liabilities from Equity . Based on this guidance, preferred stock that is conditionally redeemable is classified as temporary or “mezzanine” equity. Accordingly, the various Series of Preferred Stock, which is subject to conditional redemption, is presented at redemption value as mezzanine equity outside of the stockholders’ equity section of the consolidated balance sheets Preferred Shares Series A Preferred Stock On February 16, 2021, we cancelled all the Preferred Series A shares. In exchange, the holders of Series A Preferred shares received one-year option agreements to purchase shares of our wholly owned subsidiary at the time, CZJ License, Inc. at $ 10 per share for up to 300,000 shares. The option agreement expired without being exercised. Form 10-Q – Q2 Madison Technologies Inc. Page 23 Series C Preferred Stock There are 10,000 designated and authorized Series C Preferred Stock. Holders of Series C 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. As of June 30, 2022 and December 31, 2021, no shares of Series C Preferred Stock are outstanding . Series D Preferred Stock There are 230,000 designated and authorized Series D Preferred Stock with a 4.99 % conversion cap which may be increased to a maximum of 9.99 % by holder by written notice to us. There is a stated value of $ 3.32 per share, subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions or other similar events occurring after the date which the Series D are issued. Series D are ranked as a Senior Preferred Stock and have no voting rights. Each share of Series D Preferred Stock may be converted to 1,000 common shares. On February 16, 2021, we settled $ 1,028,000 in note payables, convertible notes payable and accrued interest for 230,000 shares of our Series D Preferred Stock, of which 75,000 shares of Series D Preferred Stock were converted into 75,000,000 shares of our Common Stock and 155,000 Series D Preferred shares remain unconverted and outstanding as of June 30, 2022 and December 31, 2021. Series E Preferred Stock On February 16, 2021, we issued 1,000 shares of Series E Preferred Stock to acquire Sovryn that we valued at $ 4,225,062 based on value of 100% of our Common Stock at the time. On September 16, 2021, the holders of our Series E Preferred Stock entered into an Exchange Agreement with us whereby on October 11, 2021, the 1,000 Series E Preferred shares were exchanged for 1,152,500 Series E-1 Preferred shares and 1,091,388,889 shares of Common Stock. We valued the exchange at the same $ 4,225,062 value as was assigned to the 1,000 shares of Series E Preferred Stock. As of June 30, 2022 and December 31, 2021, no shares of Series E Preferred Stock are outstanding. Series E-1 Preferred Stock There are 1,152,500 designated and authorized Series E-1 Preferred Stock that we issued on October 11, 2021 in exchange for our Series E Preferred Stock. At June 30, 2022 and December 31, 2021, 1,152,500 Preferred Series E-1 shares remain outstanding. Each share of Series E-1 Preferred Stock may be converted to 1,000 common shares. Series F Preferred Stock There are 1,000 designated and authorized Series F Preferred Stock. On February 17, 2021, we issued the Investors 1,000 shares of Series F Preferred Stock that convert into 192,073,017 shares of Common Stock, which we valued at $ 864,000 , based on the underlying value of shares our Common Stock that were $ 0.0045 per share at the time. On October 11, 2021, the 1,000 shares of Series F Preferred Stock were converted into 192,073,017 shares of Common Stock. As of June 30, 2022 and December 31, 2021, no shares of Series F Preferred Stock are outstanding. Series G Preferred Stock We received $ 4,600,000 in subscriptions for 4,600 of Series G Preferred Shares that we valued at $ 1,000 per share based on the cash price. On November 2, 2021, all of the 4,600 authorized and issued shares of Series G Preferred Stock were converted into 255,555,556 shares of our Common Stock. At June 30, 2022 and December 31, 2021, no shares of Series G Preferred Stock are outstanding. Form 10-Q – Q2 Madison Technologies Inc. Page 24 Series H Preferred Stock On November 11, 2021, pursuant to an Exchange Agreement that we entered into with the Investors, 39,895,000 of our Common shares held by the Investors were exchanged for 39,895 shares of our Series H Preferred Stock and we cancelled the 39,895,000 Common shares. Each share of Series H Preferred Stock may be converted to 1,000 common shares, subject to a maximum ownership limit of 9.99%. We valued the 39,895,000 Common shares and 39,895 Series H Preferred shares at $ 3,989,500 . At June 30, 2022 and December 31, 2021, 39,895 shares of Series H Preferred Stock remain outstanding. Note 16 Shareholders’ Equity Preferred Stock As of June 30, 2022 and December 31, 2021, we are authorized to issue 50,000,000 shares of $ 0.001 par value Preferred Stock, with designations, voting, and other rights and preferences to be determined by our Board of Directors of which 48,617,400 remain available for designation and issuance. Series B Preferred Stock There are 100 designated and authorized Series B Preferred Stock. Holders of Series B Preferred Stock have the right to vote on all shareholder matters equal to 51% of the total vote of Common stockholders. The Series B Preferred Stockholder is entitled to 51% voting rights regardless of the number of common shares or other voting shares issued by the company at any time . Such provision grants the holder of Series B Preferred Stock majority control of us, unless otherwise canceled. On July 17, 2020, 100 Series B Preferred Stock were issued pursuant to the License Agreement. The Series B Preferred Stock was valued at par at $ 0.001 . Although the Series B Preferred Stock is entitled to 51% voting rights as described above, the stock has no dividend rate nor conversion feature . Furthermore, the shares were not issued to the investors, but rather were granted to new unrelated management. On February 17, 2021, the 100 Series B Preferred Stock were transferred from Mr. Canouse (our former director and CEO), to FFO1 Irrevocable Trust, a company Mr. Falcone (our director and CEO) is the trustee and has the voting and dispositive power. At June 30, 2022 and December 31, 2021, there were 100 Series B Preferred shares outstanding, respectively. Common Stock In August 14, 2021, our shareholders approved an increase in authorized Common Stock to 6,000,000,000 from 1,000,000,000 , which became effective the same day. As of June 30, 2022 and December 31, 2021 there were 1,599,095,027 , and 1,599,095,027 , shares outstanding, respectively. Our Board of Directors and majority stockholder approved the decision to not move forward with a reverse stock split ratio of 25 to 1 share , and approved a reverse stock split ratio from 10 to 1 share , which is currently subject to regulatory approval. Warrants On February 17, 2021, we issued 192,073,017 Warrants to Arena Investors that are exercisable for a five-year period from the date of issuance and, based on an amendment made on September 24, 2021, the Warrants may be converted into our Common Stock at $0.02 per share, subject to a maximum ownership limit of 9.99% . The exercise price is subject to adjustment due to stock dividends, stock splits and recapitalizations and other events. We valued the Warrants at $ 864,000 based on a value of $ 0.0045 per share for our Common Stock at the time. Form 10-Q – Q2 Madison Technologies Inc. Page 25 On December 28, 2021, we entered into a promissory note payable and provided 500,000 Warrants. Each Warrant is exercisable at $ 0.025 per share and expires on December 31, 2023 . We valued the Warrants at $ 9,000 based on a value of $ 0.018 per share for our Common Stock at the time. The Warrants issued are loan incentives. The value was allocated to the warrants based on fair value on the date of the grant as determined using the Black-Scholes option pricing model. For the six months ended June 30, 2022, a summary of our warrant activity is as follows: Schedule of Warrants Activity Number of Warrants Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Weighted- Average Grant- Date Fair Value Aggregate Intrinsic Value Outstanding and exercisable at January 1, 2022 192,573,017 $ 0.020 4.13 $ 482,666 $ 3,465,573 - Issued 28,600,000 $ 0.028 3.76 56,437 $ 514,800 Exercised - - - - - Expired - - - - - Outstanding and exercisable at June, 2022 218,673,016 $ 0.021 4.19 $ 467,739 $ 3,979,329 Form 10-Q – Q2 Madison Technologies Inc. Page 26 Note 17 Discontinued Operations On February 16, 2021, we cancelled all the Series A Preferred Stock shares and offered their holder’s option agreements to purchase up to 300,000 shares of CZJ License, Inc., our wholly owned subsidiary at the time, at an option price of $ 10 per share. The option agreements are exercisable for a period of one year from the date of issuance and were not exercised. On November 15, 2021, we entered into a Purchase and Sale agreement with ZA Group Inc. to sell CZJ License Inc. 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 . At November 15, 2021, CZJ License Inc.’s accounts were eliminated from the consolidated financial statements. All expenses incurred by CZJ License Inc. up to November 15, 2021 have been disclosed as discontinued operations. The previous year’s assets, liabilities and expenses have been similarly classified for comparative purposes. Schedule of Previous Year Assets Liabilities and Expenses Assets Prepaid Expenses $ - $ 37,218 Website - 10,000 Intangible Assets - License - 423,410 Assets - 470,628 Liabilities Accounts Payable & Accrued - 33,500 Liabilities - 33,500 Expenses Amortization 74,760 64,687 Selling, general and administrative 190,857 152,939 Professional fees 213,500 172,750 - Expenses $ 479,117 $ 390,376 Form 10-Q – Q2 Madison Technologies Inc. Page 27 Note 18 Commitments On September 28, 2020, we entered into a one-year renewable employment agreement with Mr. Canouse, our Chief Executive Officer at the time. In the three months ended March 31, 2022 and 2021, Mr. Canouse received $ 24,487 and $ 0 , respectively. Mr. Canouse resigned on July 1, 2022. On February 17, 2021, we sold the Investors $ 16,500,000 of Notes and we entered into a Security Agreement and a Guaranty Agreement with the Investors that secure the Notes with liens on all of our tangible and intangible assets. We have not yet made the $ 0.4 million interest payments on the Notes held by Arena Partners LC that were due on April 1, 2022 and July 1, 2022, and as a result, under the Note terms, the interest rate is 20.0 % per annum. We are currently in discussions with the Investors on a plan of forbearance; however, there is no assurance that we will be successful in completion of a plan, which may disrupt our operations and result in a restructuring of obligations. On October 20, 2021, we entered into a Stock Acquisition Agreement with Top Dog Productions Inc., Jay Blumefield 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 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, 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. As of March 31, 2022, the agreement has not closed. On January 12, 2022, we entered into a consulting agreement with EF Hutton as a lead underwriter. The agreement is for one year and we may terminate the agreement on or after 270 th day with 30-days written notice. EF Hutton may terminate the agreement on or after 120 days from execution of the agreement. EF Hutton agrees to provide underwriting the sale of up to $20 million of securities. In return, we grant EF Hutton an option to acquire up to 15% of the total number of securities we offer , provide an underwriting discount of 7% of the total gross proceeds, provide warrants equal to 5% of the aggregate number of shares of Common Stock sold in the offering, warrants to be exercisable at any time in whole or in part for 4 ½ years commencing 6 months from the effective date of offering at a price per share equal to 100% of the public offering price per security. EF Hutton may also provide advisory services for a cash fee of 7% of capital raised for equity placements, 6% for debt placements, closing warrants equal to 3% of aggregate proceeds sold in offering with the warrants to expire in 5 years. We agree to pay expenses for marketing, promotional materials and other costs associated with the work. In January 2022, we entered into a six-month consulting agreement with a third party to provide strategic and business services relating to the blockchain project that we amended in February 2022. The first two months are payable at $ 25,000 per month and the remaining four months are payable at $ 10,000 per month. We have paid $ 25,000 to date. In February 2022, we entered into a consulting agreement to establish, launch, manage, operate and produce a 24/7 broadcast network devoted to cryptocurrency, NFT, Web3 and blockchain technology. In consideration for the wide range and scope of work, we agreed to pay the consultant a fee in the aggregate of $ 600,000 , of which $ 450,000 has been paid and $ 150,000 is payable upon the launch of the network. In February 2022, we entered into a consulting agreement with a third party to provide corporate marketing strategy, creation and development of content for distribution, market development, communications, products and growth. The agreement ends the earlier of June 30, 2022 or when an executed Employment Agreement is signed with us. Upon execution of the consulting agreement, we paid the consultant $ 100,000 and we are obligated to pay a service fee $ 30,000 per month for March through June. As part of the arrangement, we granted the consultant a Warrant to acquire up to 160,000,000 shares of our Common Stock at an exercise price of $ 0.025 per share that is contingent upon our entering into an Employment Agreement or extending the consulting agreement, which did not occur. As of the date of this report, we paid $ 160,000 . Form 10-Q – Q2 Madison Technologies Inc. Page 28 In March 2022, we entered into a six-month service agreement for press releases, campaigns and social media advertisings. The service fee is $ 30,000 per month plus expenses. The agreement may not be terminated during the initial six months and we must provide no less than 30-day prior written notice to the termination. Note 19 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: Schedule of Income Tax Expense June 30, June 30, 2022 2021 Net loss for the six-month period $ ( 5,070,158 ) $ ( 856,777 ) Statutory and effective tax rates 21.0 % 21.0 % Income taxes expenses (recovery) at the effective rate $ ( 1,064,733 ) $ ( 179,923 ) Effect of change in tax rates - - Permanent differences - - Valuation allowance 1,064,733 179,923 Income tax expense and income tax liability $ - $ - As of June 30, 2022 and December 31, 2021 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. Schedule of Deferred Income Tax Asset June 30, December 31, 2022 2021 Tax loss carried forward $ - $ - Deferred tax assets $ 4,059,875 $ 2,995,142 Valuation allowance ( 4,059,875 ) ( 2,995,142 ) Deferred taxes recognized $ - $ - Tax losses of approximately $ 14 million will expire in 2040 Form 10-Q – Q2 Madison Technologies Inc. Page 29 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. The following discussion of our financial condition, changes in financial condition and results of operations for the three and six months ended June 30, 2022 should be read in conjunction with our unaudited condensed consolidated financial statements and related notes for the three and six months ended June 30, 2021. Forward Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates, and projections about DLT Resolutions’ industry, management’s beliefs, and certain assumptions made by management. Forward-looking statements include our expectations regarding product, services, and maintenance revenue, annual savings associated with the organizational changes effected in prior years, and short- and long-term cash needs. In some cases, words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “estimates,” variations of these words, and similar expressions are intended to identify forward-looking statements. In addition, statements about the potential effects of the COVID-19 pandemic on the Company’s businesses, results of operations and financial condition may constitute forward-looking statements. The statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any forward-looking statements. Risks and uncertainties of our business include those set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on August 26, 2022, under “Item 1A. Risk Factors” as well as additional risks described in this Form 10-Q. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth in other reports or documents we file from time to time with the Securities and Exchange Commission, particularly the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K . GENERAL Madison Technologies Inc. (“ Madison ”) is a Nevada corporation that was incorporated on June 15, 1998. We, through our wholly-owned subsidiary, Sovryn Holdings, Inc. (“Sovryn”) acquired three un-affiliated Class A/LPTV TV. Each licensed TV station can broadcast between 10 and 12 channels over-the-air, 24 hours per day/7 days per week. We generated revenue by leasing channels to third parties on KNLA/KNET, a Class A television station in Los Angeles, KVVV, a low power television station in Houston and KYMU-LD, a low power television station in Seattle. Form 10-Q – Q2 Madison Technologies Inc. Page 30 RESULTS OF OPERATIONS Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities. Three months ended June 30, 2022 and 2021 Revenues Net Revenues increased to $471,266 for the three months ended June 30, 2022 from $0 for the three months ended June 30, 2021. The increase resulted from the acquisitions of television stations in 2021 and the $296,025 revenues generated by the lease agreements held by those stations. We anticipate 2022 Net Revenues will increase compared to 2021 Net Revenues as a result a full year of operating the television stations acquired during 2021 and the launch of BLOCKCHAIN.TV in 2022. Amortization Amortization increased to $80,994 for the three months ended June 30, 2022 from $179,789 for the three months ended June 30, 2021. The decrease in amortization expense resulted from the reduction in the estimated fair values of amortizable tangible and intangible television station assets as determined by an independent valuation subsequent to June 30, 2021. Selling, general and administrative fees Selling, general and administrative fees decreased to $330,819 for the three months ended June 30, 2022 from $541,842 for the three months ended June 30, 2021. The decrease was primarily the result of expenses we incurred in three months ended June 30, 2021following our acquisition of Sovryn that did not recur in the three months ended June 30, 2022. Television operations Television operation expenses are $84,051 and $19,370 for the three months ended June 30, 2022 and 2021. The expenses are direct costs of operating the television stations we acquired in 2021. Professional Fees Professional fees increased to $1,299,415 for the three months ended June 30, 2022 from $658,765 for the three months ended June 30, 2021. The increase was primarily the result of an increase in the legal and accounting expense associated with the acquisitions of television stations, the financing associated with those acquisitions, management fees and, the expense associated with regulatory filings for the SEC, including the Form S1 Registration. Form 10-Q – Q2 Madison Technologies Inc. Page 31 Interest Expense Interest expense increased to $1,689,180 for the three months ended June 30, 2022 from $556,872 for the three months ended June 30, 2021. The $1,132,308 increase resulted from the financings associated with the acquisition of television stations and development of BLOCKCHAIN.TV. Discontinued Operations Our loss from discontinued operations was $0 and $39,210 for the three months ended June 30, 2022 and 2021, respectively. On November 15, 2021, we sold our subsidiary, CZJ License Inc. and designated its operations as discontinued. The previous year’s assets, liabilities and expenses have been similarly classified for comparative purposes. Net Loss Net Loss increased to $3,003,464 for the three months ended June 30, 2022, from $1,699,823 for the three months ended June 30, 2021. The increase was primarily the result of $805,107 increase in interest expense for debt instruments we issued in 2021 and 2022. Net Loss on a basic and diluted basis of $0.002 per share for the three months ended June 30, 2022, based on 1,599,095,027 weighted average shares outstanding, as compared to a Net Loss of $0.072 per share for the three months ended June 30, 2021, based on 23,748,881 weighted average shares outstanding. The increase in weighted average shares outstanding relates primarily to issuances of 192,073,017 shares to the Investors on October 11, 2021 in connection with the $16,500,000 Notes we sold, the 1,091,388,889 shares we issued on October 11, 2021 to Preferred Series E-1 holders in pursuant to an Exchange Agreement and the 255,555,556 shares we issued on November 2, 2021 in exchange for 4,600 shares of our Series G Preferred Stock. Six months ended June 30, 2022 and 2021 Revenues Net Revenues increased to $946,265 for the six months ended June 30, 2022 from $296,025 for the three months ended June 30, 2021. The increase resulted from the acquisitions of television stations in 2021 and the $ revenues generated by the lease agreements held by those stations. We anticipate 2022 Net Revenues will increase compared to 2021 Net Revenues as a result a full year of operating the television stations acquired during 2021 and the launch of BLOCKCHAIN.TV in 2022. Amortization Amortization decreased to $161,488 for the six months ended June 30, 2022 from $215,073 for the six months ended June 30, 2021. The decrease in amortization expense resulted from the reduction in the estimated fair values of amortizable tangible and intangible television station assets as determined by an independent valuation subsequent to June 30, 2021. Selling, general and administrative fees Selling, general and administrative fees decreased to $480,845 for the six months ended June 30, 2022 from $624,021 for the six months ended June 30, 2021. The decrease was primarily the result of expenses we incurred in six months ended June 30, 2021 following our acquisition of Sovryn that did not recur in the six months ended June 30, 2022. Form 10-Q – Q2 Madison Technologies Inc. Page 32 Television operations Television operation expenses are $171,683 and $19,370 for the six months ended June 30, 2022 and 2021. The expenses are direct costs of operating the television stations we acquired in 2021. Professional Fees Professional Fees increased to $2,140,748 for the six months ended June 30, 2022 from $1,004,296 for the six months ended June 30, 2021. The increase was primarily the result of an increase in the legal and accounting expense associated with the acquisitions of television stations, the financing associated with those acquisitions, management fees and, the expense associated with regulatory filings for the SEC, including the Form S1 Registration. Loss on asset disposals Our loss on asset disposals was $52,668 and $0 for the six months ended June 30, 2022 and 2021. Our initial objective was to create one the largest, most comprehensive, state of the art OTA content distribution platforms to capitalize on the changing media and distribution landscape and on the growing OTA viewership in the U.S. We are exploring more capital efficient and technology centric alternatives to its planned station acquisition distribution platform. While there is no guarantee that it will be successful with this alternative approach, we have determined that it will postpone further capital expenditures on acquisitions and as a result, the planned acquisitions have been terminated and future acquisition plans have been put on hold while we evaluate this alternative approach. As a result, we recognized a $52,668 of loss from disposition of OTA assets. Interest Expense Interest expense increased to $3,028,038 for the six months ended June 30, 2022 from $916,820 for the six months ended June 30, 2022. The $2,111,218 increase resulted from the financings associated with the acquisition of television stations and development of BLOCKCHAIN.TV. Discontinued Operations Our loss from discontinued operations was $0 and $73,045 for the six months ended March 31, 2022 and 2021, respectively. On November 15, 2021, we sold our subsidiary, CZJ License Inc. and designated its operations as discontinued. The previous year’s assets, liabilities and expenses have been similarly classified for comparative purposes. Net Loss Net Loss increased to $5,070,158 for the six months ended June 30, 2022 from $2,556,600 for the six months ended June 30, 2021. The increase was primarily the result of the $2,111,218 increase in interest expense for debt instruments we issued in 2021 and 2022. Net Loss on a basic and diluted basis of $0.003 per share for the six months ended June 30, 2022, based on 1,599,095,027 weighted average shares outstanding, as compared to a Net Loss of $0.106 per share for the six months ended June 30, 2021, based on 24,168,698 weighted average shares outstanding. The increase in weighted average shares outstanding relates primarily to issuances of 192,073,017 shares to the Investors on October 11, 2021 in connection with the $16,500,000 Notes we sold, the 1,091,388,889 shares we issued on October 11, 2021 to Preferred Series E-1 holders in pursuant to an Exchange Agreement and the 255,555,556 shares we issued on November 2, 2021 in exchange for 4,600 shares of our Series G Preferred Stock. Form 10-Q – Q2 Madison Technologies Inc. Page 33 Liquidity and Capital Resources Cash and Working Capital As at June 30, 2022, we had $22,543 in cash and a $8,491,105 working capital deficit, compared to cash of $55,656 and working capital deficit of $4,373,271 as at December 31, 2021. We will require additional capital to meet our long-term operating requirements. We have not yet made the $0.4 million interest payments on the Notes held by Arena Partners LC that were due on April 1, 2022 and July 1, 2022, and as a result, under the Note terms, the interest rate is 20.0% per annum. We are currently in discussions with Arena Capital LP, on a plan of forbearance; however, there is no assurance that we will be successful in completion of a plan, which may disrupt our operations and result in a restructuring of obligations. We expect to raise additional capital through the sale of equity and/or debt securities; however, there is no assurance that we will be successful at raising additional capital in the future. If our plans are not achieved and/or if significant unanticipated events occur, we may have to further modify our business plan, which may require us to raise additional capital. As of June 30, 2022, our principal source of liquidity was our cash, which totaled $22,543. Historically, our principal sources of cash have included proceeds from the sale of common stock and preferred stock and related party loans. Our principal uses of cash have included cash used in operations, to make acquisitions and to pay interest on our Notes. We expect that the principal uses of cash in the future will be for continuing operations associated with rolling out the business plan and for interest payments. Net Cash Used in Operating Activities We used cash of $1,331,299 in operating activities during six months ended June 30, 2022 compared to cash used of $1,228,685 in operating activities during the previous year’s six-month period. The increase was primarily the result of increase in expenses associated with the build out and roll out of our business plan. Net Cash Used in Investing Activities We used cash of $103,815 in investing activities during the six months ended June 30, 2022 compared to cash used of $12,343,010 in investing activities during the previous year’s six-month period. The decrease was the result of the 2021 purchases of the television station assets that did not recur in 2022. Net Cash Provided by Financing Activities Net cash flows provided by financing activities of $1,402,000 for the six months ended June 30, 2022 were from the proceeds of subordinated notes payable and Warrants that we sold to investors, compared to $19,203,001 of cash provided by financing activities during the previous fiscal year that we generated from the Arena financing in February 2021 and sales of subscriptions to purchase our Common Stock. Form 10-Q – Q2 Madison Technologies Inc. Page 34 Off-balance Sheet Arrangements We have no off-balance sheet arrangements including arrangements that would affect its liquidity, capital resources, market risk support and credit risk support or other benefits. Going Concern The independent auditors’ reports accompanying our December 31, 2021 and 2020 financial statements contain an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. Future Financings Management anticipates continuing to rely on equity sales of our Common Stock in order to continue to fund our business operations. Issuances of additional Common Stock will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our Common Stock or arrange for debt or other financing to fund our planned activities. Material Commitments for Capital Expenditures We had no contingencies or long-term commitments at June 30, 2022. Tabular Disclosure of Contractual Obligations We are 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. Critical Accounting Policies We follow certain significant accounting policies when preparing our consolidated financial statements. A complete summary of these policies is included in Note 1 of Notes to Consolidated Financial Statements. Certain of the policies require management to make significant and subjective estimates or assumptions that may deviate from actual results. In particular, management makes estimates regarding the useful life of long-lived assets related to depreciation and amortization expense, estimates regarding fair value of our reporting units and future cash flows with respect to assessing potential impairment of both long-lived assets and goodwill and estimates of expense related to our debt and equity instruments. Each of these estimates is discussed in greater detail in the following discussion. Long-Lived Assets, Depreciation and Amortization Expense and Valuation We review the carrying value of long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset, or related asset group, may not be recoverable from estimated future undiscounted cash flows. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. In 2021, we recognized that we would not complete the acquisition of the TV station assets of W27EB and KPHE TV and we wrote off $1,150,000 in deposits paid to sellers of those assets. In the six months ended June 30, 2022, we wrote off an additional $52,668 in TV station assets. Goodwill Valuation Management performed the annual goodwill and indefinite-lived intangible assets impairment assessments as of December 31, 2021 and concluded that our goodwill for the Sovryn acquisition was impaired as of that date. Goodwill and indefinite lived assets are tested annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. We follow a two-step process for testing impairment. First, the fair value of each reporting unit is compared to its carrying value to determine whether an indication of impairment exists. If impairment is indicated, then the fair value of the reporting unit’s goodwill is determined by allocating the unit’s fair value of its assets and liabilities (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. The amount of impairment for goodwill is measured as the excess of its carrying value over its implied fair value. Derivative Liabilities We have certain financial instruments that are derivatives or contain embedded derivatives. We evaluate all of our financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 810-10-05-4 and 815-40. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with us, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on extinguishment. Form 10-Q – Q2 Madison Technologies Inc. Page 35 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are 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 4. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures In connection with the preparation of this annual report on Form 10-K, an evaluation was carried out by our management, with the participation of our Chief Executive Officer, who also serves as our Principal Financial and Accounting Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”) as of December 31, 2021. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer, to allow timely decisions regarding required disclosures. Based on that evaluation, our management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the SEC rules and forms and that such information was accumulated or communicated to management to allow timely decisions regarding required disclosure. In particular, we identified material weaknesses in internal control over financial reporting, as discussed below. Management’s Report on Internal Controls over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404 A. Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: ● pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Form 10-Q – Q2 Madison Technologies Inc. Page 36 Management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control –Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). As a result of this assessment, management identified material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The matters involving internal controls and procedures that management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified and communicated to management in connection with the preparation and audit of our financial statements as of December 31, 2021 and the preparation of our 2021 quarterly financial statements. As a result of the material weakness in internal control over financial reporting described above, management has concluded that, as of June 30, 2022, our internal control over financial reporting was not effective based on the criteria in Internal Control – Integrated Framework issued by COSO. Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on our board of directors caused and continues to cause an ineffective oversight in the establishment and monitoring of the required internal controls over financial reporting. We are committed to improving its financial organization. As part of this commitment and when funds are available, we will create a position to segregate duties consistent with control objectives and will increase its personnel resources and technical accounting expertise within the accounting function by: (i) appointing one or more outside directors to its board of directors who will also be appointed to our audit committee, resulting in a fully functioning audit committee that will undertake the oversight in the establishment and monitoring of required internal controls over financial reporting; and (ii) preparing and implementing sufficient written policies and checklists that will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements. Management believes that the appointment of one or more outside directors, who will also be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses: (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support our internal controls if personnel turn-over issues within the department occur. This, coupled with the appointment of additional outside directors, is designed to greatly decrease any control and procedure issues we may encounter in the future. Management will continue to monitor and evaluate the effectiveness of our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. Our independent auditors have not issued an attestation report on management’s assessment of our internal control over financial reporting. As a result, this quarterly report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We are not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this quarterly report. Changes in Internal Controls over Financial Reporting There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended June 30, 2022, that materially affected, or are reasonably likely to materially affect, Madison’s internal control over financial reporting. Limitations on the Effectiveness of Controls and Procedures Management, including our President and Chief Financial Officer, does not expect that Madison’s controls and procedures will prevent all potential error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Form 10-Q – Q2 Madison Technologies Inc. Page 37 Part II – Other Information ITEM 1. LEGAL PROCEEDINGS. None. 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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS During the quarter of the fiscal year covered by this report, (i) Madison did not modify the instruments defining the rights of its shareholders, (ii) no rights of any shareholders were limited or qualified by any other class of securities, and (iii) Madison did not sell any unregistered equity securities, except as follows: On March 1, 2022, we granted a Warrant to Mr. Zenna, our Director, to purchase up to 500,000 shares of our Common Stock at $0.025 per share. In 2022, we sold a total of $1,667,500 of notes payable, some of which are convertible into our Common Stock at fixed prices, and we issued certain noteholders, Warrants to purchase an aggregate of 17,350,000 shares of our Common Stock, on a cashless exercise basis, at prices ranging from $0.02 to $0.10 per share. ITEM 3. DEFAULTS UPON SENIOR SECURITIES We have not yet made the $453,750 million interest payments on the senior secured Notes held by Arena Partners LP that were due on April 1, 2022 and July 1, 2022, and we are currently in discussions with Arena Capital LP on a plan of forbearance. ITEM 4. MINE SAFETY DISCLOSURES No report required. ITEM 5. OTHER INFORMATION No report required. Form 10-Q – Q2 Madison Technologies Inc. Page 38 ITEM 6. EXHIBITS (a) Index to and Description of Exhibits All Exhibits required to be filed with the Form 10-Q are included in this quarterly report or incorporated by reference to Madison’s previous filings with the SEC, which can be found in their entirety at the SEC website at www.sec.gov under SEC File Number 000-51302. Exhibit Description Status 3.3 Certificate of Amendment dated March 9, 2015, filed as an Exhibit to Madison’s current report on Form 8-K filed March 11, 2015, and incorporated herein by reference Filed 31.1 Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Included 31.2 Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Included 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Included 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Included 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) Form 10-Q – Q2 Madison Technologies Inc. Page 39 Signatures In accordance with the requirements of the Securities Exchange Act of 1934, Madison Technologies, Inc. has caused this report to be signed on its behalf by the undersigned duly authorized person. Madison Technologies, Inc. Dated: September 28, 2022 By: / s/ Philip Falcone Name: Philip Falcone Title : President (Principal Executive Officer)