Item 1. Business
Item
1. Business.
Summary
Madison
Technologies Inc. (“Madison” or the “Company” or “we” or “us” or “our”)
is a Nevada corporation that was incorporated on June 15, 1998.
Madison Technologies Inc. is seeking to
create, develop and launch BlockchainTV (“BCTV”), the first-to-market 24/7 television broadcast and streaming communications
network designed to bring the most up-to-date cryptocurrency information and entertainment to the masses in the U.S. and around
the world.
We believe there is an information void
in the blockchain global community where there is no credible, reliable and unbiased source for the most up-to-date information.
We created BCTV to fill that void with a live broadcast network and distribution platform to deliver unbiased information in the
global blockchain marketplace. We intend for BCTV to engage with viewers by bringing experts, entrepreneurs and entertainment programming
into their living rooms and on their devices with a focus on unpacking trends, separating fact from fiction and providing insight
into the volatile global marketplace.
The BCTV live news programming will be
delivered by a team of anchors who will provide breaking news, in-depth stories and interviews around the clock in studio settings
and on location through contributing journalists. Our vision is to broadcast BCTV initially from Niagara Falls in Ontario, Canada
and to expand our broadcast locations to New York, Miami and Dubai, which are markets with relatively large numbers of people and
businesses connected to the cryptocurrency marketplace.
Product
and Services
To achieve the North American rollout,
we are focusing on strategic partnerships and distribution deals that deliver BCTV to households through more than 300 over-the-air
television stations, through television distributors such as Comcast Cable, DirecTV and DishTV and through alternative distribution
platforms such as Roku, Hulu, YouTube, Pluto and Xumo.
The core revenue streams envisioned for
BCTV media content would be generated by selling advertising and sponsorships. We seek to supplement core revenues by transacting
through e-commerce with our audience. Building, growing and knowing your audience is a significant factor in developing core and
supplemental revenues.
1
Recent Developments
On February 17, 2021, we entered into a
securities purchase agreement with funds affiliated with Arena Investors, LP (collectively, the “Investors”) pursuant
to which we issued convertible notes in an aggregate principal amount of $16.5 million for an aggregate purchase price of $15 million
(collectively, the “Notes”). We used proceeds from the Notes to acquire KNET and KNLA, Class A television stations
in Los Angeles, California, KVVV, a low power television station in Houston, Texas, and KYMU-LD, a low power television station
in Seattle, Washington. The Notes accrued interest at a rate of 11% per annum, subject to increase to 20% per annum upon and during
the occurrence of an event of default. We did not make the $0.4 million interest payments on the Notes that were due on April 1,
2022, July 1, 2022, October 1, 2022, and December 31, 2022, and accrued default interest accordingly. The Notes were secured by
a blanket lien on all of the Company’s assets and the shares of common stock, par value $0.001 per share, of the Company
(“Common Stock”) and the Company’s preferred stock, par value $0.001 per share (collectively, the “Pledged
Assets”), held by Philip Falcone, FFO 1 2021 Irrevocable Trust (“FFO1”), FFO 2 2021 Irrevocable Trust (“FFO2”)
and Korr Value LP (collectively, the “Pledgors”), which shares the Investors had been granted the right to vote in
the event of default.
On January 28, 2023, Arena Investors, LP
(“Arena”), in its capacity as the agent (the “Agent”) for the Investors delivered a notice to us (the “Acceleration
Notice”), which stated that the Agent and the Investors (a) elected to cause the outstanding principal amount of the Notes,
plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof, to become immediately due and
payable in cash, (b) intended to commence legal action to collect any or all of the amounts due under the Notes, and (c) sought
the appointment of a receiver or trustee as a means of realizing proceeds on their collateral.
On September 21, 2023, the Agent for the
Investors delivered a notice to us that the Agent exercised the Investors’ rights to vote the Pledged Interests (as defined
in such notice) and to exercise the Pledgees’ rights, powers and privileges, to pass certain resolutions and to amend our
then-existing bylaws to, among other things, (i) remove the board of directors of the Company (the “Board of Directors”)
and all officers of the Company, and (ii) reduce the number of the Board of Directors from three directors to one director. As
a result of the Agent delivering such notice and exercising its rights to vote the Pledged Interests, a change of control of the
Company occurred (the “Change of Control”).
On November 6, 2023, the shareholders of
the Company removed Philip Falcone and Warren Zenna from the Board of Directors and appointed Thomas Amon as the sole member of
the Board of Directors. Mr. Amon removed all of the Company’s then-serving officers and appointed himself as the Company’s
President, Secretary, Treasurer, Chief Executive Officer, Chief Financial Officer, Principal Executive Officer and Principal Accounting
Officer.
As of the date of this Annual Report
and since the last day of the year ended December 31, 2022, we have not been able to timely repay certain of our other outstanding
debt obligations in addition to those obligations to Arena and Z4 described above, with an aggregate of approximately $3.5 million
currently in default, including accrued interest, default interest and late fees. As a result of the Change of Control, we intend
to strategize with the holders of such notes to extend, modify or otherwise revisit the terms of such indebtedness in order to
resolve such outstanding defaults.
Since October 2023, and as a result of
the Change of Control, we have had minimal operations and nominal assets consisting almost entirely of cash. However, in December
2023, we held discussions with the head of content production of BCTV regarding initial plans to continue the Company’s business
plans described above as intended prior to the Change of Control. However, we cannot make any guarantee as of the date of the filing
of this Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (this “Annual Report”) as to the timing
and success of these plans, business relationships or reaching any self-imposed expectations, or that we will ultimately continue
the Company’s business as so described. See “Cautionary Note Regarding Future Looking Statements”.
Discontinued Operations
On February 1, 2023, we entered into a
Partial Strict Foreclosure Agreement with the Investors, pursuant to which we transferred ownership of our Federal Communications
Commission (“FCC”) licenses and other broadcast television assets associated with the broadcast television business
of SovRyn Holdings, Inc (“Sovryn”), then our subsidiary, to a third-party entity controlled by the Investors (the “Partial
Foreclosure Agreement”). In consideration therefor, the Investors agreed to reduce the indebtedness under the Notes by $11,600,000.
As a result, the revenues, expenses, assets and liabilities of Sovryn were deemed discontinued operations for the year ended December
31, 2022.
Competitive Conditions
Through our BCTV content, we intend to
compete for viewership in a marketplace that is fragmented and niche. Major media organizations such as Bloomberg and Comcast,
which operate CNBC and MSNBC, respectively, deliver content about cryptocurrencies, but none have a dedicated source for viewers
to continuously consume that content.
Dependence on Customers
Currently, we are not, and plan not to
be, dependent on one or a few major customers. Our business is designed to generate revenue from four primary categories of customers:
(1) advertisers and sponsors of our BCTV content airing on our broadcast over-the-air content distribution platform (the “OTA
Platform”), applications and websites, as well as through third-party broadcasters, cable television operators, and alternative
video distribution platforms, such as YouTube, Roku, Pluto and Xumo; (2) viewers of our BCTV content, who form the audience that
attracts advertisers and sponsors; and (3) third-party networks that lease channels on our OTA Platform.
2
Technology
and Intellectual Property
We do not currently own any patents, trademarks
or other intellectual property.
Governmental
and Industry Regulations
Broadcast licenses are issued by and subject
to the rules and regulations of the FCC, pursuant to the Communications Act of 1934. The FCC regulates broadcasting businesses
and has the authority to issue, renew, revoke and modify broadcast licenses and impose penalties for the violation of its regulations.
In the event we continue to conduct our business in the same manner prior the Change of Control, we would potentially be subject
to FCC rules and regulations. In order to obtain, renew, assign or modify a license, purchase a new station or sell an existing
station, we must obtain approval from the FCC.
Depending on our anticipated and future
operations, we expect to continue to be subject to other federal and state laws and regulations that relate directly or indirectly
to our operations, including federal securities laws. We are also subject to common business and tax rules and regulations pertaining
to the operation of our business.
Research
and Development Activities and Costs
We
have not spent any funds on research and development activities to date.
Compliance
with Environmental Laws
Our
current operations are not subject to any environmental laws.
Facilities
Our principal executive office, at which
minimal operations are conducted and which we do not own or lease, is located at 2500 Westchester Avenue, Suite 401, Purchase,
New York.
Number
of Total Employees and Number of Full Time Employees
We have one employee who serves as our
President, Secretary, Treasurer, Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer.
Cautionary
Note Regarding Forward Looking Statements
The information in this Annual Report on
Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements
involve risks and uncertainties, including statements regarding Madison’s capital needs, future cash flows, financial results,
business strategy, business plans and objectives, current and future operations, intentions, expectations any statements concerning
proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements
of belief; and any statements of assumptions underlying any of the foregoing. Any statements contained herein that are not statements
of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements
by terminology such as “may”, “will”, “likely”. “should”, “expect”,
“plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”,
“forecast”, “seek”, “target”, “potential” or “continue”, the negative
of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements,
you should consider various factors, including the risks outlined from time to time, in other reports Madison’s files with
the U.S. Securities and Exchange Commission (“SEC”).
Such forward-looking statements in this
Annual Report, as well as in our other periodic reports on Form 10-Q and Form 8-K filed with the SEC, in our press releases, in
our presentations, on our website and in other materials released to the public, are out of our control and subject to risks and
uncertainties that could cause actual results to differ materially from the results expressed in or implied by the statements contained
in this Annual Report. As a result, the identification and interpretation of data and other information and their use in developing
and selecting assumptions from and among reasonable alternatives requires the exercise of judgment. To the extent that the assumed
events do not occur, the outcome may vary substantially from anticipated or projected results, and accordingly, no opinion is expressed
on the achievability of such forward-looking statements. No assurance can be given that any of the assumptions relating to such
forward-looking statements are accurate.
3
Such forward-looking statements are made
as of the date of the filing of this Annual Report with the SEC and Madison disclaims any obligation to publicly update such forward-looking
statements, or disclose any difference between its actual results and those reflected in such forward-looking statements, as a
result of new information, future events or otherwise. The Company’s management may, from time to time, make oral forward-looking
statements. Madison strongly advises that the above paragraphs and the risk factors described in this Annual Report and in Madison’s
other documents filed with the SEC should be read for a description of certain factors that could cause the actual results of Madison
to materially differ from those in such oral forward-looking statements. Madison disclaims any intention or obligation to update
or revise any such oral forward-looking statements whether as a result of new information, future events or otherwise. All forward-looking
statements attributable to us are expressly qualified by these cautionary statements.