Madison Technologies Inc. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. THE FOLLOWING PRESENTATION OF OUR PLAN OF OPERATION OF SHOULD BE READ IN CONJUNCTION WITH THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION INCLUDED HEREIN. RECENT DEVELOPMENTS On November 6, 2023, the shareholders of the Company removed Philip Falcone and Warren Zenna as our directors and appointed Thomas Amon as the sole member of our board of directors. Mr. Amon removed all our officers and was appointed as the Company’s President, Secretary, Treasurer, Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer. RESULTS OF OPERATIONS Our consolidated financial statements included herein 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 stock or debt securities and further implement our business plan. Years Ended December 31, 2024 and December 31, 2023 General and administrative expenses General and administrative expenses decreased to $54,063 for the year ended December 31, 2024, from $426,757 for the year ended December 31, 2023. The decrease was primarily because of the expenses necessary to process our SEC filings and transfer Sovryn to the Investors. 23 Professional Fees Professional fees increased to $248,101 for the year ended December 31, 2024, from $140,434 for the year ended December 31, 2023. The increase was primarily because of the professional fees necessary to prepare and audit our financial statements, file our Annual Report on Form 10-K and the expenses for the transfer of Sovryn to the Investors that resulted in a $9,159,907 reduction in principal on the senior secured notes on February 1, 2023. Amortization expense and interest expense Total amortization expense and interest expense decreased to $2,498,385 for the year ended December 31, 2024, from $4,724,398for the year ended December 31, 2023. Amortization expense is derived from discounts recognized when we issued debt and then amortized the discount over the terms of the debt. Most of our debt matured in 2023 and the discounts were fully amortized in 2023. In 2024, we amortized all the remaining debt discounts. Discontinued Operations Our loss from discontinued operations was $Nil for the year ended December 31, 2024 as compared to a loss of $9,709 for the year ended December 31, 2023. Effective February 1, 2023, we entered into an agreement with a lender in which we exchanged our ownership of the assets associated with Sovryn’s broadcast television business in exchange for a $9,159,907 reduction in our obligation for the senior secured notes. As a result, the revenues, expenses, assets and liabilities of Sovryn are included as discontinued operations for the year ended December 31, 2023. The 2023 loss resulted from Sovryn’s operations for the month of January 2023. 24 Net Loss Net loss decreased to $2,800,549 for the year ended December 31, 2024, from $5,301,298 for the year ended December 31, 2023. The decrease was primarily the result of decreases in amortized interest expense and general and administrative expenses. The net loss from continuing operations per basic and diluted share was $0.0017 and $0.0033, respectively, with basic and diluted weighted averages shares outstanding of 1,603,095,243 for the respective periods. The net loss from discontinued operations per basic and diluted share was $0.0000 and $0.0000, respectively, with basic and diluted weighted averages shares outstanding of 1,603,095,243 for the respective periods. Liquidity and Capital Resources Cash and Working Capital As at December 31, 2024, we had $Nil in cash and a $20,386,295 working capital deficit, compared to cash of $Nil and working capital deficit of $17,585,746 as at December 31, 2023. The increase in the working capital deficit primarily resulted from the transfer of all Sovryn assets on February 1, 2023 according to the Partial Foreclosure Agreement with the lenders (Investors). We will require additional capital to meet our long- and short-term operating requirements. For the year ended December 31, 2024, our principal source of liquidity was our cash that we obtained from funds provided by the Investors. Our principal use of cash was to fund operations. We expect that the principal uses of cash in the future will be for continuing operations associated with rolling out our business plan and repayment of notes payable that are not converted into our Common Stock or renegotiated. Net Cash Used in Continuing Operating Activities We used $394,617 in cash from continuing operating activities for the year ended December 31 2024, compared to cash used of $323,288 from continuing operating activities during the year ended December 31, 2023. Net Cash Provided by Financing Activities Net cash provided by financing activities was $394,617 during the year ended December 31, 2024, compared to $363,710 of cash provided by financing activities during the year ended December 31, 2023. Net Cash from Discontinued Operations For the year ended December 31, 2024, we used $Nil of cash in discontinued operating activities. For the year ended December 31, 2023, we used $40,422 of cash in discontinued operating activities which ceased on February 1, 2023, The decrease resulted from the transfer of our ownership of Sovryn on February 1, 2023 according to the Partial Foreclosure Agreement with the Investors. 25 Discontinued Operations In the fourth quarter of 2022, management at that time determined that Sovryn’s television broadcast business was not an efficient use of our resources to develop and launch BCTV, our core business, and sought to exit Sovryn’s business and reduce Madison’s senior debt it incurred in connection with acquiring Sovryn’s assets and creating its business. As a result, Sovryn is recognized as a discontinued operation in the accompanying consolidated financial statements for the year ended December 31, 2023. The previous year’s assets, liabilities and expenses have been similarly classified for comparative purposes. The following is a summary of Sovryn for the years ended December 31, 2024 and 2023: 2024 2023 Assets Current assets $ — $ — Property, equipment and right-of-use assets — — Intangible assets — — Total assets — — Liabilities Accounts payable and accrued liabilities — — Lease liability obligations — — Total liabilities — — Revenues — 163,620 General and administrative expense — (9,170 ) Television operation expense — — Amortization expense — — Professional fees — (163,473 ) Finance costs — (686 ) Gain on partial settlement of senior secured notes — 9,159,907 Loss on disposition of subsidiary — (9,159,907 ) Impairment loss — — Loss from discontinued operations $ — $ (9,709 ) Purchase of Significant Equipment As of December 31, 2024, we had no intention to purchase any significant equipment during the next twelve months. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits Material Commitments for Capital Expenditures We had no contingencies or long-term commitments at December 31, 2024. Going Concern The independent auditors’ reports accompanying our December 31, 2024 and 2023 financial statements in this Annual Report contain an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. Such consolidated 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. 26 Transactions with Related Parties Effective January 1, 2022, we entered into a management consulting agreement with GreenRock LLC, a company controlled by Mr. Falcone, for a period of one year ending December 31, 2022, pursuant to which we provided monthly remuneration of $35,000, plus expenses in connection with his duties, responsibilities and performance as our chief executive officer. In February 2021, Sovryn entered into a consulting agreement with GreenRock LLC to provide us with chief executive officer services. The agreements expired on December 31, 2022 and were not renewed. In the year ended December 31, 2024 and 2023, we incurred fees to GreenRock LLC $Nil and $70,000 respectively. On February 1, 2023, we entered into the Partial Foreclosure Agreement with the Investors pursuant to which we transferred ownership of our Federal Communications Commission (“FCC”) licenses and other broadcast television assets to a third-party entity controlled by the Investors. In consideration therefore, the Investors agreed to reduce the indebtedness under the Notes by $9,159,907. On September 21, 2023, the Agent for the Investors delivered to us a notice that the Agent has exercised the Investors’ rights to vote the Pledged Interests, including the 100 shares of our Series B Preferred Stock, and to exercise the Investors’ rights, powers and privileges to pass certain resolutions and to amend our bylaws then in effect to, among other things, (i) remove the Board of Directors and all Company officers, and (ii) reduce the number of the Board of Directors from three directors to one director. As a result of the Agent sending such notice and exercising its rights to vote the Pledged Interests, the Change of Control occurred. On November 6, 2023, the shareholders of the Company removed Philip Falcone and Warren Zenna as our directors and appointed Thomas Amon as the sole member of our board of directors. Mr. Amon removed all our officers and appointed himself as the Company’s President, Secretary, Treasurer, Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer. Recent Accounting Pronouncements New pronouncements issued for future implementation are discussed in Note 3, Summary of Significant Accounting Policies – Recently Issued Accounting Pronouncements, in our Notes to the consolidated financial statements included in this Annual Report. 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 3 of the Notes to the consolidated financial statements included in this Annual Report. 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 promissory notes, convertible notes and senior secured notes due to use of discount rates. 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. 28