MDEX 10-K
Madison Technologies Inc. (MDEX)
United states
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
i
part I
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 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 over-the-air television stations, through television distributors 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 enable our wholly owned subsidiary, SovRyn Holdings Inc. (“Sovryn”), 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 February 1, 2023, pursuant to an agreement with the Investors, Sovryn was sold to the lender. The net assets of Sovryn at the time of disposition totalled $9,159,907, which was used to partially settle the principal balance of the senior secured notes, which totalled $16,500,000. The transaction was accounted for as a non-cash settlement.
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, 2024 (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, then our subsidiary, to a third-party entity controlled by the Investors (the “Partial Foreclosure Agreement”). As a result, the revenues, expenses, assets and liabilities of Sovryn ceased as of January 31, 2023 and were deemed discontinued operations for the years ended December 31, 2023.
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 and Pluto; (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.
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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.
Item 1A. Risk Factors.
Our business involves significant risks, some of which are described below. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report. The risks and uncertainties described below are not the only ones we face. Additional risk and uncertainties of which we are unaware or that we deem immaterial may also become important factors that adversely affect our business. The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects as well as our ability to accomplish our strategic objectives. In that event, the market price of our Common Stock could decline and you could lose part or all of your investment.
Risks Related to Our Business
We have a history of losses, have not been profitable historically and may not achieve or maintain profitability in the future.
We have a history of losses. Our ability to forecast our future operating results is subject to a number of uncertainties, including our ability to plan for and model future growth. We have encountered and will continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly evolving industries. If our assumptions regarding these uncertainties, which we use to plan our business, are incorrect or change in reaction to changes in our markets, or if we do not address these risks successfully, our operating and financial results could differ materially from expectations, our business could suffer and the trading price of our stock may decline.
We have incurred net losses of $3.0 million and $2.8 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had accumulated deficit of $34.6 million.
We are not certain whether or when we will obtain a high enough volume of sales of our products and services to sustain or increase our growth or achieve or maintain profitability in the future. We expect our costs to increase in future periods, which could negatively affect our future operating results if our revenue does not increase. In particular, we may, among other things, expend substantial financial and other resources on:
| ● | content production related to BCTV, including investments in expanding our content and production teams; |
| ● | sales and marketing, including a significant expansion of our sales organization; |
| ● | continued expansion of our business into adjacent geographic markets; |
| ● | re-establishing our business operations after the Change of Control; and |
| ● | general administration expenses, including legal and accounting expenses related to being a public company. |
These investments may not result in increased revenue or growth in our business. If we are unable to increase our revenue at a rate sufficient to offset the expected increase in our costs, our business, financial position and results of operations will be harmed, and we may not be able to achieve or maintain profitability over the long term. Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays and other unknown factors that may result in losses in future periods. If our revenue growth does not meet our expectations in future periods, our financial performance may be harmed, and we may not be able to achieve or maintain profitability in the future.
4
We have incurred debt in connection with our acquisitions of television station assets, some of which is currently in default, and this has and may continue to materially and adversely affect our financial condition and could restrict our operating flexibility.
In connection with our planned launch of BCTV, we issued promissory and convertible notes that include negative covenants that restrict our ability to, among other things: incur additional indebtedness; create liens or other encumbrances on assets; make loans, guarantees, investments and acquisitions; sell or otherwise dispose of assets; make negative pledges; enter into affiliate transactions; and make cash distributions to our stockholders.
In January 2023, outstanding principal amounts under the Notes of not less than $16.5 million were accelerated by Arena in its capacity as Agent due to the occurrence of certain events of default under the Notes, which ultimately resulted in the Change of Control.
On November 10, 2023, Philip Falcone, individually and on behalf of Madison and other named defendants, filed a Confession of Judgment affirming that a promissory note (the “Z4 Note”) had been issued by the Company, dated December 28, 2021, by Z4 Mgmt. LLC (“Z4”), which was guaranteed by each of FFO1 and FFO2. The Z4 Note was initially payable on February 15, 2022, and had an original principal balance of $500,000 with an interest rate of 12% per annum. The Z4 Note’s expiration date was extended to July 5, 2022, then further extended to March 31, 2023, and as of October 1, 2023, the revised principal balance, along with interest accrued, totaled $581,304. On such date, Z4 filed an Affidavit of Default affirming that the Z4 Note was in default and requesting a judgment in the amount of $581,304 against the Company, FFO1, FFO2, and Mr. Falcone personally, in favor of Z4. On December 5, 2023, a judgement in favor Z4 in the sum of $581,304 was rendered against us, Mr. Falcone, FFO1 and FFO2.
In addition to the defaults described above, as of the date of this Annual Report, and since the last day of the year ended December 31, 2023, we are in default under a certain loans payable for failure to pay principal and accrued interest on such loans, with an aggregate of approximately $4.6 million and $4.1 million of principal, accrued interest and late fees, as of such date and as of December 31, 2022, respectively. We have not yet made principal and interest payments on such notes when due and as a result, under terms of the notes, the default rate is as much as 22% per annum. 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.
Such convertible notes and related obligations, including interest payments, covenants and restrictions, had and could have in the future important consequences, including the following:
| ● | reserving cash in order to satisfy the obligations relating to such notes could adversely affect the amount or timing of investments to grow our business, impairing our ability to invest in and successfully grow our business; |
| ● | limit our ability to obtain additional financing on satisfactory terms to fund our working capital requirements, capital expenditures, acquisitions, debt obligations and other general corporate requirements; |
| ● | result in foreclosure of certain pledged assets pursuant to such notes; |
| ● | increase our vulnerability to general economic downturns, competition and industry conditions and we may be unable to take advantage of opportunities that our leverage prevents us from exploiting, placing us at a disadvantage to our competitors that are less leveraged; and |
| ● | impose restrictions on the manner in which we conduct our business, including restrictions on our ability to pay dividends, incur additional debt and sell assets. |
The obligations under such promissory and convertible notes could have a material adverse effect on our business, financial condition, operating results or cash flows. In addition, our failure to comply with the covenants under such convertible notes could result in an event of default and acceleration of the outstanding balance, which could significantly harm our business and cause our stock price to decline.
Our products may never achieve market acceptance.
Our ability to generate revenues from sales of our products and services and to achieve profitability will depend upon our ability to successfully commercialize such products and services. Because we have not yet begun to offer any of our products or services for sale, we have no basis to predict whether any of our products or services will achieve market acceptance. A number of factors may limit the market acceptance of any of our products or services, including:
| ● | the competitive features of our products and services, including price, as compared to other similar products and services; |
| ● | the extent and success of our marketing efforts and those of our collaborators; |
| ● | unfavorable publicity concerning our products or similar products; and |
| ● | the timing of regulatory approvals of our products or services and market entry compared to competitive products. |
If we are unable to attract viewers or acquire customers, our future revenues and operating results will be harmed. Likewise, potential customer turnover in the future, or costs we incur to retain our existing customers, could materially and adversely affect our financial performance.
Our success depends on our ability to acquire new customers in new and existing vertical markets, and in new and existing geographic markets. If we are unable to attract a sufficient number of new customers, we may be unable to generate revenue growth at desired rates. The markets in which we now and may in the future operate are competitive and many of our competitors have substantial financial, personnel and other resources that they utilize to develop solutions and attract viewers and customers. As a result, it may be difficult for us to add new viewers and customers to our base. Competition in the marketplace may also lead us to attract fewer new viewers and customers or result in us providing discounts and other commercial incentives. Additional factors that impact our ability to acquire new viewers or customers include keeping pace with technological developments, including with respect to production and programming capabilities, network and information systems and the utility of our OTA Platform, as well as general economic conditions. These factors may have a meaningful negative impact on future revenues and operating results.
5
If we are unable to sell services to our customers and grow our customer retention rates, our future revenue and operating results may be harmed.
Our future success depends, in part, on our ability to deploy our services to viewers and other customers. This may require increasingly sophisticated and costly sales efforts and may not result in any sales. In addition, the rate at which our customers purchase our services may depends on a number of factors, including the perceived need for additional TV entertainment, information and other content as well as general economic conditions. If our efforts to sell our services to such viewers and customers are not successful, our business may suffer.
Our business model is predicated, in part, on building a customer base that will generate a recurring stream of revenue. If such revenue stream does not develop as expected, or if our business model changes as the broadcasting industry evolves, our operating results may be adversely affected.
Our business model is dependent, in part, on our ability to maintain and increase distribution to generate recurring revenues. Our customers may not utilize our television broadcast assets at the same rate at which we intend them to do currently. If our customers are to reduce their utilization, our recurring revenue stream relative to our total revenues would be reduced and our operating results would be adversely affected.
Fluctuating economic conditions make it difficult to predict revenue for a particular period, and a shortfall in revenue may harm our operating results.
Our revenue depends significantly on general economic conditions. Economic weakness and customer financial difficulties may result in decreased revenue and earnings. Such factors could make it difficult to accurately forecast our sales and operating results and could negatively affect our ability to provide accurate forecasts of our costs and expenses. General economic weakness may also lead to longer collection cycles for payments due from our customers, an increase in customer bad debt, restructuring initiatives and associated expenses and impairment of investments.
Uncertainty about future economic conditions also makes it difficult to forecast operating results and to make decisions about future investments. Future or continued economic weakness for us or our customers, failure of our customers and markets to recover from such weakness and customer financial difficulties could have a material adverse effect on demand, and consequently on our business, financial condition and results of operations.
Our brand, reputation and ability to attract, retain, and serve our customers will be dependent in part upon the reliable performance of our products and infrastructure.
Our brand, reputation and ability to attract, retain, and serve our customers will be dependent in part upon the reliable performance of, and the ability of our customers to access and use our television broadcast assets. We may in the future experience disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, equipment failure, human or software errors, capacity constraints, and fraud or cybersecurity attacks. In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time.
Interruptions in our systems or the third-party systems on which we rely, whether due to system failures, computer viruses, physical or electronic break-ins, or other factors, could affect the security or availability of our television broadcast assets, network infrastructure, cloud infrastructure and website.
Problems with the reliability or security of our systems could harm our reputation. Damage to our reputation and the cost of remedying these problems could negatively affect our business, financial condition and operating results.
Any disruptions or other performance problems with our television broadcast assets could harm our reputation and business and may damage our customers’ businesses. Interruptions in our service delivery might reduce our revenue, cause us to issue credits to customers, subject us to potential liability and cause customers not to renew any subscriptions that we may offer.
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If we are not able to position our brand or reputation as an industry leader, our business and operating results may be adversely affected.
We believe that if we position ourselves as the leader in next-generation television, it will help build relationships with our end-user customers and our ability to attract customers and reseller partners. The successful promotion of our brand will depend on multiple factors, including our marketing efforts, our ability to continue to deliver a superior customer experience and develop high-quality features and our ability to successfully differentiate our broadcast services from those of our competitors. Our brand promotion activities may not be successful or yield increased revenue. The promotion of our brand requires us to make substantial expenditures, and we anticipate that the expenditures will increase as our market becomes more competitive, and as we expand into new geographies and vertical markets. To the extent that these activities yield increased revenue; this revenue may not offset the increased expenses we incur. If we do not successfully position our brand and reputation as an industry leader, our business and operating results may be adversely affected.
We are dependent on the continued services and performance of Thomas Amon and other key employees we intend to hire in the future, as well as on our ability to successfully hire, train, manage and retain qualified personnel.
Our future performance depends on the continued services and contributions of Thomas Amon, our President, Chief Executive Officer and Chief Financial Officer, to execute on our business plan and to identify and pursue new opportunities and product innovations. We do not maintain key man insurance for Mr. Amon. From time to time, there may be changes in our senior management team resulting from the termination or departure of executive officers and key employees. We currently intend for our senior management and key employees to be generally employed on an at-will basis, which means that they could terminate their employment with us at any time. The loss of the services of Mr. Amon, or any other future key employees, for any reason could significantly delay or prevent our development or the achievement of our strategic objectives and harm our business, financial condition and results of operations.
Our ability to successfully pursue our growth strategy will also depend on our ability to attract, motivate and retain personnel. We expect to face escalating compensation demands from new and prospective employees, as well as intense competition for these employees from numerous technology, software and other companies, especially in certain geographic areas in which we intend to operate, and we cannot ensure that we will be able to attract, motivate and/or retain additional qualified employees in the future. If we are unable to attract new employees or retain Mr. Amon, we may not be able to adequately develop, market and maintain new products or services at the same levels as our competitors and may, therefore, lose customers and market share. Our failure to attract and retain personnel could have an adverse effect on our ability to execute our business objectives and, as a result, our ability to compete could decrease, our operating results could suffer and our revenue could decrease. Even if we are able to identify and recruit a sufficient number of new hires, these new hires will require significant training before they achieve full productivity and they may not become productive as quickly as we would like, or at all.
If we cannot maintain our Company’s culture as it grows, we could lose the innovation, teamwork, passion and focus on execution that we believe contributes to a successful business and as a result, our business may be harmed.
We believe that a critical component to a successful business is mission-driven company culture based on a shared commitment to make television accessible to younger consumers, which we believe fosters innovation, teamwork, passion for customers, a focus on execution, and facilitates critical knowledge transfer, knowledge sharing and professional growth. Any failure to preserve such culture could negatively affect our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives. As we grow and develop the Company’s infrastructure, we may find it increasingly difficult to maintain these important aspects. If we fail to do so, our business may be adversely impacted.
7
If we are unable to compete effectively with new entrants and other potential competitors, our sales and profitability could be adversely affected.
The sales prices for our products and services may decline for a variety of reasons, including competitive pricing pressures, discounts, a change in our mix of products and services, anticipation of the introduction of new products or promotional programs. Competition continues to increase in the market segments in which we may participate, and we expect competition to further increase in the future, thereby leading to increased pricing pressures. Larger competitors with more diverse product and service offerings may reduce the price of products that compete with theirs or may bundle them with other products and services. Additionally, currency fluctuations in certain countries and regions may negatively impact prices that partners and customers are willing to pay in those countries and regions. We cannot be certain that we will be successful in developing and introducing products with enhanced functionality on a timely basis, or that our product offerings, if introduced, will enable us to maintain our prices and gross profits at levels that will allow us to maintain positive gross margins and achieve profitability.
We may acquire or invest in other companies or technologies in the future, which could divert management’s attention, fail to meet our expectations, result in additional dilution to our stockholders, increase expenses, disrupt our operations or otherwise harm our operating results.
We may in the future acquire or invest in, businesses, television broadcast assets or other assets or technologies that we believe could complement or expand our business, enhance our capabilities or otherwise offer growth opportunities. We may not be able to fully realize the anticipated benefits of any future acquisitions or anticipated benefits may not transpire. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses related to identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.
There are inherent risks in integrating and managing acquisitions. If we acquire additional businesses, we may not be able to assimilate or integrate the acquired personnel, operations, products, services and technologies successfully or effectively manage the combined business following the acquisition and our management may be distracted from operating our business. We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including, without limitation:
| ● | unanticipated costs or liabilities associated with the acquisition; |
| ● | incurrence of acquisition-related costs, which would be recognized as a current period expense; |
| ● | inability to generate sufficient revenue to offset acquisition or investment costs; |
| ● | inability to maintain relationships with customers and partners of the acquired business; |
| ● | difficulty of incorporating acquired technology and rights into our operations and of maintaining quality and security standards consistent with our intended brands; |
| ● | delays in customer purchases due to uncertainty related to any acquisition; |
| ● | the potential loss of key employees; |
| ● | use of resources that are needed in other parts of our business and diversion of management and employee resources; |
| ● | inability to recognize acquired deferred revenue in accordance with our revenue recognition policies; and |
| ● | use of substantial portions of our available cash and equity or the incurrence of debt to consummate the acquisition. |
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Acquisitions also increase the risk of unforeseen legal liability, including for potential shareholder suits or potential violations of applicable law or industry rules and regulations, arising from prior or ongoing acts or omissions by the acquired businesses that are not discovered by due diligence during the acquisition process or new regulatory restrictions at the federal, state, or local levels. Generally, if an acquired business fails to meet our expectations, our operating results, business and financial condition may suffer. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our business, results of operations and financial condition.
In addition, a significant portion of the purchase price of companies we may acquire may be allocated to goodwill and other intangible assets, which must be assessed for impairment at least annually. If our acquisitions do not ultimately yield expected returns, we may be required to take charges to our operating results based on our impairment assessment process, which could harm our results of operations.
Because our services may collect and store viewer and related information, domestic and international privacy and cyber security concerns, and other laws and regulations, could result in additional costs and liabilities to us or inhibit sales of our products or services.
We may be affected by cyber-attacks and other means of gaining unauthorized access to our products, services, systems, and data. For instance, cyber criminals or insiders may target us or third parties with which we have business relationships to obtain data, or in a manner that disrupts our operations or compromises our products or the systems into which our products are integrated. The evolution of technology systems introduces ever more complex security risks that are difficult to predict and defend against. An increasing number of companies, including those with significant online operations, have recently disclosed breaches of their security, some of which involved sophisticated tactics and techniques allegedly attributable to criminal enterprises or nation-state actors. While we take measures to protect the security of personal information, it is possible that our security controls over personal information and other practices we follow may not prevent the unauthorized access to, or the unintended release of, personal information. In addition, we do not know whether our current practices will be deemed sufficient under applicable laws or whether new regulatory requirements might make our current practices insufficient. If there is a breach of our computer systems and we know or suspect that certain personal information has been accessed, or used inappropriately, we may need to inform the affected individual and may be subject to significant fines and penalties. In the event of a breach, we could face government scrutiny or consumer class actions.
Cybersecurity incidents directed at us or third-parties with whom we have relationships can range from uncoordinated individual attempts to gain unauthorized access to information technology systems to sophisticated and targeted measures known as advanced persistent threats. Cybersecurity incidents are also constantly evolving, increasing the difficulty of detecting and successfully defending against them. In the ordinary course of our business, we and such third-parties expect to collect and store personal information, as well as our proprietary business information and intellectual property and that of our customers and employees. Additionally, we expect to rely on third parties and their security procedures for the secure storage, processing, maintenance, and transmission of information that is critical to our operations. Despite measures designed to prevent, detect, address, and mitigate cybersecurity incidents, such incidents may occur to us or our third-party providers and, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (our own or that of third parties, including personal information of our customers and employees) and the disruption of business operations. We expect to experience attempted routine cyber-attacks of our information technology networks, such as through phishing scams and ransomware. Although we do not except any of these actual or attempted cyber-attacks to have a material adverse impact on our operations or financial condition, we cannot guarantee that any such incidents will not have such an impact in the future. For example, we may be at higher risk for interruptions, outages and breaches of: operational systems, including business, financial, accounting, product development, data processing or production processes owned by us or such third-parties; facility security systems, owned by us or such third-parties; in-product technology owned by us or such third-parties; any integrated software in our solutions; or customer or other data that we process or such third-parties process on our behalf. Such cyber incidents could materially disrupt operational systems; result in loss of intellectual property, trade secrets or other proprietary or competitively sensitive information; compromise certain information of customers, employees, suppliers, or others; jeopardize the security of any of our facilities or equipment; or affect the performance of in-product technology and any integrated software in our solutions.
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A cyber incident could be caused by disasters, insiders (through inadvertence or with malicious intent) or malicious third parties (including nation-states or nation-state supported actors) using sophisticated, targeted methods to circumvent firewalls, encryption and other security defenses, including hacking, fraud, trickery or other forms of deception. The techniques used by cyber attackers change frequently and may be difficult to detect for long periods of time. Although we maintain information technology measures designed to protect us against intellectual property theft, data breaches and other cyber incidents, such measures will require updates and improvements, and we cannot guarantee that such measures will be adequate to detect, prevent or mitigate cyber incidents.
Any actual or alleged security breaches or alleged violations of federal or state laws or regulations relating to privacy and data security could result in mandated user notifications, litigation, government investigations, significant fines, and expenditures; divert management’s attention from operations; deterring people from using our products or services; damage our brand and reputation; and materially adversely affect our business, results of operations, and financial condition. Defending against claims or litigation based on any security breach or incident, regardless of their merit, will be costly and may cause reputation harm. In addition, we may incur significant costs for remediation that may include liability for stolen assets or information, repair of system damage, and compensation to customers, employees, and business partners. The successful assertion of one or more large claims against us that exceed available insurance coverage, denial of coverage as to any specific claim, or any change or cessation in our insurance policies and coverages, including premium increases or the imposition of large deductible requirements, could have a material adverse effect on our business, results of operations, and financial condition.
We may be subject to governmental regulation and other legal obligations, particularly related to privacy, data protection and information security, and our actual or perceived failure to comply with such obligations could harm our business.
We may be subject to a number of domestic and international laws and regulations that apply to cloud services and the internet generally. These laws, rules and regulations address a range of issues, including data privacy and cyber security, breach notification and restrictions or technological requirements regarding the collection, processing, use, storage, protection, disclosure, retention or transfer of data. The regulatory framework for online services, data privacy and cyber security issues worldwide can vary substantially from jurisdiction to jurisdiction, is rapidly evolving and is likely to remain uncertain for the foreseeable future. Many federal, state, local and foreign government bodies and agencies have adopted or are considering adopting laws, rules and regulations regarding the collection, processing, use, storage and disclosure of information, web browsing and geolocation data collection, data analytics, facial recognition, cyber security and breach response and notification procedures. Furthermore, existing laws and regulations are constantly evolving, and new laws and regulations that apply to our business are being introduced at every level of government in the United States, as well as internationally. As we seek to develop our business, we are, and may increasingly become subject to various laws, regulations, and standards, and may be subject to contractual obligations relating to data privacy and security in the jurisdictions in which we operate. Any significant change to applicable laws, regulations or industry practices regarding the use or disclosure of personal information, or regarding the manner in which the express or implied consent of customers for the use and disclosure of personal information is obtained, could require us to modify our products and features, possibly in a material manner and subject to increased compliance costs, which may limit our ability to develop new products and features that make use of the personal information that our customers may voluntarily share. Any failure, or perceived failure, by us to comply with any federal or state privacy or security laws, regulations, industry self-regulatory principles, or codes of conduct, regulatory guidance, orders to which we may be subject, or other legal obligations relating to data privacy or security could adversely affect our reputation, brand and business, and may result in claims, liabilities, proceedings or actions against us by governmental entities, customers or others. Any such claims, proceedings or actions could hurt our reputation, brand and business, force us to incur significant expenses in defense of such proceedings or actions, distract our management, increase our costs of doing business, result in a loss of customers and result in the imposition of monetary penalties.
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In the United States, there are numerous federal and state data privacy and security laws, rules, and regulations governing the collection, use, disclosure, retention, security, transfer, storage, and other processing of personal data, including federal and state data privacy laws, data breach notification laws, and consumer protection laws. For example, the Federal Trade Commission (“FTC”) and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination, and security of data. Such standards require us to publish statements that describe how we handle personal data and choices individuals may have about the way we handle their personal data. If such information that we publish is considered untrue or inaccurate, we may be subject to government claims of unfair or deceptive trade practices, which could lead to significant liabilities and consequences. Moreover, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal data secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. State consumer protection laws provide similar causes of action for unfair or deceptive practices.
In March 2021, the Governor of Virginia signed into law the Virginia Consumer Data Protection Act (the “VCDPA”). The VCDPA creates consumer rights, similar to the CCPA, but also imposes security and assessment requirements for businesses. In addition, in July 2021, Colorado enacted the Colorado Privacy Act (“COCPA”), becoming the third comprehensive consumer privacy law to be passed in the United States (after the CCPA and VCDPA). The COCPA closely resembles the VCDPA, and both will be enforced by the respective states’ Attorney General and district attorneys, although the two differ in many ways. We must comply with each if our operations fall within the scope of these newly enacted comprehensive mandates, which may increase our compliance costs and potential liability. Similar laws have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States. This legislation may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to compliance programs, could impact strategies and availability of previously useful data, and could result in increased compliance costs and/or changes in business practices and policies.
In addition, some laws may require us to notify governmental authorities and/or affected individuals of data breaches involving certain personal information or other unauthorized or inadvertent access to or disclosure of such information. We may need to notify governmental authorities and affected individuals with respect to such incidents. For example, laws in all 50 U.S. states may require businesses to provide notice to consumers whose personal information has been disclosed as a result of a data breach. These laws are not consistent, and compliance in the event of a widespread data breach may be difficult and costly. We also may be contractually required to notify consumers or other counterparties of a security breach. Regardless of our contractual protections, any actual or perceived security breach or breach of our contractual obligations could harm our reputation and brand, expose us to potential liability or require us to expend significant resources on data security and in responding to any such actual or perceived breach.
We strive to comply with all applicable laws, policies, legal obligations and industry codes of conduct relating to privacy and data protection to the extent possible. Because the interpretation and application of privacy and data protection laws are still uncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or with our existing practices or the features of our products and may conflict with other rules or regulations, making enforcement, and thus compliance requirements, ambiguous, uncertain, and potentially inconsistent. Any failure or perceived failure by us to comply with our privacy policies, privacy-related obligations to customers or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized access to or unintended release of personally identifiable information or other customer data, may result in governmental enforcement actions, litigation, or public statements against us by consumer advocacy groups or others. Any of these events could cause us to incur significant costs in investigating and defending such claims and, if found liable, pay significant damages. Further, these proceedings and any subsequent adverse outcomes may cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.
We may also be subject to claims of liability or responsibility for the actions of third parties with whom we interact or upon whom it relies in relation to various products or services, including but not limited to vendors and business partners. If so, in addition to the possibility of fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices or modify our products, which could have an adverse effect on our business. Any inability to adequately address privacy and/or data concerns, even if unfounded, or comply with applicable privacy or data protection laws, regulations and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales and adversely affect our business.
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The costs of compliance with, and other burdens imposed by, the laws, rules, regulations and policies that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our products or services. Even the perception of privacy concerns, whether or not valid, may harm our reputation, inhibit adoption of our products or services by current and future customers, or adversely impact our ability to attract and retain workforce talent. Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement action against us, including fines, imprisonment of our employees or directors and public censure, claims for damages by customers and other affected individuals, damage to our reputation and loss of goodwill (both in relation to existing customers and prospective customers), any of which could have a material adverse effect on our operations, financial performance and business.
Periods of rapid growth and expansion could place a significant strain on our resources, including our future employees, which could negatively impact our operating results.
We may experience periods of rapid growth and expansion, which may place a significant strain and demands on our management, our operational and financial resources, customer operations, research and development, sales and marketing, administrative, and other resources. To manage our possible future growth effectively, we will be required to continue to improve our management, operational and financial systems. Future growth would also require us to successfully hire, train, motivate and manage employees. In addition, our continued growth and the evolution of our business plan will require significant additional management, technical and administrative resources. If we are unable to manage our growth successfully, we may not be able to effectively manage the growth and evolution of our current business and our operating results could suffer.
Our future performance may depend on the success of products and services we have not yet developed or acquired.
Our success depends on the development, implementation and acceptance of our products and services. Commitments to develop new products and services must be made well in advance of any resulting sales, and technologies and standards may change during development, potentially rendering our products and services outdated or uncompetitive before their introduction. Our ability to develop products and services to meet evolving industry requirements and at prices acceptable to our customers will be significant factors in determining our competitiveness. We may expend considerable funds and other resources on the development of our products and services without any guarantee that these products will be successful. If we are not successful in bringing one or more products or types of services to market, whether because we fail to address marketplace demand, fail to develop viable technologies or otherwise, our revenues may decline and our results of operations could be seriously harmed.
Our operating results may be harmed if we are required to collect taxes on our billings in jurisdictions where it has not historically done so.
Taxing jurisdictions, including state, local and federal taxing authorities, have differing rules and regulations governing taxes, and these rules and regulations are subject to varying interpretations that may change over time. In particular, significant judgment is required in evaluating our tax positions and our provision for taxes. While we believe that we are in material compliance with our obligations under applicable taxing regimes, one or more states, localities or the federal government may seek to impose tax collection obligations on us. It is possible that we could face tax audits and that such audits could result in tax-related liabilities for which we have not accrued. A successful assertion that we should be collecting taxes in jurisdictions where it has not historically done so and do not accrue for taxes could result in substantial tax liabilities for past sales, discourage customers from purchasing from us or otherwise harm our business and operating results.
In addition, our tax obligations and effective tax rates could be adversely affected by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations, including those relating to income tax nexus, jurisdictional mix of profits at varying statutory tax rates, by changes in foreign currency exchange rates, or by changes in the valuation of our deferred tax assets and liabilities. Although we believe our tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from our historical tax provisions and accruals, which could have a material adverse effect on our operating results or cash flows in the period or periods for which a determination is made.
We expect to require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.
We intend to continue to make investments to support our business growth and expect to require additional funds to respond to business challenges, including the potential need to develop new business segments, services, features or enhance our products, improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we expect to need to engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities that we issue could have rights, preferences and privileges superior to those of holders of our Common Stock. Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to it, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to it when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be adversely affected.
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Without obtaining adequate capital funding or improving our financial performance, we may not be able to continue as a going concern.
Our recurring losses from operations and negative cash flows raise substantial doubt about our ability to continue as a going concern without additional capital-raising activities. As a result, we have concluded that there is substantial doubt about our ability to continue as a going concern. Failure to secure additional funding may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on our business, operating results, financial condition, and ability to achieve our intended business objectives.
The requirements of being a public company may strain our resources and divert management’s attention.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act and other applicable securities rules and regulations. The Exchange Act requires, among other things, that we file annual and current reports with the SEC with respect to our business and operating results. Compliance with these rules and regulations increases our legal and financial compliance costs, makes some activities more difficult, time-consuming, or costly, and increases demand on our systems and resources.
As a result of disclosure of information in this Annual Report and in filings required of a public company, our business and financial condition is more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert resources of our management and harm our business and operating results.
As a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze our results of operations and financial prospects.
As a “smaller reporting company,” we (i) are able to provide simplified executive compensation disclosures in our filings, (ii) are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting and (iii) have certain other decreased disclosure obligations in our filings with the SEC, including being required to provide only two years of audited financial statements in annual reports. Consequently, it may be more challenging for investors to analyze our results of operations and financial prospects.
We will remain a smaller reporting company until the beginning of a fiscal year in which we had a public float of $250 million held by non-affiliates as of the last business day of the second quarter of the prior fiscal year, assuming our Common Stock is registered under Section 12 of the Exchange Act on the applicable evaluation date. Even if we remain a smaller reporting company, if our public float exceeds $250 million and our annual revenues are greater than $100 million, we will become subject to the provisions of Section 404(b) of the Sarbanes-Oxley Act.
As a result of being a public company, we are responsible for establishing and maintaining adequate internal control over financial reporting. We have identified material weaknesses in our internal control over financial reporting, and if we are unable to remediate the material weaknesses, or if we fail to develop and maintain effective disclosure controls and procedures and internal control over financial reporting, our ability to produce timely and accurate consolidated financial statements or comply with applicable laws and regulations could be impaired, which may adversely affect our business and the price of our Common Stock.
As a public company, we are required to furnish a report by our management on the effectiveness of our internal control over financial reporting for each Annual Report on Form 10-K that we file with the SEC. This assessment will need to include disclosure of any material weaknesses identified by our management in internal control over financial reporting. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. Ineffective internal control over financial reporting could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our Common Stock.
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We have identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
We did not design and maintain an effective control environment commensurate with our financial reporting requirements. Specifically, we lacked a sufficient complement of personnel with an appropriate level of internal controls and accounting knowledge, training and experience commensurate with our financial reporting requirements. Additionally, the limited personnel resulted in our inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions. This material weakness contributed to the following additional material weaknesses:
(1) lack of a functioning audit committee and no 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 U.S. generally accepted accounting principles (“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, 2022, and the preparation of our 2023 quarterly financial statements.
While we are undertaking efforts to remediate these material weaknesses, the material weaknesses will not be considered remediated until our remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively. At this time, we cannot predict the success of such efforts or the outcome of our assessment of the remediation efforts. We can give no assurance that our efforts will remediate these material weaknesses in our internal control over financial reporting, or that additional material weaknesses will not be identified in the future.
The effectiveness of our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the possibility of human error and the risk of fraud. If we are unable to remediate the material weaknesses, our ability to record, process and report financial information accurately, and to prepare the consolidated financial statements within the time periods specified by the rules and regulations of the SEC, could be adversely affected which, in turn, may adversely affect our reputation and business and the trading price of our Common Stock. Our failure to design and maintain effective internal control over financial reporting could also result in errors in our consolidated financial statements that could result in a restatement of such financial statements and could cause us to fail to meet such time periods, any of which could diminish investor confidence in us and cause a decline in the price of our Common Stock. In addition, any such failures could result in litigation or regulatory actions by the SEC or other regulatory authorities, loss of investor confidence, our Common Stock no longer being quoted on the over-the-counter market, harm to our reputation and financial condition, or diversion of financial and management resources from the operation of our business.
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Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
GAAP is subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions already completed before the announcement of such change.
We may be vulnerable to continued global economic uncertainty causing volatility in financial markets.
Our business may be sensitive to changes in general economic conditions and the financial markets inside the United States and internationally, which have experienced extreme disruption in recent times, including, among other things, extreme volatility in security prices, severely diminished liquidity and credit availability, and declining valuations of investments. We believe these disruptions are likely to have an ongoing adverse effect on the world economy. A continued economic downturn and financial market disruptions could have a material adverse effect on our business, financial condition and results of operations. Any uncertainties relating to COVID-19 or other adverse public health developments, inflation, the foreign and domestic government sanctions imposed on Russia as a result of its invasion of Ukraine, or global supply chain disruptions may cause consumers, businesses, and governments to defer purchases in response to tighter credit, decreased cash availability and declining consumer confidence. Accordingly, demand for our products or services could decrease and differ materially from current expectations. Further, some of our customers may require substantial financing in order to fund their operations and subscribe or purchase products or services from us. The inability of these customers to obtain sufficient credit to finance purchases of our products or services and meet their payment obligations to us or possible insolvencies of our customers could result in decreased customer demand and could adversely impact our financial results.
Risks Related to Our Common Stock
The market price of our Common Stock is likely to be highly volatile given our status as a relatively unknown company with a small and thinly traded public float, and lack of profits, and you may lose some or all of your investment.
The market for our Common Stock is characterized by significant price volatility when compared to the securities of larger, more established companies that have large public floats, and we expect that the price of our Common Stock will continue to be more volatile than the securities of such larger, more established companies for the indefinite future. The volatility in the price of our Common Stock is attributable to a number of factors. First, as noted above, our Common Stock is, compared to the securities of such larger, more established companies, sporadically and thinly traded. The price of our Common Stock could, for example, decline precipitously in the event that a large number of shares of our Common Stock is sold on the market without commensurate demand. Secondly, we are a speculative or “risky” investment due to our lack of profits to date. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares of Common Stock on the market more quickly and at greater discounts than would be the case with the securities of a larger, more established company that has a large public float. Such volatility can also occur due to a variety of other factors, including the following:
| ● | the inability to maintain the quotation of the Common Stock on the over-the-counter market; |
| ● | changes in applicable laws or regulations; |
| ● | risks relating to the uncertainty of our projected financial information; and |
| ● | risks related to the organic and inorganic growth of our business and the timing of expected business milestones. |
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, as well as general economic, political, regulatory and market conditions, may negatively affect the market price of our Common Stock, regardless of our actual operating performance. Many of these factors are beyond our control and may decrease the market price of our Common Stock regardless of our operating performance.
Volatility in the prices of our Common Stock could subject us to securities class action litigation.
In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities or the completion of a merger. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.
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Our Common Stock is quoted on the Experts Market tier of the OTC Markets Group Inc., which may have an unfavorable impact on the price of our Common Stock and liquidity. Our Common Stock may not be eligible for listing on a national securities exchange.
Our Common Stock is quoted on the Experts Market tier of OTC Markets Group, Inc. This tier is a significantly more limited market than other national securities exchanges, such as those operated by The Nasdaq Stock Market LLC. The quotation of our Common Stock on the over-the-counter market may result in a less liquid market available for existing and potential stockholders to trade shares of our Common Stock, could depress the trading price of our Common Stock and could have a long-term adverse impact on our ability to raise capital in the future. There is no guarantee that any such national securities exchange or other quotation system will permit our Common Stock to be listed and traded. As a result, investors may find it difficult to buy or sell or obtain accurate quotations for our Common Stock, and the liquidity of our Common Stock remain limited. These factors may have an adverse impact on the trading and price of our Common Stock.
We cannot predict the extent to which an active public trading market for our Common Stock will develop or be sustained. If an active public trading market for our Common Stock does not develop or cannot be sustained, you may be unable to liquidate your investment in our securities.
At present, there is minimal public trading in our Common Stock. We cannot predict the extent to which an active public market for our Common Stock will develop or be sustained due to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our securities until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our Common Stock is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on market price. We cannot give you any assurance that an active public trading market for our securities will develop or be sustained. If such a market cannot be sustained, you may be unable to liquidate your investment in our securities.
U.S. broker-dealers may be discouraged from effecting transactions in shares of our Common Stock because they may be considered penny stocks and thus be subject to the penny stock rules.
The SEC has adopted a number of rules to regulate “penny stock” that restricts transactions involving stock which is deemed to be penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Exchange Act. These rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges if current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our shares of Common Stock have in the past constituted, and may again in the future constitute, “penny stock” within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of our Common Stock, which could severely limit the market liquidity of such shares of Common Stock and impede their sale in the secondary market.
A U.S. broker-dealer selling a penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with a net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule prepared in accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to the “penny stock” held in a customer’s account and information with respect to the limited market in “penny stocks”.
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Stockholders should be aware that, according to the SEC, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns include: (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.
Because certain of our stockholders control a significant number of shares of our Common Stock, they may have effective control over actions requiring stockholder approval.
As of the date of the filing of this Annual Report and in part due to the Change of Control, Arena, together with its affiliates, beneficially owns an aggregate of 2,347,661,906 shares of Common Stock as well as all shares of outstanding Series B Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), providing such holder the ability to vote approximately 90.2% of the total voting power of our capital stock. One of the entities affiliated with Arena, Portents Holdings LLC, beneficially owns all of our outstanding Series B Preferred Stock, which shares alone entitles it to voting power equivalent to the number of votes equal to 51% of the total voting power of each class of stock outstanding. Due to such disproportionate voting power, new investors will not be able to effect a change in our business or management, and therefore, stockholders would have limited recourse as a result of decisions made by management. As a result, Arena has the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, Arena has the ability to control the management and affairs of our Company. Accordingly, this concentration of ownership might harm the market price of our Common Stock by:
| ● | delaying, deferring or preventing a change in corporate control; |
| ● | impeding a merger, consolidation, takeover or other business combination involving us; or |
| ● | discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us. |
If securities or industry analysts do not publish research or reports about us, or publish negative reports, the price of our Common Stock and trading volume could decline.
The trading market for our Common Stock will depend, in part, on the research and reports that securities or industry analysts publish about us. We do not have any control over these analysts. If our financial performance fails to meet analyst estimates or one or more of the analysts who cover us downgrade our Common Stock, change their opinion, or reduce the target stock price for our Common Stock, our Common Stock price would likely decline. If one or more of these analysts do not publish reports on us regularly or at all, we will not likely have visibility in the financial markets, which could cause our Common Stock price or trading volume to decline.
Because we do not anticipate paying any cash dividends on our shares of Common Stock in the foreseeable future, capital appreciation, if any, would be your sole source of gain if you hold such shares.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and we do not anticipate declaring or paying any cash dividends on our Common Stock for the foreseeable future. As a result, capital appreciation, if any, of our Common Stock would be your sole source of gain on an investment in such shares for the foreseeable future.
17
A large number of outstanding shares of our Common Stock is currently restricted from resale. The number of shares eligible for public sale upon the lapse of such restrictions and conversions of outstanding convertible notes and preferred stock could depress the market price of our Common Stock dilute the ownership interests of existing stockholders.
The following summarizes certain transactions in which a large number of shares of Common Stock were issued, which shares are currently restricted from resale but may in the future be sold upon the lapse of such restrictions:
| ● | In connection with the issuance of convertible notes to the Investors, we issued to them shares of our Series F convertible preferred stock, par value $0.001 per share (“Series F Preferred Stock”), which was subsequently converted into 192,073,017 shares of Common Stock. |
| ● | In connection with the issuance of a promissory note to Z4 in December 2021, we issued it warrants to purchase up to 500,000 shares of our Common Stock. |
| ● | 155,000 issued and outstanding shares of our Series D convertible preferred stock, par value $0.001 per share (the “Series D Preferred Stock”), may be converted into 155,000,000 shares of Common Stock. |
| ● | We have issued 1,152,500 shares of the Series E-1 convertible preferred stock, par value $0.001 per share (the “Series E-1 Preferred Stock”), which were issued in September 2021 and automatically convert into 1,152,500,000 shares of Common Stock two years from the date of issuance. The Company has not processed such conversions as of the date of this Annual Report. |
| ● | We have issued 39,895 shares of Series H convertible preferred stock, par value $0.001 per share (the “Series H Preferred Stock”), which may be converted into 39,895,000 shares of Common Stock. |
| ● | As of the date of this Annual Report, the outstanding aggregate principal balance, including accrued interest, of outstanding convertible notes, excluding the Investors’ Notes all of which are currently in default is convertible into approximately 733,000,000 shares of Common Stock. |
Sales of our Common Stock as such restrictions are lifted and such conversions occur (or in connection with any anticipated conversions) may make it more difficult for us to sell our Common Stock and other equity securities in the future at a time and at a price that we deem appropriate. Such conversions and sales could also cause the trading price of our Common Stock to fall and dilute the ownership of our existing stockholders.
We could issue “blank check” preferred stock without stockholder approval with the effect of diluting then current stockholder interests and impairing their voting rights; and provisions in our organizational documents could discourage a takeover that stockholders may consider favorable.
Our articles of incorporation, as amended (“Articles of Incorporation”), authorizes the issuance of up to 50,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by our Board. Our Board is empowered, without stockholder approval, to issue a series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute the interest of, or impair the voting power of, our common stockholders. The issuance of a series of preferred stock could be used as a method of discouraging, delaying, or preventing a change in control of the Company. For example, it would be possible for our Board of Directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of the Company. Currently, shares of our Series B Preferred Stock, Series D Preferred Stock, Series E-1 Preferred Stock and Series H Preferred Stock are currently outstanding, each with preferential rights over the Common Stock.
Our Articles of Incorporation, amended and restated bylaws (“Bylaws”) and Nevada law have anti-takeover provisions that could discourage, delay or prevent a change in control, which may cause the prices of our securities to decline.
Our Articles of Incorporation, Bylaws and Nevada law contain provisions which could make it more difficult for a third party to acquire us, even if closing such a transaction would be beneficial to our stockholders. We are currently authorized to issue up to 50,000,000 shares of “blank check” preferred stock. This preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by our board of directors without further action by stockholders. Currently, shares of our Series B Preferred Stock, Series D Preferred Stock, Series E-1 Preferred Stock and Series H Preferred Stock are currently outstanding, each with preferential rights over the Common Stock. The terms of such series of preferred stock any other series of preferred stock may include voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights and sinking fund provisions. Such classes of preferred stock now and hereinafter issued could materially adversely affect the rights of the holders of our securities, and therefore, reduce the value of our securities. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party and thereby preserve control by current management.
18
Our Articles of Incorporation, Bylaws or Nevada law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the raider and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt a hostile takeover. These provisions include, among others:
| ● | the inability of our stockholders to call a special meeting; |
| ● | the right of our Board of Directors to issue preferred stock without stockholder approval; and |
| ● | the ability of our directors to fill vacancies on our Board of Directors. |
| ● | Provisions of our Articles of Incorporation, Bylaws or Nevada law also could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, our Articles of Incorporation, our Bylaws or Nevada law, as applicable, among other things, may provide our Board of Directors with the ability to alter our Bylaws without stockholder approval, and provide that vacancies on our Board of Directors may be filled by a majority of directors in office, although less than a quorum. |
In addition, we are subject to Nevada’s Combination with Interested Stockholders Statute (Nevada Revised Statutes 78.411 – 78.444), which prohibits an interested stockholder from entering into a “combination” with the corporation, unless certain conditions are met. These provisions are expected to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of our company to first negotiate with our Board of Directors. These provisions may delay or prevent someone from acquiring or merging with us, which may cause the market price of our Common Stock to decline.
We are also subject to Nevada’s Acquisition of Controlling Interest Statute (Nevada Revised Statutes 78.378 – 78.3793), which prohibits an acquirer, under certain circumstances, from voting shares of a corporation’s stock after crossing specific threshold ownership percentages. These provisions have the effect of discouraging or delaying from acquiring or merging with us.
Item 1B. Unresolved Staff Comments.
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 1C. Cybersecurity.
Not applicable.
Item 2. Properties.
We are a remote-only company. Accordingly, we maintain basic headquarters at 2500 Westchester Avenue, Suite 401, Purchase, New York, for which there is no lease.
Item 3. Legal Proceedings
Other than the following proceedings, we are not a party to any material pending legal proceedings and, to the best of our knowledge, none of our property or assets are the subject of any material pending legal proceedings.
19
On February 17, 2024, Agile Capital Funding LLC filed a Confession of Judgment executed by Philip Falcone with the Supreme Court of the State of New York, County of New York. The filing stated that Sovryn Holdings Inc. and Madison Technologies Inc. owe Agile an amount of approximately $190,444 as of February 17, 2024, representing funds received on January 30, 2023, net of repayments, together with accrued interest and collection fees.
Item 4. Mine Safety Disclosures.
Not Applicable.
20
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
(a) Market Information
Our Common Stock was quoted on the Pink Open Market maintained by the OTC Markets Group Inc. (the “OTC”) under the symbol “MDEX” from April 26, 2006 to July 14, 2023 and is now quoted on the Expert Market operated by the OTC since July 17, 2023. Quotations of Expert Market securities are restricted from public viewing. It is our objective that the Common Stock once again be quoted on the Pink Open Market, but there is no assurance that we will be successful in such regard. The following table lists the high and low prices of our Common Stock for each of our fiscal quarters for the last two fiscal years and for the year ended December 31, 2025. The price information was obtained from the OTC and reflects inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.
High and Low Prices of the Common Stock For the Period Ended |
High | Low | Source | |||||||
| December 31, 2025 | $ | 0.0135 | $ | 0.0002 | OTC Markets Group Inc | |||||
| September 30, 2025 | $ | 0.0002 | $ | 0.0002 | OTC Markets Group Inc. | |||||
| June 30, 2025 | $ | 0.0002 | $ | 0.0002 | OTC Markets Group Inc. | |||||
| March 31, 2025 | $ | 0.0002 | $ | 0.0002 | OTC Markets Group Inc. | |||||
| December 31, 2024 | $ | 0.0003 | $ | 0.0003 | OTC Markets Group Inc. | |||||
| September 30, 2024 | $ | 0.0003 | $ | 0.0003 | OTC Markets Group Inc. | |||||
| June 30, 2024 | $ | 0.0020 | $ | 0.0002 | OTC Markets Group Inc. | |||||
| March 31, 2024 | $ | 0.0001 | $ | 0.0001 | OTC Markets Group Inc. | |||||
| December 31, 2023 | $ | 0.0003 | $ | 0.0001 | OTC Markets Group Inc. | |||||
| September 30, 2023 | $ | 0.0017 | $ | 0.0020 | OTC Markets Group Inc. | |||||
| June 30, 2023 | $ | 0.0042 | $ | 0.0012 | OTC Markets Group Inc. | |||||
| March 31, 2023 | $ | 0.0174 | $ | 0.0016 | OTC Markets Group Inc. | |||||
| December 31, 2022 | $ | 0.0310 | $ | 0.0030 | OTC Markets Group Inc. | |||||
| September 30, 2022 | $ | 0.1100 | $ | 0.0000 | OTC Markets Group Inc. | |||||
| June 30, 2022 | $ | 0.2180 | $ | 0.0670 | OTC Markets Group Inc. | |||||
| March 31, 2022 | $ | 0.2500 | $ | 0.0500 | OTC Markets Group Inc. | |||||
21
(b) Holders of Record
We have approximately 52 holders of record of our Common Stock as of December 31, 2025, according to a shareholders list provided by Madison’s transfer agent as of that date. The number of registered shareholders does not include any estimate by us of the number of beneficial owners of Common Stock held in street name. The transfer agent for our Common Stock is Pacific Stock Transfer Company, 6725 Via Austi Pkwy, Suite 300, Las Vegas, Nevada 89119 and its telephone number is (800) 785-7782.
(c) Dividends
We have declared no dividends on our Common Stock, and we are not subject to any restrictions that limit our ability to pay dividends on our shares of Common Stock. Dividends are declared at the sole discretion of our Board of Directors and we do not plan to pay dividends in the future.
(d) Securities Authorized for Issuance under Equity Compensation Plans
As of December 31, 2025, we have not adopted an equity compensation plan. In January 2026, we adopted the Madison Technologies Inc. 2026 Omnibus Equity Incentive Plan (the “Incentive Plan”) and reserved 168,000,000 shares of our Common Stock for the Incentive Plan.
(e) Recent Sales of Unregistered Securities
On December 30, 2025, we issued 75,000,000 shares of unregistered Common Stock in satisfaction of a conversion notice submitted by a lender for partial repayment of our debt.
(f) Penny Stock Rules
Trading in our Common Stock is subject to the “penny stock” rules. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer who recommends our Common Stock to persons other than prior customers and accredited investors, must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. The application of the “penny stock” rules may affect your ability to resell our securities.
22
Item 6. [Reserved]
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.
On January 31, 2026, Vincent DeVito was appointed to our board of directors.
RESULTS OF OPERATIONS
Our consolidated financial statements have been prepared on a going concern basis and, accordingly, do not include any adjustments relating to the recoverability and realization of assets or the classification of liabilities that might be necessary should we be unable to continue in operation.
Our ability to continue as a going concern is dependent upon our ability to raise additional capital through the issuance of equity or debt securities, continued financial support from our largest shareholder, the execution of potential strategic initiatives, including amalgamation or similar transactions currently being pursued by management, and the continued implementation of our business plan. However, we may not be successful in securing such financing on a timely basis or on favorable terms, if at all.
We expect to raise additional capital through, among other means, the issuance of equity or debt securities and the continued execution of our business plan.
Years Ended December 31, 2025 and December 31, 2024
General and administrative expenses
General and administrative expenses increased to $188,298 for the year ended December 31, 2025, from $54,063 for the year ended December 31, 2024. The increase was primarily because of insurance expense for coverage added in November 2024.
23
Professional Fees
Professional fees increased to $311,360 for the year ended December 31, 2025, from $248,101 for the year ended December 31, 2024. The increase was primarily because of the professional fees necessary to prepare and audit our financial statements, file our 2024 Annual Report on Form 10-K, our 2025 Quarterly Reports on Form 10-Q.
Amortization expense and interest expense
Total amortization expense and interest expense decreased to $2,480,965 for the year ended December 31, 2025, from $2,498,385 for the year ended December 31, 2024. 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 and recognized $130,226 in amortization expense.
Net Loss
Net loss increased to $2,980,623 for the year ended December 31, 2025, from $2,800,549 for the year ended December 31, 2024. The increase was primarily the result of increases in general and administrative expenses and professional fees. The net loss from operations per basic and diluted share was $0.0019 and $0.0017, respectively, with basic and diluted weighted averages shares outstanding of 1,603,506,202 for the respective periods.
24
Liquidity and Capital Resources
Cash and Working Capital
As at December 31, 2025 and 2024, we had $Nil in cash and a working capital deficit of $23,310,668 and $20,386,294, respectively. The increase in the working capital deficit primarily resulted from the additional accruals of interest on our debt and loans from our principal shareholder, the Investors.
We will require additional capital to meet our long- and short-term operating requirements. For the year ended December 31, 2025, 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 Operating Activities
We used $330,965 in cash from operating activities for the year ended December 31 2025, compared to cash used of $394,617 from operating activities during the year ended December 31, 2024.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $330,965 during the year ended December 31, 2025, compared to $394,617 of cash provided by financing activities during the year ended December 31, 2024.
25
Purchase of Significant Equipment
As of December 31, 2025, 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, 2025.
Going Concern
Our consolidated financial statements have been prepared on a going concern basis and, accordingly, do not include any adjustments relating to the recoverability and realization of assets or the classification of liabilities that might be necessary should we be unable to continue in operation.
Our ability to continue as a going concern is dependent upon our ability to raise additional capital through the issuance of equity or debt securities, continued financial support from our largest shareholder, the execution of potential strategic initiatives, including amalgamation or similar transactions currently being pursued by management, and the continued implementation of our business plan. However, we may not be successful in securing such financing on a timely basis or on favorable terms, if at all.
We expect to raise additional capital through, among other means, the issuance of equity or debt securities and the continued execution of our business plan.
26
Transactions with Related Parties
As at December 31, 2025 and 2024, respectively, $725,582 and $394,617 were due our principal shareholder. These amounts were received to support the Company’s working capital requirement, and it is unsecured, non-interest bearing and payable on demand.
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
Item 8. Financial Statements and Supplementary Data.
MADISON TECHNOLOGIES INC.
DECEMBER 31, 2025 AND 2024
TABLE OF Contents
| Independent Auditor’s Report (PCAOB ID#: |
F-1 |
| CONSOLIDATED FINANCIAL STATEMENTS | |
| Consolidated Balance Sheets | F-2 |
| Consolidated Statements of Operations | F-3 |
| Consolidated Statements of Mezzanine Equity and Stockholders’ Deficiency | F-4 |
| Consolidated Statements of Cash Flows | F-5 |
| Notes to the Consolidated Financial Statements | F-6 to F-28 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Madison Technologies Inc.
Opinion on the Consolidated Financial Statements
Material Uncertainty Related to Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred recurring losses from operations, has negative cash flows from operating activities, working capital deficiency and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
We have served as the Company’s auditor since 2024 April __, 2026 |
CHARTERED PROFESSIONAL ACCOUNTANTS Authorized to practice public accounting by the Chartered Professional Accountants of Ontario |
F-1
Item 1: Financial Statements.
MADISON TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2025 and 2024
(Currency expressed in United States Dollars (“US$ or $”), except for number of shares)
December 31, 2025 |
December 31, 2024 |
|||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Prepaid insurance and other expenses | $ | $ | ||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities (Note 4) | $ | $ | ||||||
| Loan from a principal shareholder (Note 8) | ||||||||
| Promissory notes (Note 5) | ||||||||
| Convertible notes (Note 6) | ||||||||
| Interest payable on senior secured notes (Note 7) | ||||||||
| Senior secured notes (Note 7) | ||||||||
| Total liabilities | ||||||||
| MEZZANINE EQUITY | ||||||||
| Preferred Stock – Series A, shares authorized, $ par value per share, stated value $ per share, shares designated, shares issued and outstanding, December 31, 2025 and 2024, respectively (Note 9) | ||||||||
| Preferred Stock - Series C, $ par value; stated value $ per share, shares designated, issued and outstanding, December 31, 2025 and 2024, respectively (Note 9) | ||||||||
| Total Mezzanine Equity | ||||||||
| STOCKHOLDERS’ DEFICIENCY | ||||||||
| Preferred Stock - Series B, $ par value; shares designated, shares issued and outstanding, December 31, 2025 and 2024, respectively (Note 9) | ||||||||
| Preferred Stock - Series D, $ par value; convertible, stated value $ per share, shares designated, shares issued and outstanding, December 31, 2025 and 2024, respectively (Note 9) | ||||||||
| Preferred Stock- Series E, $ par value; convertible, stated value $ per share, shares designated, Nil issued and outstanding, December 31, 2025 and 2024, respectively; (Note 9) | ||||||||
| Preferred Stock - Series E-1, $ par value; convertible, stated value $ per share, shares designated, shares issued and outstanding, December 31, 2025 and 2024, respectively (Note 9) | ||||||||
| Preferred Stock - Series F, $ par value; convertible, stated value $ per share, shares designated, Nil issued and outstanding, December 31, 2025 and 2024, respectively (Note 9) | ||||||||
| Preferred Stock - Series G, $ par value; convertible, stated value $ per share, shares designated, Nil issued and outstanding, December 31, 2025 and 2024, respectively (Note 9); | ||||||||
| Preferred Stock – Series H, $ par value; convertible, stated value $ per share, shares designated, issued and outstanding, December 31, 2025 and 2024, respectively (Note 9) | ||||||||
| Common Stock - $ par value; shares authorized, shares issued and outstanding, December 31, 2025 and 2024, respectively (Note 9) | ||||||||
| Additional Paid in Capital (Note 9) | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total stockholders’ deficiency | ( |
) | ( |
) | ||||
| Total liabilities, mezzanine equity and stockholders’ deficiency | $ | $ | ||||||
See the accompanying notes to the consolidated financial statements
F-2
MADISON TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS of Operations
(Currency expressed in United States Dollars (“US$ or $”), except for number of shares)
For
the Year 2025 |
For
the Year 2024 |
|||||||
| Revenues | $ | $ | ||||||
| Operating Expenses | ||||||||
| General and administrative | ||||||||
| Professional fees | ||||||||
| Total operating expenses | ||||||||
| Loss before other expense | ( |
) | ( |
) | ||||
| Other income (expense) | ||||||||
| Amortized expense (Notes 5, 6 and 7) | ( |
) | ||||||
| Interest expense (Notes 5, 6 and 7) | ( |
) | ( |
) | ||||
| Total non-operating expense | ( |
) | ( |
) | ||||
| Loss before income taxes | ( |
) | ( |
) | ||||
| Income tax expense | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Loss per share, basic and diluted | $ | ) | $ | ) | ||||
| Weighted average basic and diluted shares outstanding | ||||||||
See the accompanying notes to the consolidated financial statements
F-3
MADISON TECHNOLOGIES INC.
CONSOLIDATED
STATEMENTS OF MEZZANINE EQUITY AND
STOCKHOLDERS’ DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Currency expressed in United States Dollars (“US$ or $”), except for number of shares)
| Mezzanine Equity | Common Stock | Preferred Stock | Additional Paid | Accumulated | |||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | In Capital | Deficit | Total | |||||||||||||||||||
| # | $ | # | $ | # | $ | $ | $ | $ | |||||||||||||||||||
| Balance, December 31, 2024 | ( |
) | ( |
) | |||||||||||||||||||||||
| Conversion option exercised for interest accrued (Note 5) | — | — | ( |
) | |||||||||||||||||||||||
| Net loss for the period | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||
| Balance, December 31, 2025 | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, December 31, 2023 | ( |
) | ( |
) | |||||||||||||||||||||||
| Net loss for the period | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||
| Balance, December 31, 2024 | ( |
) | ( |
) | |||||||||||||||||||||||
See the accompanying notes to the consolidated financial statements
F-4
MADISON TECHNOLOGIES INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS FOR THE
YEAR ENDED DECEMBER 31,
2025 AND 2024
(Currency expressed in United States Dollars (“US$ or $”), except for number of shares)
| For the | For the | |||||||
| Year Ended | Year Ended | |||||||
| December
31, 2025 |
December
31, 2024 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net loss for the period | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Amortized expenses (Notes 5, 6 and 7) | ||||||||
| Changes in non-cash working capital items: | ||||||||
| Prepaid expenses | ( |
) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Interest payable on senior secured notes | ||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash flows from investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Loan from a principal shareholder | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ||||||||
| Cash, beginning of the period | ||||||||
| Cash, end of the period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE | ||||||||
| Interest paid | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES | ||||||||
| Issuance of Common Stock to pay interest | $ | $ | ||||||
See the accompanying notes to the consolidated financial statements
F-5
MADISON TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2025
Note 1 Nature of Operations
Madison Technologies Inc. (the “Company”) was incorporated on June 15, 1998 in the State of Nevada, and our shares of Common Stock are quoted on the Experts Market tier of the over-the-counter market operated by OTC Markets, Inc.
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, 2025, we generated no revenues from operations, incurred a net loss of $
Note 3 Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). The accompanying consolidated financial statements are expressed in United States dollars (“USD”) have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.
The accompanying consolidated financial statements include the accounts of our wholly owned subsidiaries, Blockchain.tv, Inc. All the intercompany balances and transactions have been eliminated in the consolidation.
Significant accounting estimates and assumptions
The preparation of the consolidated financial statements requires the use of estimates and assumptions to be made in applying the accounting policies that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities. The estimates and related assumptions are based on previous experiences and other factors considered reasonable under the circumstances, the results of which form the basis for making the assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Significant accounts that require estimates include promissory notes, convertible notes and senior secured notes due to the use of discount rates.
| ● | Fair value of equity classified conversion feature and warrants |
In determining the fair values of the equity classified conversion feature and warrants pursuant to debt financing transactions, the Company applies a market-based valuation technique using the most recent private placement price as a proxy for fair value. This valuation approach is considered a Level 3 fair value measurement within the fair value hierarchy due to the use of unobservable inputs.
F-6
| ● | Provisions |
Provisions are recognized when the Company has a present obligation, legal or constructive, as a result of a previous event, if it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the obligation. The amount recognized is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligations. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate of the expected future cash flows.
| ● | Contingencies |
Contingencies can be either possible assets or possible liabilities arising from past events, which, by their nature, will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence and potential impact of contingencies inherently involves the exercise of significant judgment and the use of estimates regarding the outcome of future events.
| ● | Going concern |
The Company evaluates its ability to continue as a going concern in accordance with ASC 205-40, Presentation of Financial Statements – Going Concern. This assessment requires significant judgment and involves the evaluation of relevant conditions and events that are known or reasonably knowable at the date the financial statements are issued, including the Company’s current financial condition, obligations due within one year, expected future cash flows, access to capital, and management’s plans.
The assessment involves inherent uncertainty, as it requires management to project future conditions and the effectiveness of any plans intended to address potential liquidity shortfalls. If substantial doubt about the Company’s ability to continue as a going concern is identified, management evaluates whether its plans will mitigate that doubt, and appropriate disclosures are made in the financial statements.
Consolidation
The accompanying consolidated financial statements include the accounts of our wholly owned subsidiary, Blockchain.tv, Inc., which is dormant has not had operations since its inception. The functional and reporting currency of the Company and its subsidiaries are U.S. Dollar.
Segment reporting
Operating segments are defined as components of an entity where discrete financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. We identified our Chief Executive Officer as the chief operating decision maker. We operate in one operating segment. Our operating decision maker allocates resources and assesses performance at the consolidated level.
F-7
Fair Value of Financial Instruments
ASC 820 defines fair value, establishes a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
● Level 1 – Valuation based on quoted market prices in active markets for identical assets or liabilities.
● Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets.
● Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
Fair value estimates presented herein are based on market assumptions and information available to management as of the reporting date. The carrying amounts of certain financial instruments approximate their fair values due to their short-term maturities or because their stated interest rates approximate market rates. These instruments include accounts payable and accrued expenses, interest payable on senior secured notes, promissory notes, convertible notes and senior secured notes.
Convertible notes and other debt instruments
In connection with the issuance of promissory and convertible notes, in certain instances we issued common share purchase warrants (the “Warrants”) that entitle the holder to purchase shares of our Common Stock at a specified fixed exercise price at any time within a time period specified within each Warrant. We evaluated the embedded conversion feature, if any, and the warrants and concluded that they qualified as equity instruments under Accounting Standards Codification (ASC) 815, Derivatives and Hedging, and ASC 815-40, Contracts in Entity’s Own Equity. The fair value of the Warrants were separated from the promissory and convertible notes and accounted for as a reduction of the carrying amount of the note with an increase to additional paid-in capital.
With respect to the embedded conversion features in the senior secured notes, although they qualify as derivatives under ASC 815, the Company concluded that no reliable basis exists to determine their fair value as of the reporting date. Accordingly, no value has been assigned to the conversion features, and the derivative liability recognized pertains solely to the freestanding warrants.
The fair value of the Warrants that represented a discount was amortized and included in the consolidated statements of operation over the term of each note using the effective interest method.
F-8
Series A and C Convertible Preferred Stock
The Series A and C convertible preferred stock (“Series A Preferred Stock” and “Series C Preferred Stock”) were accounted for as mezzanine equity.
Net Loss Per Share
The Company has adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 260-10 which provides for calculation of “basic” and “diluted” earnings per share.
Basic
loss per share of common stock is computed by dividing net loss $
Diluted loss per share of common stock is computed similarly to basic loss per share from continuing operations except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents, if dilutive.
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 have adopted the ASU in year ended December 31, 2023.
F-9
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.
Income taxes
The Company accounts for income taxes in accordance with ASC 740. The Company provides for Federal, State and Provincial income taxes payable, as well as for those deferred because of the timing differences between reporting income and expenses for consolidated financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. The effect of a change in tax rates is recognized as income or expense in the period of the change. A valuation allowance is established, when necessary, to reduce deferred income tax assets to the amount that is more likely than not to be realized.
Recently Issued Accounting Pronouncements
Accounting guidance recently adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to improve the disclosures regarding a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. The Company adopted quarterly requirements of this guidance beginning in the first quarter of 2025 and the adoption has no material impact on the consolidated financial statements.
New accounting guidance not yet adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures (“ASU 2023-09”) to provide disaggregated income tax disclosures on rate reconciliation and income taxes paid. The Company is required to adopt the guidance in the fourth quarter of fiscal 2026, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated financial statements.
In January 2025, the FASB issued a clarification by ASU 2025-01 Income Statement - Expense Disaggregation Disclosures (Topic 220): A new guidance related to expense disaggregation disclosures. This guidance requires additional disclosure of certain amounts included in the expense captions presented in the Statement of Income as well as disclosures about selling expenses. The new guidance will be effective for us beginning in 2027 on an annual basis and in the first quarter of 2028 on a quarterly basis and may be applied on either a prospective or retrospective basis. Early adoption of the guidance is permitted. The Company is currently evaluating the effect this new guidance will have on our disclosures.
The Company continues to evaluate the impact of the new accounting pronouncement, including enhanced disclosure requirements, on our business processes, controls and systems.
F-10
Note 4 Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities as of December 31, 2025, and 2024 are summarized below:
Schedule of Accounts Payable and Accrued Liabilities
| December
31, 2025 |
December
31, 2024 |
|||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued interest | ||||||||
| Total | $ | $ | ||||||
Note 5 Promissory Notes
During the years ended December 31, 2021, 2022 and 2023, the Company issued several promissory notes with warrants. The Company evaluated the warrants and concluded that those warrants qualified as equity instruments under Accounting Standards Codification (ASC) 815, Derivatives and Hedging, and ASC 815-40, Contracts in Entity’s Own Equity.
Due to the limited trading activity and pricing transparency of the Company’s Common Stock, observable market inputs for valuing the warrants were determined to be unreliable. Specifically:
| ● | The Company’s Common Stock is listed on the OTC Expert Market, which restricts public quotation and limits visibility to investors. |
| ● | The average daily trading volume of the Company’s Common Stock is approximately $1,000, and the share price has historically been highly volatile in its thinly traded status. |
Due to these limitations, valuation techniques that depend on quoted market prices cannot be reliably applied.
Accordingly, the Company applied a market-based valuation technique using the most recent private placement price of $0.018 per share (dated November 2, 2021) as a proxy for fair value. This valuation approach is considered a Level 3 fair value measurement within the fair value hierarchy due to the use of unobservable inputs. The fair value of the freestanding warrants as of the reporting date was estimated based on this Level 3 input, and the corresponding equity classified warrants has been recorded under additional paid-in capital. Management believes this approach provides the most reasonable estimate of fair value in the absence of observable market data.
Significant unobservable input used in the valuation was the private placement price of $0.018/share. No sensitivity analysis is presented due to the absence of a reliable market range of inputs.
Promissory note issued during year ended December 31, 2021
On
December 28, 2021, the Company issued a promissory note with a principal amount and cash proceeds of $
In connection with the issuance of the promissory note, the Company also issued common share purchase warrants (the “Warrants”) that entitle the holder to purchase shares of the Company’s Common Stock at an exercise price of $ per share at any time until December 31, 2023.
The
fair value of the warrants of $
The fair value of the warrants that represented a discount was amortized to consolidated statements of operation over the term of the promissory note using the effective interest method.
For
the year ended December 31, 2025 and 2024, the Company recorded interest expense of $
Promissory notes issued during year ended December 31, 2022
| (a) | On
January 14, 2022, the Company issued a promissory note with a principal amount and cash proceeds of $ |
The
promissory note accrued interest at an annual rate of
The
fee payable of $
F-11
For
the year ended December 31, 2025 and 2024, the Company recorded interest expense of $
As
of December 31, 2025 and 2024, $
| (b) | On
January 14, 2022, the Company issued a promissory note with a principal amount and cash proceeds of $ |
The
fee payable of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
As
of December 31, 2025 and 2024, $
| (c) | On
April 27, 2022, the Company issued a promissory note with a principal amount of $ |
In connection with the issuance of the promissory note, the Company also issued common share purchase warrants that entitle the holder to purchase shares of the Company’s Common Stock at an exercise price of $ per share at any time until December 15, 2024.
The
fair value of the warrants of $
The
original issuance discount of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Promissory notes issued during year ended December 31, 2023
In
February 2023, the Company issued a promissory note $
On
February 3, 2023, the Company entered into a securities purchase agreement with a lender pursuant to which the Company borrowed
$
On
December 30, 2025, the note holder exercised their conversion rights over the accrued interest of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
F-12
Note 6 Convertible Notes
During the years ended December 31, 2021, 2022 and 2023, the Company issued several series of unsecured convertible notes with embedded conversion features and freestanding warrants. The Company evaluated the embedded conversion features and the warrants and concluded that they qualified as equity instruments under Accounting Standards Codification (ASC) 815, Derivatives and Hedging, and ASC 815-40, Contracts in Entity’s Own Equity.
Due to the limited trading activity and pricing transparency of the Company’s Common Stock, observable market inputs for valuing those instruments were determined to be unreliable. Specifically:
| ● | The Company’s Common Stock is listed on the OTC Expert Market, which restricts public quotation and limits visibility to investors. |
| ● | The average daily trading volume of the Company’s Common Stock is approximately $1,000, and the share price has historically been highly volatile in its thinly traded status. |
Accordingly, the Company applied a market-based valuation technique using the most recent private placement price of $0.018 per share (dated November 2, 2021) as a proxy for fair value. This valuation approach is considered a Level 3 fair value measurement within the fair value hierarchy due to the use of unobservable inputs. The fair value of the freestanding warrants as of the reporting date was estimated based on this Level 3 input, and the corresponding equity classified warrants has been recorded under additional paid-in capital. Management believes this approach provides the most reasonable estimate of fair value in the absence of observable market data.
Significant unobservable input used in the valuation was the private placement price of $0.018/share. No sensitivity analysis is presented due to the absence of a reliable market range of inputs.
Although the embedded conversion features meet the definition of equity classified instruments under ASC 815, the Company concluded that there is no reliable basis to estimate their fair value as of the reporting date. The features are highly sensitive to changes in various unobservable inputs, and due to the lack of active trading, volatility benchmarks, or comparable market data, any valuation would be purely speculative. Management assessed whether a Level 3 fair value estimate (e.g., using an option pricing model) could be developed, but concluded that input assumptions such as volatility and market-based discount rates were not supportable. As such, no value has been assigned to the embedded conversion features, and the recognized equity classified instruments pertains solely to the freestanding warrants. The Company will reassess the valuation of the conversion features in subsequent periods as market data becomes available.
Our convertible notes payable, all of which are liabilities as of December 31, 2025 and 2024, are as follows:
| December
31, 2025 |
December
31, 2024 |
|||||||
| Series 1 | $ | $ | ||||||
| Series 2 | ||||||||
| Series 3 | ||||||||
| Series 4 | ||||||||
| Series 5 | ||||||||
| Series 6 | ||||||||
| Principal outstanding total | ||||||||
| Less discount | ||||||||
| Principal outstanding, net | $ | $ | ||||||
Series 1
During
the years ended December 31, 2021 and 2022, the Company issued convertible notes totaling $
Convertible notes issued during year ended December 31, 2021
Series 1-1
On
August 31, 2021, the Company issued a series of convertible notes with total principal amount and cash proceeds of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Convertible notes issued during year ended December 31, 2022
Series 1-2
On
April 5, 2022, the Company issued a convertible note with total principal amount and cash proceeds of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
F-13
Series 2
Convertible notes issued during year ended December 31, 2022
Series 2-1
On
January 5, 2022, the Company issued a convertible note with a principal amount and cash proceeds of $
In
connection with the issuance of the convertible note, the Company also issued common share purchase warrants (the “Warrants”)
that entitle the holder to purchase
The
fair value of the warrants of $
The fair value of the warrants was amortized to consolidated statements of operations over the term of the convertible note using the effective interest method.
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Convertible notes issued during year ended December 31, 2023
Series 2-4
On
January 10, 2023, the Company issued a convertible note with a principal amount of $
In connection with the issuance of the convertible note, the Company also issued common share purchase warrants that entitle the holder to purchase shares of the Company’s Common Stock at an exercise price of $ per share at any time until January 30, 2030.
The
fair values of the warrants of $
The
issuance of the convertible note resulted in an original issuance discount of $
F-14
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Series 2-5
On
January 10, 2023, the Company issued a convertible note with a principal amount and cash proceeds of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Series 3
Convertible notes issued during year ended December 31, 2022
Series 3-1
On
February 11, 2022, the Company issued a convertible note with a principal amount of $
In connection with the issuance of the convertible note, the Company also issued common share purchase warrants (the “Warrants”) that entitle the holder to purchase shares of the Company’s Common Stock at an exercise price of $ per share at any time until February 11, 2027.
The
fair values of the warrants of $
The
issuance of the convertible note resulted in an original issuance discount of $
F-15
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Series 3-2
On
February 11, 2022, the Company issued a convertible note with a principal amount of $
In connection with the issuance of the convertible note, the Company also issued common share purchase warrants (the “Warrants”) that entitle the holder to purchase shares of the Company’s Common Stock at an exercise price of $ per share at any time until February 11, 2027.
The
fair values of the warrants of $
The
issuance of the convertible note resulted in an original issuance discount of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Series 4
Convertible notes issued during year ended December 31, 2022
Series 4-1
On
May 5, 2022, the Company issued a secured convertible note with a principal amount of $
In connection with the issuance of the secured convertible note, the Company also issued common share purchase warrants (the “Warrants”) that entitle the holder to purchase shares of the Company’s Common Stock at an exercise price of $ per share at any time until May 5, 2029.
The
fair values of the warrants of $
F-16
The
issuance of the convertible note resulted in an original issuance discount of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Series 4-2
On
June 24, 2022, the Company issued a convertible note with a principal amount of $
In connection with the issuance of the convertible note, the Company also issued common share purchase warrants (the “Warrants”) that entitle the holder to purchase shares of the Company’s Common Stock at an exercise price of $ per share at any time until June 24, 2029.
The
fair values of the warrants of $
The
issuance of the convertible note resulted in an original issuance discount of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Series 5
Convertible notes issued during year ended December 31, 2022
Series 5-1
On
May 5, 2022, the Company issued a convertible note with a principal amount of $
F-17
In connection with the issuance of the convertible note, the Company also issued common share purchase warrants (the “Warrants”) that entitle the holder to purchase shares of the Company’s Common Stock at an exercise price of $ per share at any time until May 5, 2029.
The
fair values of the warrants of $
The
issuance of the convertible note resulted in an original issuance discount of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Series 5-2
On
May 5, 2022, the Company issued a convertible note with a principal amount of $
In connection with the issuance of the convertible note, the Company also issued common share purchase warrants (the “Warrants”) that entitle the holder to purchase shares of the Company’s Common Stock at an exercise price of $ per share at any time until May 5, 2029.
The
fair values of the warrants of $
The
issuance of the convertible note resulted in an original issuance discount of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Series 5-3
On
October 14, 2022, the Company issued a convertible note with a principal amount of $
F-18
In connection with the issuance of the convertible note, the Company also issued common share purchase warrants (the “Warrants”) that entitle the holder to purchase shares of the Company’s Common Stock at an exercise price of $ per share at any time until May 5, 2029.
The
fair value of the warrants of $
The fair value of the warrants was amortized to consolidated statements of operations over the term of the convertible note using the effective interest method.
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Series 5-4
On
December 15, 2022, the Company issued a convertible note with a principal amount of $
In connection with the issuance of the convertible note, the Company also issued common share purchase warrants (the “Warrants”) that entitle the holder to purchase shares of the Company’s Common Stock at an exercise price of $ per share at any time until May 5, 2029.
The
fair values of the warrants of $
The
issuance of the convertible note resulted in an original issuance discount of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Convertible notes issued during year ended December 31, 2023
Series 5-5
On
February 2, 2023, the Company issued a convertible note with a principal amount of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
F-19
Series 6
Convertible notes issued during year ended December 31, 2022
Series 6-1
On
September 16, 2022, the Company issued a convertible note with a principal amount of $
The
original issuance discount of $
For
the years ended December 31, 2025 and 2024, the Company recorded interest expense of $
Note 7 Senior Secured Notes
On
February 17, 2021, the Company 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 $
In connection with the issuance of the Notes, the Company also issued number of common share purchase warrants (the “Warrants”) and Preferred Series F Shares to the investors (Note 10).
The
Notes would mature on February 17, 2024, unless earlier converted, and accrue interest at a rate of
Conversion Feature
The Notes contain conversion features that allow the Investors to convert the Notes and unpaid interests into shares of the Company’s common stock. The conversion price is subject to the following:
The conversion price on any conversion date will be the lower of (1) $50,000,000 divided by the total number of outstanding shares of preferred stock, common stock, and common stock equivalents (assuming full conversion or exercise of all securities convertible into or exercisable for equity), or (2) $1.00.
Upon an event of default, the conversion price will be the lower of (1) 75% of the average VWAP of the Company’s common stock over the five (5) trading days immediately preceding the conversion date, or (2) $0.015 per share.
On
September 24, 2021, the Notes were amended to change the conversion price to $
F-20
Warrants
The
Warrants entitle the Investors to purchase shares of the Company’s common stock. At the inception of the agreement, the
exercise price of the Warrants was calculated as
The Company evaluated the conversion feature and warrants in accordance with Accounting Standards Codification (ASC) 815, Derivatives and Hedging. Initially, the conversion features and warrants were determined to be derivative liabilities. However, as the Company’s common stock is quoted on the OTC Expert Market, which lacks sufficient trading volume and transparency, management determined that reliable market inputs necessary to support a fair value measurement were not available. As a result, the fair value of the embedded conversion features was assessed to be nil. The fair values of the warrants of $3,464,529 were separated from the note and accounted for as a reduction of the carrying amount of the note with a recognition of derivative liabilities).
On September 24, 2021, upon the amendment of the exercise price of the warrants to a fixed price, the Company re-evaluated the amended terms in accordance with ASC 815-40 Contracts In Entity’s Own Equity, derecognized the derivative liabilities related to those warrants, and recognized the Warrants in equity (“End of derivative warrants treatment”).
The
issuance of the Notes resulted in an original issuance discount of $
On
February 1, 2023, pursuant to an agreement with the lender of the Company’s senior secured notes, Sovryn was sold to the
lender. The net assets of Sovryn at the time of disposition totalled $
| Total | ||||
| $ | ||||
| Face value of senior secured notes issued | ||||
| Debt discount | ( |
) | ||
| Day 1 value of senior secured notes issued | ||||
| Amortization expenses | ||||
| Balance at December 31, 2021 | ||||
| Amortization expenses | ||||
| Balance at December 31, 2022 | ||||
| Partial settlement of principal | ( |
) | ||
| Amortization expenses | ||||
| Balance at December 31, 2023 | ||||
| Amortization expenses | ||||
| Balance at December 31, 2024 | ||||
| Amortization expenses | ||||
| Balance at December 31, 2025 | ||||
The
Company recorded interest expenses of $
The
interest payable on senior secured notes as on December 31, 2025 and 2024 amounts to $
F-21
Note 8 Related Party
As
at December 31, 2025 and 2024, respectively, $
Note 9 Stockholders’ Deficiency
Preferred Stock
As of December 31, 2025 and 2024, the Company is authorized to issue shares of preferred stock, with designations, voting, and other rights and preferences to be determined by our Board of Directors, of which remain available for designation and issuance.
Series A Preferred Stock and Series B Preferred Stock
On
July 28, 2020, the Company filed a certificate of designations of Series A Convertible Preferred Stock (the “Certificate
of Designations”) with the Nevada Secretary of State designating shares of the Company’s shares of Preferred
Stock as Series A Convertible Preferred Stock and setting forth the voting and other powers, preferences and relative, participating,
optional or other rights of the Preferred Shares. Each share of Series A Preferred Stock has a par value of $ per share and
a stated value of $
The Series A Preferred Stock does not have redemption rights.
The Series A Preferred Stock, with respect to the payment of dividends and payments upon the liquidation of the Company, ranks senior to all capital stock of the Company.
The Series A Preferred Stockholders is entitled to receive cumulative quarterly dividends, payable in additional Series A Preferred Stock, at an annual rate of 3% of the Stated Value, when declared by the Board. The Board did not declare dividend since issuance of the Series A Preferred Shares.
The Series A Preferred Stock is convertible by the holder into shares of the Company’s Common Stock at any time after issuance. For the 24 months following issuance, the conversion ratio will be adjusted if the Company issues Common Stock (or related securities) that causes the total fully diluted Common Stock outstanding to exceed shares. The adjusted conversion ratio will be calculated based on the total fully diluted shares after such issuance divided by , multiplied by the current conversion ratio.
In the event of a liquidation, dissolution, or winding up of the Company, or a Sale (defined as a sale of the majority of assets or certain mergers/consolidations), holders of Series A Preferred Stock are entitled to receive, prior to any distribution to junior securities, an amount equal to the Stated Value plus all accrued and unpaid dividends. If the Company’s assets are insufficient to pay this full amount, the remaining assets will be distributed proportionally among the Series A Preferred stockholders. The Company will provide at least 45 days’ written notice of any such Liquidation. The number of Series A Preferred Stock issued and outstanding as of December 31, 2025 and 2024 was .
F-22
On July 28, 2020, the Company filed a certificate of designations of Series B Super Voting Preferred Stock (the “Certificate of Designations”) with the Nevada Secretary of State designating shares of the Company’s shares of Preferred Stock as Series B Super Voting Preferred Stock and setting forth the voting and other powers, preferences and relative, participating, optional or other rights of the Preferred Shares. Each share of Series B Preferred Stock has a par value of $ per share.
The Series B Preferred Stock does not have redemption rights.
The Series B Preferred Stock will not be entitled to dividends unless the Corporation pays cash dividends or dividends in other property to holders of outstanding shares of Common Stock.
There is no mandatory conversion of Series B Super Voting Preferred Stock into Common Stock.
On February 17, 2021, the shares Series B Preferred Stock were transferred from Mr. Canouse (the Company’s former director and CEO), to the FFO 1 2021 Irrevocable Trust, a company that Mr. Falcone (the Company’s former director and CEO) is the trustee and has the voting and dispositive power. The 100 shares of Series B Preferred are included in the collateral for the Investor Notes.
In
July 2020, pursuant to an acquisition agreement to acquire the Casa Zeta-Jones Brand License Agreement from Luxurie Legs, LLC,
the Company issued shares of Series A Preferred Stock and shares of Series B Preferred Stock. The fair values of the
Series A and Series B Preferred Stock issued were $
The
Company accounted for its Series A Preferred Stock as Mezzanine Equity in accordance with ASC 480, Distinguishing Liabilities
from Equity. The embedded conversion feature of the preferred stock was evaluated under ASC 815, Derivatives and Hedging, and
was separated from the host instrument. This embedded conversion feature was recognized as a derivative liability, with changes
in its fair value recorded in the consolidated statements of operations at each reporting period end. Upon the issuance of the
Series A Preferred Stock, the Company recognized derivative liabilities of $
The
Series B Preferred Stock was accounted for as Permanent Equity in accordance with ASC 480 - Distinguishing Liabilities from Equity.
The fair value of the Series B Preferred Stock was allocated to par value of $ and additional paid-in capital of $
On
February 16, 2021, the Company extinguished all outstanding shares of its Series A Preferred Stock. In exchange, the former holders
received one-year options to purchase up to shares of the Company’s then wholly-owned subsidiary, CZJ License, Inc.,
at an exercise price of $ per share. The fair value of the options issued was $21,465 and was included in additional paid-in
capital. This transaction resulted in the derecognition of both the derivative liabilities and the Series A Preferred Stock. The
difference between the combined carrying value of the derecognized derivative liabilities and Series A Preferred Stock and the
$21,465 fair value of the options issued resulted in a gain on extinguishment of $
The options issued expired without exercise.
The number of Series B Preferred Stock issued and outstanding as of December 31, 2025 and 2024 was .
F-23
Series C Preferred Stock
On February 11, 2021, the Company filed a certificate of designations of Series C Convertible Preferred Stock (the “Certificate of Designations”) with the Nevada Secretary of State designating shares of the Company’s shares of Preferred Stock as Series C Convertible Preferred Stock and setting forth the voting and other powers, preferences and relative, participating, optional or other rights of the Preferred Shares. Each share of Series C Preferred Stock has a par value of $ per share and a stated value of $ per share.
The Series C Preferred Stock does not have redemption rights.
The Series C Preferred Stockholders are entitled to receive cumulative quarterly dividends, payable in additional Series A Preferred Stock, at an annual rate of 2% of the Stated Value, when declared by the Board. The Board did not declare dividend since issuance of the Series A Preferred Shares.
The Company accounted for its Series C Preferred Stock as Mezzanine Equity in accordance with ASC 480, Distinguishing Liabilities from Equity. The embedded conversion feature of the preferred stock was evaluated under ASC 815, Derivatives and Hedging, and was concluded to qualify for derivatives.
The Company did not issue Series C Preferred Stock. As at December 31, 2025 and 2024, no shares of Series C Preferred Stock are outstanding.
Series D Preferred Stock
On March 26, 2021, the Company filed a certificate of designations of Series D Convertible Preferred Stock (the “Certificate of Designations”) with the Nevada Secretary of State designating shares of the Company’s shares of Preferred Stock as Series D Convertible Preferred Stock and setting forth the voting and other powers, preferences and relative, participating, optional or other rights of the Preferred Shares. Each share of Series C Preferred Stock has a par value of $ per share and a stated value of $ per share.
The Series D Preferred Stock does not have redemption rights.
The Series D are ranked equally with the Series E Preferred Stock and the Series F Preferred Stock and as senior to all previously issued series of Preferred Stock and the Common Stock.
The Series D Preferred Stockholders is entitled to receive dividends when declared by the Board. The Board did not declare a dividend since the issuance of the Series D Preferred Shares.
Each
share of Series D Preferred Stock may be converted into common shares, subject to a
The Series D Preferred Stock was accounted for as Permanent Equity in accordance with ASC 480 - Distinguishing Liabilities from Equity.
During
the year ended December 31, 2021, the Company issued shares of Series D Preferred Stock to settle several notes payable
and accrued interest. The fair value of the Series D Preferred Stock issued was determined to be $
During the year ended December 31, 2021, shares of the Company’s Series D Preferred Stock were converted into shares of its Common Stock. As of December 31, 2025 and 2024, shares of Series D Preferred Stock remain unconverted and outstanding.
F-24
Series E Preferred Stock and Series E-1 Preferred Stock
On March 26, 2021, the Company filed a certificate of designations of Series E Convertible Preferred Stock (the “Certificate of Designations”) with the Nevada Secretary of State designating shares of the Company’s shares of Preferred Stock as Series E Convertible Preferred Stock and setting forth the voting and other powers, preferences and relative, participating, optional or other rights of the Preferred Shares. Each share of Series E Preferred Stock has a par value of $ per share and a stated value of $ per share.
The Series E are ranked equally with the Series D Preferred Stock and the Series F Preferred Stock and as senior to all previously issued series of Preferred Stock and the Common Stock.
The Series E Preferred Stock does not have redemption rights.
The Series E Preferred Stockholders is entitled to receive dividends when declared by the Board. The Board did not declare dividends since issuance of Series E Preferred Shares.
The Company accounted for its Series E Preferred Stock as permanent equity in accordance with ASC 480, Distinguishing Liabilities from Equity. The embedded conversion feature of the preferred stock was evaluated under ASC 815, Derivatives and Hedging, and was separated from the host instrument. The original embedded conversion feature was recognized as a derivative liability, with changes in its fair value recorded in the consolidated statements of operations at each reporting period end. Upon the issuance of the Series E Preferred Stock, the Company recognized derivative liabilities of $744. Subsequent to the issuance date, the Company evaluated an amendment to the conversion rate and determined that the amended conversion feature did not result in the recognition of a new derivative liability or a significant modification requiring remeasurement under ASC 815.
On September 16, 2021, the Company filed a certificate of designations of Series E-1 Convertible Preferred Stock (the “Certificate of Designations”) with the Nevada Secretary of State designating shares of the Company’s shares of Preferred Stock as Series E-1 Convertible Preferred Stock and setting forth the voting and other powers, preferences and relative, participating, optional or other rights of the Preferred Shares. Each share of Series E Preferred Stock has a par value of $per share and a stated value of $ per share.
The Series E-1 are ranked equally with the Series D Preferred Stock and the Series F Preferred Stock and as senior to all previously issued series of Preferred Stock and the Common Stock.
The Series E-1 Preferred Stock does not have redemption rights.
The Series E-1 Preferred Stockholders is entitled to receive dividends when declared by the Board. The Board did not declare dividends since issuance of the Series E-1 Preferred Shares.
The holder of the Series E-1 Preferred Stock may convert Series E-1 Preferred Shares into Common Stock at conversion rate of 1:1,000.
The
Series E-1 Preferred Stock was accounted for as Permanent Equity in accordance with ASC 480 - Distinguishing Liabilities from
Equity. The fair value of the Series E-1 Preferred Stock was allocated to par value of $1 and additional paid-in capital of $
On
October 11, 2021, 1,000 shares of Series E Preferred Stock were exchanged for Series E-1 Preferred shares and
shares of Common Stock. We valued the exchange at the same $
F-25
Series F Preferred Stock
During year ended December 31, 2021, the Company filed a certificate of designations of Series F Convertible Preferred Stock (the “Certificate of Designations”) with the Nevada Secretary of State designating shares of the Company’s shares of Preferred Stock as Series F Convertible Preferred Stock and setting forth the voting and other powers, preferences and relative, participating, optional or other rights of the Preferred Shares. Each share of Series E Preferred Stock has a par value of $ per share and a stated value of $ per share. shares of Series F Preferred Stock were issued along with the Senior Secured Notes (Note 8)
The Series F Preferred Stock are ranked equally with the Series D Preferred Stock and the Series E Preferred Stock and as senior to all previously issued series of Preferred Stock and the Common Stock.
The Series F Preferred Stock does not have redemption rights.
The Series F Preferred Stockholders is entitled to receive dividends when declared by the Board. The Board did not declare dividends since the issuance of the Series F Preferred Shares.
The
Company accounted for its Series F Preferred Stock as permanent equity in accordance with ASC 480, Distinguishing Liabilities
from Equity. The fair value of the Series F Preferred Stock issued was determined to be $
On October 11, 2021, the shares of Series F Preferred Stock were converted into shares of Common Stock. As of December 31, 2025 and 2024, shares of Series F Preferred Stock were issued and outstanding
Series G Preferred Stock
On March 26, 2021, the Company filed a certificate of designations of Series G Convertible Preferred Stock (the “Certificate of Designations”) with the Nevada Secretary of State designating shares of the Company’s shares of Preferred Stock as Series G Convertible Preferred Stock and setting forth the voting and other powers, preferences and relative, participating, optional or other rights of the Preferred Shares. Each share of Series E Preferred Stock has a par value of $ per share and a stated value of $ per share. On August 18, 2021, the Company filed an amendment of certificate of designations and changed the designed number of Series G Convertible Preferred Stock from to .
The Series G are ranked equally with the Series D Preferred Stock and the Series E Preferred Stock and as senior to all previously issued series of Preferred Stock and the Common Stock.
The Series G Preferred Stock does not have redemption rights.
The Series G Preferred Stockholders is entitled to receive dividends when declared by the Board. The Board did not declare dividend since issuance of the Series G Preferred Shares.
During
year ended December 31, 2021, the Company received $ in subscriptions pursuant to the issuance of 4,600 of shares Series
G Preferred Stock. The proceeds received was allocated into par value and additional paid-in capital of $ and $
The Company accounted for its Series G Preferred Stock as permanent equity in accordance with ASC 480, Distinguishing Liabilities from Equity. The embedded conversion feature of the preferred stock was evaluated under ASC 815, Derivatives and Hedging, and was separated from the host instrument. The original embedded conversion feature was recognized as a derivative liability, with changes in its fair value recorded in the consolidated statements of operations at each reporting period end. Upon the issuance of the Series G Preferred Stock, the Company recognized derivative liabilities of $354,000. Subsequent to the issuance date, the Company evaluated an amendment to the conversion rate and determined that the amended conversion feature did not result in the recognition of a new derivative liability or a significant modification requiring remeasurement under ASC 815. Upon conversion to common stock, the abovementioned derivative liabilities were derecognized during the year ended December 31, 2021; no shares of Series G Preferred Stock were outstanding as at December 31, 2025 and 2024.
F-26
Series H Preferred Stock
On November 5, 2021, the Company filed a certificate of designations of Series H Convertible Preferred Stock (the “Certificate of Designations”) with the Nevada Secretary of State designating shares of the Company’s shares of Preferred Stock as Series H Convertible Preferred Stock and setting forth the voting and other powers, preferences and relative, participating, optional or other rights of the Preferred Shares. Each share of Series H Preferred Stock has a par value of $ per share and a stated value of $per share.
The Series H Preferred Stock does not have redemption rights.
The Series H Preferred Stockholders are entitled to receive dividends when declared by the Board. The Board did not declare dividends since the issuance of the Series H Preferred Shares.
The Series H Preferred Stock allowed holders to convert into common stock by a conversion ratio of 1:1,000.
On
November 11, 2021, pursuant to an exchange agreement that we entered into with the Investors, shares of Common Stock
held by the Investors were exchanged for 39,895 shares of Series H Preferred Stock and the Company cancelled the shares
of common stock. The Company valued the 39,895,000 shares and 39,895 shares of Series H Preferred Stock at $
At December 31, 2025 and 2024, shares of Series H Preferred Stock remain outstanding.
Common Stock
On
December 30, 2025, the Company issued shares of Common Stock for repayment of $
On August 14, 2021, the shareholders approved an increase in the authorized number of shares of Common Stock to 6,000,000,000, from , which became effective the same day. As of December 31, 2025 and 2024, there were shares were outstanding, respectively.
Warrants
We issued warrants issued as loan incentives and valued the warrants on their respective grant dates using the Black-Scholes option pricing model. Warrant values per share ranged from $0.023 to $0.002. For the year ended December 31, 2025, a summary of our warrant activity is as follows:
Summary of our warrant activity is as follows:
| Number
of Warrants |
Weighted- Average Exercise Price |
Weighted- Average Remaining Contractual Term (Years) |
Weighted- Grant- Value |
|||||||||||||
| Outstanding and exercisable at January 1, 2025 | $ | $ | ||||||||||||||
| Expired | — | — | — | |||||||||||||
| Outstanding and exercisable at December 31, 2025 | $ | $ | ||||||||||||||
In determining the fair value of these equity-classified features, the Company considered the fact that its common stock is quoted on the OTC Expert Market, where trading volume is minimal and pricing is not reliably observable. Due to the absence of active market inputs, the Company determined that a quoted market price could not be used to value the conversion features.
Instead,
the Company referred to the most recent observable transaction price from a private placement conducted in 2021, in which it issued
shares of Series G Preferred Stock for total proceeds of $
F-27
Note 10 Contingency and Commitments
On
February 17, 2024, Agile Capital Funding LLC (“Agile”) filed a Confession of Judgment executed by Philip Falcone with
the Supreme Court of the State of New York, County of New York. The filing stated that Sovryn Holdings Inc. (“Sovryn”)
and Madison Technologies Inc. (“Madison”) owe Agile an amount of approximately $
Management has reviewed this matter and concluded that Madison has no obligation arising from this Confession of Judgment. The funds in question were received by Sovryn, which was a subsidiary of Madison at the time and was sold to Arena Group Holdings Inc. in February 2023, including all of Sovryn’s assets and liabilities. Accordingly, management believes that the Confession of Judgment relates to obligations of Sovryn prior to its sale.
Madison has not received any demand or claim for payment in connection with this matter. Based on the information available, management believes it is unlikely that this matter will result in any obligation for Madison. No amount has been recognized in the financial statements, as any potential liability, if any, cannot be reasonably determined at this time.
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.
The Company does not have an employment agreement with the Chief Executive Officer.
Note 11 Income Taxes
Income tax recovery differs from that which would be expected from applying the effective tax rates to the net loss as follows:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Net loss for the year | $ | ( |
) | $ | ( |
) | ||
| Statutory and effective tax rates | % | % | ||||||
| Income taxes expenses (recovery) at the effective rate | $ | ( |
) | $ | ( |
) | ||
| Effect of change in tax rates | ||||||||
| Permanent differences | ||||||||
| Valuation allowance | ||||||||
| Income tax expense and income tax liability | $ | $ | ||||||
As at December 31, 2025 and 2024 the tax effect of the temporary timing differences that give rise to significant components of deferred income tax asset are noted below. A valuation allowance has been recorded as management believes it is more likely than not that the deferred income tax asset will not be realized.
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Cumulative net losses carried forward | $ | $ | ||||||
| Deferred tax assets | $ | $ | ||||||
| Valuation allowance | ( |
) | ( |
) | ||||
| Deferred taxes recognized | $ | $ | ||||||
The Company has cumulative net losses of $
Note 12 Subsequent Events
The Company has evaluated subsequent events through April 14, 2026, the date the financial statements were available to be issued.
Subsequent
to December 31, 2025, the Company received $
Management believes that this continued financial support from Arena demonstrates the shareholder’s commitment and provides the Company with sufficient liquidity to continue operations for the foreseeable future.
On January 31, 2026, the Company adopted the 2026 Omnibus Equity Incentive Plan (the “Plan”) and reserved shares of Common Stock for Plan use.
Other than the above, management has determined that there are no other subsequent events.
F-28
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
There are no disagreements with our accountants on accounting and financial disclosure. Our independent registered public accounting firm since May 1, 2024, is SRCO Professional Corporation, Park Place Corporate Centre, 15 Wertheim Court, Suite 409, Richmond Hill, Ontario, Canada L4B 3H7.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
In connection with the preparation of this annual report on Form 10-K, an evaluation was carried out by the sole member of our Board of Directors and our Chief Executive Officer of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of December 31, 2025. 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 Section 404 of the Sarbanes-Oxley Act. Our internal control framework 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 (“US GAAP”). 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. |
F-29
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.
Management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023, 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 no 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, 2023.
As a result of the material weakness in internal control over financial reporting described above, management has concluded that, as of December 31, 2023, 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 no 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 our 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 additional 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 additional 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.
F-30
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 Annual 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 SEC that permit us to provide only management’s report in this annual report.
Changes in Internal Controls
There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the year ended December 31, 2025, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
F-31
PART III
Item 10. Directors, Executive Officers, and Corporate Governance.
(a) Identify Directors and Executive Officers
Mr. Amon, currently the Chairman of the Board of Directors, holds office until (i) the next annual meeting of the stockholders, (ii) his successor has been duly elected and qualified, or (iii) his resignation.
As of the date of this Annual Report, Madison’s management team consists solely of Mr. Amon, who serves as the Company’s President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and sole director. Mr. Amon was appointed to such positions in connection with the Change of Control on November 6, 2023.
On January 31, 2026, the Company appointed Vincent DeVito as a member of the Board of Directors.
Mr. Amon, age 78, is a corporate and M&A specialist with over 40 years’ experience representing small and medium sized companies and investment funds. Over the past five years, Mr. Amon has operated a law practice, the Law Office of Thomas Amon, until June 1, 2023 when he began working at Praetor Legal Services. From July 2020 until July 31, 2023, Mr. Amon served on the board of Everything Blockchain, Inc. For the past 15 years, Mr. Amon has also served as President of Spoleto Corporation. Mr. Amon also serves as a board member of a number of charitable institutions located in New York City and New England. Mr. Amon is a securities lawyer by trade and is licensed to practice in the State of New York. He graduated from Harvard College received his J.D. from the University of Virginia School of Law. The Company believes that Mr. Amon’s legal expertise in corporate and mergers and acquisitions matters for small and medium sized public and private companies and his role as a licensed practicing lawyer provide him with the requisite qualifications and skills to serve as a member of the Board of Directors.
Mr. DeVito, age 55, is the Global Head of Asset Management at Arena Investors, bringing more than 25 years of experience spanning origination, underwriting, portfolio management, and valuation across a wide variety of investments, including corporate private investments, structured finance transactions, natural resources, corporate securities, real estate, and secondaries and liquidity solutions. Prior to joining Arena, Mr. DeVito served as Director of Credit, Lending, and Portfolio Management at a distressed-focused asset manager, where he was responsible for debt and equity control investments primarily via bankruptcy processes. Before that, he served as a Managing Director and was the founder of a liquid and illiquid par and distressed leveraged loan and high yield bond business within a large public bank holding company. Earlier in his career, Mr. DeVito held various positions in the financial services division of a public industrial conglomerate, where he was responsible for originating, assessing, and managing par and distressed liquid and illiquid investments and private equity transactions. He also previously worked in the mergers and acquisitions group at a multinational entertainment company and began his career as a Senior Auditor at a Big 4 accounting firm. Mr. DeVito currently serves on multiple boards across a diverse range of portfolio companies. In these roles, he provides strategic guidance on matters including corporate governance, capital structure, operational performance, and value creation, drawing on his deep expertise in credit, restructuring, and private investment to support management teams and drive outcomes for stakeholders. Mr. DeVito holds a BS in Accounting and an MBA in Finance from Fordham University and is a Certified Public Accountant.
(b) Identify Significant Employees
Other than Mr. Amon, we have no significant employees as of the date of this Annual Report.
(c) Family Relationships
There are no family relationships among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
(d) Involvement in Certain Legal Proceedings
To the best of our knowledge, and except as set forth below, none of our current directors or executive officers has, during the past ten years:
| ● | Been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| ● | Had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation, or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
| ● | Been subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; |
| ● | Been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| ● | Been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| ● | Been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Except as may be set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates, or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
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(e) Compliance with Section 16(a) of the Exchange Act.
Section 16(a) of the Exchange Act requires directors, executive officers and 10% or greater shareholders of us to file with the SEC initial reports of ownership (Form 3) and reports of changes in ownership of our equity securities (Form 4 and Form 5) and to provide copies of all such Forms as filed to us. Based solely on our review of copies of the reports filed with the SEC and the written representations of our directors and executive officers, we believe that all reporting requirements for the year ended December 31, 2025 were complied with by each person who at any time during the year ended December 31, 2025 was a director or an executive officer of the Company, or held more than 10% of our Common Stock.
(f) Code of Ethics
We adopted a code of ethics that applies to all of our executive officers and employees, including our Chief Executive Officer and Chief Financial Officer. See Exhibit 14 of this Annual Report for a copy of such code of ethics. Management believes our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.
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(g) Nomination Procedure for Directors
We do not have a standing nominating committee; recommendations for candidates to stand for election as directors are made by the Board of Directors. We have not adopted a policy that permits shareholders to recommend candidates for election as directors or a process for shareholders to send communications to the Board of Directors.
(h) Audit Committee
We do not have a separately designated standing audit committee. Rather, our sole director currently performs the required functions of an audit committee. See “Item 12. (c) Director independence” below for more information on independence.
Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditor and any outside advisors engaged by the audit committee.
As of December 31, 2025, we did not have a written audit committee charter or similar document.
(i) Audit Committee Financial Expert
We have no financial expert. Management believes the cost related to retaining a financial expert at this time is prohibitive and has determined that the cost of hiring a financial expert to act as a director and to be a member of an audit committee or otherwise perform audit committee functions outweighs the benefits of having a financial expert.
(j) Insider Trading Policy
We intend to have our Board of Directors adopt an insider trading policy to promote compliance with federal and state securities laws that prohibit certain persons who are aware of material nonpublic information about a company from (i) trading in securities of that company, or (ii) providing material nonpublic information to other persons who may trade on the basis of that information.
We
have
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Item 11. Executive Compensation.
Madison has paid the following compensation to its named executive officers during its fiscal years ended December 31, 2025 and 2024.
summary compensation table
| (a) Name and principal position | (b)
Year |
(c) Salary ($) |
(d) Bonus ($) |
(e)
Stock Awards ($) |
(f) Option Awards ($) |
(g) Non- Equity Incentive Plan ($) |
(h) Non-qualified Deferred Compensation Earnings ($) |
(i)
All other compensation ($) |
(j)
Total ($) |
|||||||||||
Vincent DeVito, Director |
2025 | nil | nil | nil | nil | nil | nil | nil | nil | |||||||||||
| 2024 | nil | nil | nil | nil | nil | nil | nil | nil | ||||||||||||
| Thomas Amon, Chief Executive Officer, Chief Financial Officer and Director | 2025 | nil | nil | nil | nil | nil | nil | nil | nil | |||||||||||
| 2024 | nil | nil | nil | nil | nil | nil | nil | nil |
We have structured our compensation with the following objectives in mind:
| ● | offer competitive compensation to attract and retain highly qualified leaders to guide and govern; |
| ● | recognize the substantial investment of time and expertise necessary for the employees to discharge their duties; and |
| ● | ensure that compensation is easy to understand and is regarded positively by our shareholders and employees. |
Our executive compensation framework is designed to continue to align and promote the alignment of pay and performance to the benefit of our shareholders.
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Since our inception, no stock options, stock appreciation rights, or long-term incentive plans have been granted, exercised or repriced.
Currently, there are no arrangements between us and any of its directors whereby such directors are compensated for any services provided as directors.
There are no employment agreements between us and any named executive officer, and there are no employment agreements or other compensating plans or arrangements with regard to any named executive officer which provide for specific compensation in the event of resignation, retirement, other termination of employment or from a change of control or from a change in a named executive officer’s responsibilities following a change in control.
Director Compensation for Fiscal Year Ended 2025
During the year ended December 31, 2025, our non-employee director, Thomas Amon, was not paid any compensation in connection with his services to the Board of Directors. For compensation paid to our other director during the year ended December 31, 2025, see the Summary Compensation table in this Item 11 above.
Item 12. Security Ownership of Certain Beneficial Holders and Management and Related Stockholder Matters.
The following table sets forth, as of April 14, 2026, information regarding beneficial ownership of our capital stock by:
| ● | each person, or group of affiliated persons, known by us to beneficially own more than 5% of our outstanding voting securities; |
| ● | each of our named executive officers; |
| ● | each of our directors; and |
| ● | all of our named executive officers and directors as a group. |
Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power of that security, including securities that are exercisable for shares of Common Stock, Series B Preferred Stock or Series E-1 Preferred Stock within sixty (60) days of April 14, 2026. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the holders named in the table below have sole voting and investment power with respect to all shares of Common Stock, Series B Preferred Stock or Series E-1 Preferred Stock shown that they beneficially own, subject to community property laws where applicable.
For purposes of computing the percentage of outstanding shares of our Common Stock, Series B Preferred Stock and Series E-1 Preferred Stock held by each holder or group of holders named above, any shares of Common Stock, Series B Preferred Stock or Series E-1 Preferred Stock that such holder or holders have the right to acquire within sixty (60) days of April 14, 2026 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other holder. The inclusion herein of any shares of Common Stock, Series B Preferred Stock or Series E-1 Preferred Stock listed as beneficially owned does not constitute an admission of beneficial ownership. Unless otherwise identified, the address of each beneficial owner listed in the table below is c/o Madison Technologies Inc., 2500 Westchester Avenue, Suite 401, Purchase, New York 10577.
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| Shares Beneficially Owned | ||||||||||||||||||||||||||||
| Common Stock | Series
B Preferred Stock |
Series
E-1 Preferred Stock |
% Total Voting | |||||||||||||||||||||||||
| Name of Beneficial Owner | Shares | %(1) | Shares | %(2) | Shares | %(3) | Power(4) | |||||||||||||||||||||
| 5% Stockholders: | ||||||||||||||||||||||||||||
| Arena Investors, LP (5) | 2,347,661,906 | (3) | 61.8 | % | 100 | 100 | % | 1,152,500 | 100 | % | 90.2 | % | ||||||||||||||||
| Directors and Executive Officers: | ||||||||||||||||||||||||||||
| Thomas Amon, Chief Executive Officer, Chief Financial Officer and Sole Director | — | — | — | — | — | — | ||||||||||||||||||||||
| Vincent DeVito, Director | — | — | — | — | — | — | — | |||||||||||||||||||||
| Directors and Executive Officers as a Group (4 persons) | * | — | — | — | * | |||||||||||||||||||||||
| * | Less than 1% |
(1) Based on 1,678,095,243 shares of Common Stock issued and outstanding as of April 14, 2026.
(2) The 100 shares of Series B Preferred Stock are not convertible, however such shares enable the holder thereof to cast a number of votes equal to 51% of all voting shares of each class of the Company’s capital stock, including but not limited to, the shares of Common Stock and of the Series E-1 Preferred Stock.
(3) Each share of Series E-1 Preferred Stock converts into 1,000 shares of Common Stock and votes with the shares of Common Stock on an as-converted to Common Stock basis. Although conversions of such shares of Series E-1 Preferred Stock have not yet occurred, the Series E-1 Certificate requires the shares of Series E-1 Preferred Stock to automatically convert two years from the date of their initial issuance, which occurred in September 2021. Accordingly, such shares of Series E-1 Preferred Stock are considered converted for purposes of the number of shares of Common Stock owned and percentage ownership.
(4) Percentage of total voting power represents voting power with respect to all shares of Common Stock, Series B Preferred Stock and Series E-1 Preferred Stock.
(5) Arena Investors, LP’s (“Arena”) beneficial ownership consists of (i) 102,416,140 shares of Common Stock beneficially owned by Arena Special Opportunities Partners I, LP (“Arena Partners”), a fund for which Arena acts as investment manager and whose securities Arena has sole voting control and investment discretion over; (ii) 49,761,877 shares of Common Stock beneficially owned by Arena Special Opportunities Fund, LP (“Arena Opportunities”), a fund for which Arena acts as investment manager and whose securities Arena has sole voting control and investment discretion over; (iii) an aggregate of 1,042,983,889 shares of Common Stock, which Arena obtained voting and investment control in connection with the Change of Control and the acquisition of the Pledged Interests, of which (x) 388,150,556 shares had previously been deemed beneficially owned by FFO1 and Mr. Falcone prior to the Change of Control, (y) 436,555,556 shares had previously been deemed beneficially owned by FFO2 and Mr. Falcone prior to the Change of Control and (z) 218,277,777 shares had previously been deemed beneficially owned by Korr Value LP and Kenneth Orr (collectively, “Korr”) prior to the Change of Control; (iv) 100 shares of Series B Preferred Stock beneficially owned by Portents Holdings, LLC (“Portents”), a fund for which Arena acts as investment manager and whose securities Arena has sole voting control and investment discretion over, which shares were deemed beneficially owned by FFO1 and Mr. Falcone prior to the Change of Control and were included in the Pledged Interests; (v) an aggregate of 1,152,500 shares of Series E-1 Preferred Stock held by Portents, which shares were deemed beneficially owned by each of FFO1, FFO2, Mr. Falcone and Korr prior to the Change of Control and were included in the Pledged Interests. Such beneficial ownership excludes (i) a Common Stock purchase warrant exercisable for up to 129,265,140.441 shares of Common Stock held by Arena Partners, and (ii) a Common Stock purchase warrant exercisable for up to 62,807,875.559 shares of Common Stock held by Arena Opportunities, which warrants contain 4.99% beneficial ownership limitations preventing their exercise by the holders thereof as a result of the number of shares beneficially owned by Arena.
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Item 13. Certain Relationships and Related Transactions, and Director Independence.
(a) Transactions with Related Persons
Since the beginning of the year ended December 31, 2024, no director, executive officer, security holder, or any immediate family of such director, executive officer, or security holder has had any direct or indirect material interest in any transaction or currently proposed transaction, which we were or are to be a participant, that exceeded the lesser of (1) $120,000 or (2) one percent of the average of our total assets at year-end for the last three completed fiscal years.
(c) Director independence
Mr. Amon is the a member of our Board of Directors. Pursuant to Item 407(a)(1)(ii) of Regulation S-K of the Securities Act, our Board of Directors has adopted the definition of “independent director” as set forth in Rule 4200(a)(15) of the rules of The Nasdaq Stock Market LLC. In summary, an “independent director” means a person other than an executive officer or employee of Madison or any other individual having a relationship which, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and includes any director who accepted any compensation from us in excess of $200,000 during any period of twelve consecutive months with the three past fiscal years. The ownership of our stock will not preclude a director from being independent.
In applying this definition, our Board of Directors has determined that Mr. Amon does not qualify as an “independent director” pursuant to such Rule 4200(a)(15).
As of the date of this Annual Report, we did not maintain a separately designated audit, compensation or nominating committee. We intend to adopt this definition of independence for the members of our audit committee once formed.
[Vincent DeVito inserted here]
Item 14. Principal Accounting Fees and Services
(1) Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of our annual financial statements and for the review of financial statements included in our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:
December 31, 2025 - $65,000 – SRCO
December 31, 2024 - $65,000 – SRCO
(2) Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:
December 31, 2025 and December 31, 2024 - $Nil – SRCO
(3) Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:
December 31, 2025 and December 31, 2024 - $Nil – SRCO
(4) All Other Fees
The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) of this Item 14 was:
December 31, 2025 and December 31, 2024 - $Nil – SRCO
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(5) In lieu of an Audit Committee, our sole director pre-approves all audit and non-audit services provided by the independent auditors prior to the engagement of the independent auditors with respect to such services.
(6) The percentage of hours expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full time, permanent employees was nil %.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Given the fact that we currently have only one director, as well as our limited financial resources and operational state, our sole director must serve in the role of an audit committee. Our sole director pre-approves all audit and permissible non-audit services. These services may include audit services, audit-related services, tax services and other services. Our sole director approves these services on a case-by-case basis.
Item 15. Exhibits, Financial Statement Schedules.
(a). Financial Statements
Our consolidated financial statements have been included in Item 8 above.
(b). Financial Statement Schedules
All schedules for which provision is made in Regulation S-X are either not required to be included herein under the related instructions or are inapplicable or the related information is included in the footnotes to the applicable financial statement and, therefore, have been omitted from this Item 15.
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(c). Exhibits
All exhibits required to be filed with this Annual Report are listed below and have been filed with this Annual Report or incorporated by reference herein.
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F-41
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| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Schema | |
| 101.CAL | XBRL Taxonomy Calculation Linkbase |
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| 101.DEF | XBRL Taxonomy Definition Linkbase | |
| 101.LAB | XBRL Taxonomy Label Linkbase | |
| 101.PRE | XBRL Taxonomy Presentation Linkbase | |
| 104 | Cover Page Interactive Cover Page Data (formatted as inline XBRL and contained in Exhibit 101) |
* Filed herewith
In accordance with SEC Release 33-8238, the certifications furnished in Exhibit 32 hereto are deemed to be furnished with this Annual Report and will not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
Item 16. Form 10-K Summary
None.
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Signatures
In accordance with the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, Madison Technologies Inc. has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Madison Technologies Inc. | ||
| Date: April 14, 2026 | By: | /s/ Thomas Amon |
| Name: Thomas Amon | ||
Title: Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Madison Technologies Inc. and in the capacities and on the dates indicated.
| Date: April 14, 2026 | By: | /s/ Thomas Amon |
| Name: Thomas Amon | ||
Title: Chief Executive Officer, Chief Financial Officer, and Director (Principal Executive Officer and Principal Financial Officer) |
| Date: April 14, 2026 | By: | /s/ Vincent DeVito |
| Name: Vincent DeVito | ||
| Title: Director |
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